Unconscionable conduct in Australian consumer and commercial contracts 9780409343557, 0409343552

Citation preview

Unconscionable Conduct in Australian Consumer and Commercial Contracts

To my husband, Craig, for his unending patience and support. And to my daughters Cara and Zoe, I am very sorry that this isn’t a book about a boy wizard.

Unconscionable Conduct in Australian Consumer and Commercial Contracts Dr Michelle Sharpe BA (Juris) (Adel), LLB First Class Honours (Adel), PhD (Melb) Barrister, Victoria

LexisNexis Butterworths Australia 2018

AUSTRALIA

ARGENTINA AUSTRIA BRAZIL CANADA CHILE CHINA CZECH REPUBLIC FRANCE GERMANY HONG KONG HUNGARY INDIA ITALY JAPAN KOREA MALAYSIA NEW ZEALAND POLAND SINGAPORE SOUTH AFRICA SWITZERLAND TAIWAN UNITED KINGDOM USA

LexisNexis LexisNexis Butterworths 475–495 Victoria Avenue, CHATSWOOD NSW 2067 On the internet at: www.lexisnexis.com.au LexisNexis Argentina, BUENOS AIRES LexisNexis Verlag ARD Orac GmbH & Co KG, VIENNA LexisNexis Latin America, SAO PAULO LexisNexis Canada, Markham, ONTARIO LexisNexis Chile, SANTIAGO LexisNexis China, BEIJING, SHANGHAI Nakladatelství Orac sro, PRAGUE LexisNexis SA, PARIS LexisNexis Germany, FRANKFURT LexisNexis Hong Kong, HONG KONG HVG-Orac, BUDAPEST LexisNexis, NEW DELHI Dott A Giuffrè Editore SpA, MILAN LexisNexis Japan KK, TOKYO LexisNexis, SEOUL LexisNexis Malaysia Sdn Bhd, PETALING JAYA, SELANGOR LexisNexis, WELLINGTON Wydawnictwo Prawnicze LexisNexis, WARSAW LexisNexis, SINGAPORE LexisNexis Butterworths, DURBAN Staempfli Verlag AG, BERNE LexisNexis, TAIWAN LexisNexis UK, LONDON, EDINBURGH LexisNexis Group, New York, NEW YORK LexisNexis, Miamisburg, OHIO

A catalogue record for this book is available from the National Library of Australia

ISBN:

9780409343557 (pbk). 9780409343564 (ebk).

© 2018 Reed International Books Australia Pty Limited trading as LexisNexis. This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Futura and Sabon. Printed by Griffin Press, Australia. Visit LexisNexis Butterworths at www.lexisnexis.com.au

Preface The term ‘unconscionable’ or ‘unconscionable conduct’ is often used to refer to conduct or contracts or contractual terms that are thought to be exploitative. Exploitative, or ‘unconscionable’, conduct may be caught by a number of different common law and equitable doctrines or the bewildering myriad of legislation enacted by parliament to protect consumers. Each has its own definition of ‘unconscionable’ conduct or elements that must be shown to be present in any given matter before a court will grant relief. And, as to relief, each may provide access to different remedies. The humble purpose of this text is to provide some guide to students and practitioners through what may seem, at times, to be a confusing legal maze when dealing with a matter that concerns conduct that may be unconscionable. Conversely, it is not the purpose of this text to critique or otherwise describe the author’s view on what the law on unconscionable conduct should be or attempt to predict the future development of the law. While the purpose of this text is to assist in navigating the law relating to conduct that may be unconscionable it has not been possible to provide a comprehensive guide. Instead, what the reader will find within these pages is an outline of the most common doctrines and legislation relied upon by applicants seeking relief. This includes the doctrines of duress (Chapter 2), undue influence (Chapter 3), unconscionable conduct (Chapter 4) (as enunciated by the High Court in Commercial Bank of Australia Ltd v Amadio1) and legislation such as (but not limited to) the Australian Consumer Law (Chapter 5). Remedies and defences in respect of these doctrines and legislation have also been canvassed (Chapter 6). The text also provides an outline of the emergence of the law and relevant legal theory, among other things, to assist the reader in understanding the place that these doctrines have in modern contract law (Chapter 1). Other legal doctrines that could

have been included, but were not, are the doctrines of estoppel, unilateral mistake and penalty. Perhaps they may be included in any future editions of this text but, at present, there are a number of other helpful publications which canvass these areas of the law.2 I would like to acknowledge and thank the hardworking Annie Mill who provided research assistance in the writing of this text and editor Mary-Jane Oliver for her careful editing. I am very grateful for their help.

1.

(1983) 151 CLR 447.

2.

See, for example, P Young, C Croft & M Smith, On Equity, Lawbook Co, Sydney, 2009; P Parkinson (ed), The Principles of Equity, Lawbook Co, Sydney, 2003; C MacMillan, Mistakes in Contract Law, Hart Publishing, Oxford and Portland, Oregon, 2010.

Table of Cases References are to paragraphs

A Aboody v Ryan [2012] NSWCA 395 …. 4.30, 4.38, 4.42, 4.45, 4.46, 5.82 Abram v Bank of New Zealand [1996] ATPR 41-507 …. 6.36 Abram Steamship Co Ltd (in liq) v Westville Shipping Co Ltd (in liq) [1923] AC 773 …. 6.3, 6.8 Academy of Health and Fitness Pty Ltd v Power [1973] VR 254 …. 6.5 Adams v Lindsell (1818) 106 ER 250 …. 1.82 Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76 …. 6.3, 6.15 Addie v Western Bank of Scotland (1867) LR 1 Sc & Div 145 …. 6.17 Adenan v Buise [1984] WAR 61 …. 3.78, 3.81 AF&L Mortgages Ltd v Owens [2014] VCC 1190 …. 5.142 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 …. 6.60 Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) NSWLR 309 …. 1.78 Air India v Commonwealth [1977] 1 NSWLR 449 …. 2.21, 2.23, 2.31, 2.64 Akins v National Australia Bank (1994) 34 NSWLR 155 …. 4.23 Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 …. 6.17, 6.23, 6.25, 6.29, 6.30, 6.33 Al Maha Pty Ltd v Coplin [2017] NSWCA 318 …. 5.138 Alati v Kruger (1955) 94 CLR 216 …. 6.3, 6.5, 6.8, 6.9, 6.15, 6.20, 6.107 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 …. 5.42 Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 …. 5.50

Aldersea v Public Transport Corporation (2001) 3 VR 499 …. 6.54 Alderton v Prudential Assurance Company Ltd (1993) 41 FCR 435 …. 3.94 Alinta Asset Management Pty Ltd v Essential Services Commission (No 3) [2007] VSC 353 …. 6.59 Allcard v Skinner (1887) 36 Ch D 145 …. 1.38, 2.36, 3.2, 3.5, 3.6, 3.13, 3.36, 3.37, 3.40, 3.43, 3.51, 3.76, 3.77, 3.81, 6.102, 6.110 AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 …. 1.74 Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 …. 1.33, 1.78 — v Parker [1973] Qd R 93 …. 1.40 — v Racken Pty Ltd [2007] NSWSC 1010 …. 3.112 Ange v First East Auction Holdings Pty Ltd (2011) 284 ALR 638 …. 5.65 Antonovic v Volker (1986) 7 NSWLR 151 …. 5.147 ANZ Banking Group Ltd v Alirezai [2004] QCA 6 …. 3.112 Aravco Ltd v Qantas Airways Ltd (1995) 132 ALR 419 …. 1.83 Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 …. 6.54 Armstrong v Commonwealth Bank of Australia [1999] NSWSC 588 …. 3.107, 3.108 — v Strain [1952] 1 TLR 856 …. 5.87 Ashton v Melbourne Money Pty Ltd [1992] ANZ ConvR 95 …. 4.25 — v Pratt [2015] NSWCA 12 …. 1.25, 1.86 Association of Operative Plasterers (NSW) v Sadler [1918] AR (NSW) 159 …. 2.69 Astley v Reynolds (1731) 93 ER 939 …. 2.46 Astram Financial Services Pty Ltd v Bank of Queensland Ltd [2010] FCA 1010 …. 5.67 Atlas Express Ltd v Kafco (Importers & Distributers) Ltd [1989] QB 833 …. 2.32 Atlee v Backhouse (1838) 150 ER 1298 …. 2.46

Attorney-General for England and Wales v R [2002] 2 NZLR 91 …. 1.96, 3.26 Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 …. 1.106, 5.62, 5.66 Austotel Pty Ltd v Franklins SelfServe Pty Ltd (1989) 16 NSWLR 582 …. 1.107, 4.5 Australia and New Zealand Banking Group Ltd v Barry [1992] 2 Qd R 12 …. 4.23 — v Dzienciol [2001] WASC 305 …. 4.15, 4.30 — v Karam (2005) 64 NSWLR 149; [2005] NSWCA 344 …. 1.90, 2.11, 2.65, 2.66, 2.70, 2.71, 2.72 Australian Battery Distributors Pty Ltd v Robert Bosch (Australia) Pty Ltd [2017] FCA 707 …. 5.80 Australian Competition and Consumer Commission (ACCC) v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) (AMI) [2015] FCA 368 …. 5.17, 5.20, 5.43, 5.54, 5.60, 5.80, 5.160, 5.179, 5.202, 5.203, 5.204, 5.205, 5.206 — v — [2015] FCA 1087 …. 6.68, 6.72 — v 4WD Systems Pty Ltd (2003) 200 ALR 491; [2003] FCA 850 …. 5.9, 5.65, 5.82, 6.64, 6.69 — v Allphones Retail Pty Ltd (No 2) (2009) 253 ALR 324; [2009] FCA 17 …. 5.9, 5.65, 5.82 — v Baxter Healthcare Pty Ltd [2010] FCA 929 …. 6.80 — v C G Berbatis Holdings Pty Ltd [2000] FCA 2 …. 4.71 — v — [2000] FCA 1376 …. 4.16 — v — (2003) 214 CLR 51 …. 1.77, 4.2, 4.5, 4.7, 4.8, 4.10, 4.11, 4.12, 4.16, 4.20, 4.74 — v — (No 2) (2000) 96 FCR 491 …. 5.9 — v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212 …. 6.59 — v Chen [2003] FCA 897 …. 6.59 — v Chrisco Hampers Australia Ltd [2015] FCA 1204 …. 5.170, 5.172,

5.176, 5.177, 5.179, 5.183, 5.185, 5.187, 5.191, 5.192, 5.194 — v CLA Trading Pty Ltd [2016] FCA 377 …. 5.159, 5.160, 5.161, 5.179, 5.180, 5.190, 5.192 — v Clinica Internationale Pty Ltd (No 2) [2016] FCA 62 …. 5.38 — v Construction, Forestry, Mining and Energy Union [2006] FCA 1730 …. 6.59 — v — (No 4) [2018] FCA 684 …. 6.59, 6.67, 6.69, 6.71 — v Dataline.Net.Au Pty Ltd [2007] FCAFC 146 …. 6.67 — v Davis [2003] FCA 1227 …. 2.89 — v Dukemaster Pty Ltd [2009] FCA 682 …. 5.9, 5.65, 5.82 — v EDirect Pty Ltd [2012] FCA 1045 …. 5.12, 5.13, 5.17 — v Eurong Beach Resort Ltd [2005] FCA 1134 …. 6.59, 6.61 — v Excite Mobile Pty Ltd [2013] FCA 350 …. 2.84, 2.89, 2.90 — v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709 …. 5.14, 5.17, 5.19, 5.43, 5.202 — v Goldy Motors Pty Ltd (2001) ATPR 41-801 …. 6.59 — v Gourmet Goody’s Family Restaurant Pty Ltd [2010] FCA 1216 …. 6.76 — v Harbin Pty Ltd [2008] FCA 1792 …. 6.69, 6.72 — v Harrison [2016] FCA 1543 …. 2.80, 2.82, 2.83, 5.12, 5.17 — v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 …. 6.67 — v Humax Pty Ltd [2005] FCA 706 …. 6.72 — v IMB Group Pty Ltd [1999] FCA 313 …. 6.59 — v JJ Richards & Sons Pty Ltd [2017] FCA 1224 …. 5.159, 5.179, 5.180, 5.190, 5.191, 5.192, 5.207 — v Keshow [2005] FCA 558 …. 5.17 — v Kokos International Pty Ltd (No 2) (2008) ATPR 42-212 …. 6.59 — v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 …. 6.80 — v Leelee Pty Ltd [1999] FCA 1121 …. 5.21

— v Liquorland (Aust) Pty Ltd (2005) ATPR 42-070 …. 6.81 — v Lux Distributors Pty Ltd [2013] FCAFC 90 …. 5.38, 5.53, 5.54, 5.55, 5.56, 5.69 — v Lux Pty Ltd [2004] FCA 926 …. 5.65, 5.70 — v Maritime Union of Australia [2001] FCA 1549 …. 2.80, 2.84, 2.85, 2.86, 2.87, 2.88 — v McCaskey [2000] FCA 1037 …. 2.78, 2.79, 2.80, 2.81, 2.85, 2.86 — v Midland Brick Co Pty Ltd (2004) 207 ALR 329; [2004] FCA 693 …. 6.59, 6.72 — v MSY Technology Pty Ltd [2017] FCA 1251 …. 6.65 — v Multimedia Services Pty Ltd [2016] FCA 439 …. 5.38 — v Oceana Commercial Pty Ltd [2001] FCA 1516 …. 5.44 — v — (2004) 139 FCR 316 …. 5.43, 5.44 — v On Clinic Australia Pty Ltd (1996) 35 IPR 635 …. 6.74 — v Radio Rentals Ltd (2005) 146 FCR 292; [2005] FCA 1133 …. 4.21, 4.27, 5.9, 5.83 — v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 …. 6.74 — v — (1999) 161 ALR 79 …. 6.66 — v Rural Press Ltd (2001) 23 ATPR 41-833 …. 6.80 — v Safety Compliance Pty Ltd (in liq) [2015] FCA 211 …. 2.84, 2.87 — v Samton Holdings Pty Ltd (2002) 117 FCR 301; [2002] FCA 62 …. 1.103, 4.8, 4.11, 4.12, 4.16, 4.59, 4.73, 4.74 — v Seal-a-Fridge Pty Ltd (2010) 268 ALR 321 …. 5.82 — v Sensaslim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 …. 6.63, 6.64, 6.65 — v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253 …. 5.9 — v Skippy Australia Pty Ltd [2006] FCA 1343 …. 6.76 — v South East Melbourne Cleaning Pty Ltd (in liq) [2015] FCA 25 …. 5.21, 5.39, 5.42

— v Titan Marketing Pty Ltd [2014] FCA 913 …. 5.17 — v TPG Internet Pty Ltd [2011] FCA 1254 …. 6.86 — v — [2013] HCA 54 …. 6.98, 6.99, 6.100 — v — (No 2) [2012] FCA 629 …. 6.74, 6.83, 6.86, 6.87, 6.88, 6.89, 6.90, 6.91, 6.92, 6.93 — v Unique International College [2017] FCA 727 …. 5.15, 5.17, 5.18 — v — (No 7) [2017] FCA 1289 …. 6.62 — v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 …. 6.74 — v Woolworths Ltd [2016] FCA 1472 …. 5.62 — v Woolworths (South Australia) Pty Ltd (2003) 198 ALR 417 …. 5.25 — v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1 …. 6.63, 6.65 — v Zanok Technologies Pty Ltd [2009] FCA 1124 …. 4.50, 4.51 — v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 …. 6.65, 6.68, 6.70, 6.71 Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164 …. 2.78, 2.80, 2.84, 2.87 — v Kobelt [2016] FCA 1327 …. 5.12, 5.17, 5.90 — v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226 …. 5.12, 5.13, 5.17, 5.27, 5.65 — v Westpac Banking Corporation (No 2) [2018] FCA 751 …. 4.33, 5.17, 5.27, 5.82, 5.89 Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 …. 1.85 Avon Finance Co Ltd v Bridger [1985] 2 All ER 281 …. 3.92, 3.94 Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 …. 6.23, 6.32

B B & S Contracts and Designs Ltd v Victor Green Publications Ltd [1984] ICR 419 …. 2.13, 2.33 Baburin v Baburin [1990] 2 Qd R 101 …. 3.56

— v — (No 2) [1991] 2 Qd R 240 …. 3.56 Bainbrigge v Browne (1881) 18 Ch D 188 …. 1.38, 3.13, 3.87, 3.89 Baird v BCE Holdings Pty Ltd (1996) 40 NSWLR 374 …. 6.5, 6.7 Balfour v Balfour [1919] 2 KB 571 …. 1.25, 1.86 — v Hollandia Ravensthorpe (NL) (1978) 18 SASR 240 …. 6.17, 6.19 Baltic Shipping Company v Dillon (‘Mikhail Lermontov’) (1991) 22 NSWLR 1 …. 1.74, 5.131, 5.142, 5.149, 5.150, 5.160 Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] 1 All ER 545 …. 1.94 Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923 …. 3.6, 3.8, 3.19, 3.20, 3.54, 3.91 Bank of New South Wales v Commonwealth (1948) 76 CLR 1 …. 4.65 — v Rogers (1941) 65 CLR 42 …. 3.4, 3.12, 3.13, 3.30, 3.36, 3.40, 3.45, 3.64, 3.75, 3.76, 3.78, 3.89, 3.90, 3.91, 3.93 Bank of Queensland Ltd v Dutta [2010] NSWSC 574 …. 5.118 Bank of Victoria Ltd v Mueller [1925] VLR 642 …. 3.89, 3.97, 3.98, 3.104, 3.107, 6.11 Banque Brussels Lambert SA v Australian National Industries Ltd (1989) 21 NSWLR 502 …. 1.26, 1.86 Barbaro v Millington [2007] ACTCA 1 …. 3.112 Barclays Bank plc v O’Brien [1994] 1 AC 180; [1993] 4 All ER 417 …. 3.6, 3.89, 3.92, 3.96 Barker v GE Mortgage Solutions Ltd [2013] QCA 127 …. 5.145 Bar-Mordecai v Hillston [2004] NSWCA 65 …. 3.40 Barnes v Addy (1874) LR 9 Ch App 244 …. 4.26 Barron v Willis [1902] AC 271 …. 3.40 Barton v Armstrong [1973] 2 NSWLR 598; [1976] AC 104 …. 1.33, 2.14, 2.15, 2.16, 2.24, 2.25, 2.38, 2.44 Bass Coast Resort Pty Ltd v Success Resources Australia Pty Ltd [2017] VCAT 1217 …. 5.190, 5.200

Batt v Onslow (1892) 13 LR (NSW) Eq 79 …. 1.82 Beaton v McDivitt (1987) 13 NSWLR 162 …. 1.83 Beerens v Bluescope Distribution Pty Ltd [2012] VSCA 209 …. 2.48, 2.50, 2.51 Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137 …. 2.58, 2.59, 2.60, 2.62 Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256 …. 5.146 Berry v Federal Commissioner of Taxation (1953) 89 CLR 653 …. 5.25 Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 …. 3.29, 3.72, 3.78, 3.86 Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 …. 1.74, 5.160 Blackshaw Services Pty Ltd v Cureton [2001] NSWSC 548 …. 3.112 Blomley v Ryan (1956) 99 CLR 362 …. 1.38, 3.54, 4.2, 4.7, 4.8, 4.13, 4.19, 4.34, 4.69, 4.71, 4.73 BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452 …. 6.72 Body Bronze International Pty Ltd v Fehcorp Pty Ltd [2011] VSCA 196 …. 5.43, 5.67 — v Soleil Tanning Oxford Pty Ltd [2007] FCA 371 …. 4.74 BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 …. 1.32 Bridge v Campbell Discount Co Ltd [1962] AC 600 …. 1.89 Bridgeman v Green (1755) 2 Ves Sen 627 …. 3.87 Bridgewater v Leahy (1998) 194 CLR 457; 158 ALR 66 …. 1.33, 1.38, 1.103, 1.110, 3.12, 4.7, 4.8, 4.15, 4.16, 4.35, 4.37, 4.38, 4.49, 4.73 Britain v Rossiter (1879) 11 QBD 123 …. 1.94 Brocklehurst’s Estate, Re [1978] Ch 14 …. 3.24 Bromley v Norton (1872) 27 LT 478 …. 2.19, 2.44

Brott v Shtrambrandt [2009] VSC 467 …. 5.118 Brown v Smitt (1924) 34 CLR 160 …. 6.2, 6.9, 6.13, 6.16 Browning v Beston (1553) Plowd 140 …. 1.8 Brueckner v Satellite Group (Ultimo) Pty Ltd [2002] NSWSC 378 …. 3.107 Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555 …. 3.23, 3.30 Brusewitz v Brown [1923] NZLR 1106 …. 1.89, 3.78 Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 …. 6.23, 6.43, 6.44, 6.46, 6.48, 6.50 Bullock v Lloyds Bank Ltd [1955] Ch 317 …. 3.13, 3.78, 6.110 Burger King Corporation v Hungry Jack’s Pty Ltd (2001) 69 NSWLR 558 …. 5.50 Burke v State Bank of New South Wales (1994) 37 NSWLR 53 …. 3.94 Bylander International Consortium (Australia) Pty Ltd v Multilink Investments Pty Ltd [2001] NSWCA 53 …. 3.107 Byle v Byle [1990] 65 DLR 4th 641 …. 2.19, 2.45 Byrne v Australian Airlines Ltd (1995) 185 CLR 411 …. 1.32

C Calverley v Green (1984) 155 CLR 242 …. 3.43 Calvo v Ellimark Pty Ltd [2016] NSWCA 136 …. 5.138 Campbell v Metway Leasing Ltd (1998) ATPR 41-630 …. 2.79 Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557 …. 1.83 — v Official Trustee in Bankruptcy (1996) 65 FCR 453 …. 1.83 Canon Australia Pty Ltd v Patton [2007] NSWCA 246 …. 5.40, 5.64, 5.67 Canty v Paperlinx Australia Pty Ltd [2014] NSWCA 309 …. 5.133, 5.134, 5.135, 5.138 Capel & Co v Sim’s Ships Compositions Co Ltd (1888) 58 LT 807 …. 6.5 Car & Universal Finance Co Ltd v Caldwell [1965] 1 QB 525 …. 6.6 Caratti v Deputy Commissioner of Taxation (1993) 27 ATR 448 …. 2.69

Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 …. 1.92 Carillion Construction Ltd v Felix (UK) Ltd [2001] BLR 1 …. 2.33 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 …. 1.81 Cauvin v Philip Morris Ltd [2002] NSWSC 736 …. 4.74 Cavendish v Strutt (1903) 19 TLR 483 …. 3.78 Chandran v Narayan [2006] NSWSC 104 …. 3.78 Christodoulou v Christodoulou [2009] VSC 583 …. 3.42 CIBC Mortgages plc v Pitt [1994] 1 AC 200 …. 3.20 CIT Credit Pty Ltd v Keable [2006] NSWCA 130 …. 5.146 Citicorp Australia Ltd v O’Brien (1996) 40 NSWLR 398 …. 3.80 Clark v Malpas (1862) 45 ER 1238 …. 3.24, 3.29 Close v Phipps (1844) 135 ER 236 …. 2.46 Clough v London & North Western Railway Co (1871) LR Ex 26 …. 6.4, 6.5, 6.7, 6.15 Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2007] FCA 881 …. 4.74 Coastal Estates Pty Ltd v Melevende [1965] VR 433 …. 6.5, 6.14, 6.104 Cockburn v GIO Finance Ltd (No 2) [2001] NSWCA 177 …. 6.2, 6.8 Cockerill v Westpac Banking Corporation (1996) 142 ALR 227 …. 2.69, 6.5 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 …. 1.32 Cohen v Cohen (1929) 42 CLR 91 …. 1.25, 1.86 Coldunell Ltd v Gallon [1986] QB 1184 …. 3.19 Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd (2017) 349 ALR 100; [2017] FCAFC 75 …. 5.43, 5.72, 5.80, 5.95, 5.96, 5.100, 5.101 Collier v Morlend Finance Corporation (Victoria) Pty Ltd (1989) 6 BPR 13,337 …. 6.37 Collings Construction Co Pty Ltd v Australian Competition and Consumer Commission (1998) 43 NSWLR 131 …. 6.29, 6.54

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 …. 1.33, 1.38, 1.103, 1.110, 1.111, 3.54, 4.2, 4.4, 4.7, 4.8, 4.10, 4.16, 4.23, 4.24, 4.25, 4.26, 4.28, 4.30, 4.34, 4.35, 4.36, 4.41, 4.69, 4.71, 4.73, 5.82, 6.11 Commercial Base Pty Ltd v Watson [2013] VSC 334 …. 2.72 Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476 …. 6.75 — v Verwayen (1990) 170 CLR 394 …. 1.103, 4.73 Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 …. 5.50 — v Cohen (1988) ASC 55-681 …. 3.96 — v Hoskings [2000] VSCA 244 …. 3.107 — v Khouri [1998] VSC 128 …. 3.107, 3.108 — v Kojic [2016] FCAFC 186 …. 5.53, 5.64, 5.72, 5.79, 5.82, 5.85, 5.87, 5.88, 5.89 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 …. 4.65 Conley v Commonwealth Bank of Australia [2000] NSWCA 101 …. 5.131 Coomber, Re [1911] 1 Ch 723 …. 3.78, 3.81 Cotterill v Penn [1936] 1 KB 53 …. 2.42 Cousins v Merrington Pty Ltd (No 2) [2008] VSC 340 …. 6.59 Cowen v Piggott [1989] 1 Qd R 41 …. 3.30, 3.49 Cranfield Pty Ltd v Commonwealth Bank of Australia [1998] VSC 140 …. 3.107 Creative’s Landscape Design Centre Pty Ltd v Platz (1989) ATPR 40-980 …. 6.25 Credit Lyonnais Bank Nederland NV v Burch (1996) 29 HLR 513 …. 3.78, 3.81, 3.92 Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 …. 1.33, 2.1, 2.5, 2.8, 2.20, 2.32, 2.39, 2.40, 2.66, 2.69 Crowe v Commonwealth Bank of Australia [2005] NSWCA 41 …. 5.131 Crystal Auburn Pty Ltd v I L Wollermann Pty Ltd [2004] FCA 821 …. 6.54

CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 …. 2.66, 2.69, 2.70 Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Ltd (2015) 326 ALR 556 …. 6.51 Cureton v Blackshaw Services Pty Ltd [2002] NSWCA 187 …. 3.112 Custom Credit Corp Ltd v Gray [1992] 1 VR 540 …. 5.141 — v Lupi [1992] 1 VR 99 …. 5.141

D Dale v Nichols Constructions Pty Ltd [2003] QDC 453 …. 5.118, 5.142 Darmanin v Cowan [2010] NSWSC 1118 …. 3.12 Daunt v Daunt [2015] VSCA 58 …. 3.42, 3.70, 3.71, 3.72 Davey v Challenger Managed Investments Ltd [2003] NSWCA 172 …. 4.15 Deacon v Transport Regulation Board [1958] VR 458 …. 2.28 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 …. 6.23, 6.28, 6.29, 6.31, 6.33 Dent v Bennett (1839) 41 ER 105 …. 1.38 Dimskal Shipping Co SA v International Transport Workers’ Federation (the Evia Luck) [1992] 2 AC 152 …. 2.8 Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 …. 5.160, 5.173, 5.174, 5.178, 5.181, 5.182, 5.183 Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493 …. 5.180 — v Daiso Industries (Australia) Pty Ltd (No 2) [2017] FCA 720 …. 6.60 — v Fletcher & Parker (Balwyn) Pty Ltd [2017] FCA 1521 …. 6.60, 6.74 — v Gibson [2017] FCA 240 …. 5.83, 5.91, 5.92, 5.93, 5.94 — v Manningham Property Group Pty Ltd [2017] FCA 1448 …. 6.60, 6.68, 6.74 — v Scully [2013] VSCA 292 …. 5.10, 5.21, 5.39, 5.40, 5.43, 5.53, 5.62, 5.64, 5.65, 5.70, 5.75, 5.82

— v Scully (No 3) [2012] VSC 444 …. 5.82 Director of Public Prosecutions v Lynch [1975] AC 653 …. 2.8 DNSD Subsea Ltd v Petroleum Geo-Services ASA [2000] BLR 530 …. 2.33 Doggett v Commonwealth Bank of Australia [2015] VSCA 351 …. 2.11, 2.52 Doige’s Case (1442) YB 20 Hen VI, H, T, pl 4 …. 1.6 Don Nuno Alvares Pereira De Mello, Duke of Cadaval v Collins (1836) 4 Ad & E 858 …. 2.48 Donaldson v Gray [1920] VLR 379 …. 2.31 Dowsett v Reid (1912) 15 CLR 695 …. 3.40 Dubois v Ong [2004] QCA 185 …. 3.106, 3.107 Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 …. 2.14, 2.18, 2.44 Dynamic Supplies Pty Ltd v Tonnex International Pty Ltd (No 2) [2011] FCA 675 …. 6.64

E Earl of Aylesford v Morris (1873) LR 8 Ch App 484 …. 4.2 Earl of Chesterfield v Janssen (1751) 28 ER 82 …. 4.2 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 343 ALR 58 …. 1.88 Edwards v Skyways Ltd [1964] 1 All ER 494 …. 1.26, 1.86 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 …. 2.12, 2.28, 2.35 — v — [2013] WASCA 36 …. 2.42, 2.52, 2.72 Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413 …. 5.131, 6.37 Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 …. 6.44, 6.46 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 …. 1.90, 2.69, 2.70, 2.71

ER Squibb & Sons Pty Ltd v Tully Corp Pty Ltd (1986) 6 IPR 489 …. 6.25 Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 …. 6.9, 6.108, 6.109, 6.110 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 …. 1.79, 1.85, 1.86 Esanda Finance Corporation Ltd v Atanasovska [2014] NSWDC 169 …. 1.82 — v Tong (1997) 41 NSWLR 482 …. 5.131, 6.36, 6.37 European Asian of Australia v Kurland (1985) 8 NSWLR 192 …. 3.96 Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2012) 289 ALR 237 …. 1.85, 1.86

F Farmers Co-operative Executors & Trustees Ltd v Perks (1989) 52 SASR 399 …. 3.12, 3.19, 3.31, 3.58, 3.81 Farmers’ Mercantile Union v Coade (1921) 30 CLR 113 …. 1.82 Farrow Mortgage Services Pty Ltd (in liq) v Edgar (1993) 114 ALR 1 …. 6.21 Fast Financial Solutions Pty Ltd v Crawford [2012] NSWSC 40 …. 5.67 Fast Fix Loans Pty Ltd v Samardzic [2011] NSWCA 260 …. 5.137, 5.145 Federal Commerce and Navigation Ltd v Molena Alpha Inc [1978] QB 927 …. 1.95 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 …. 5.39 Felton v Mulligan (1971) 124 CLR 367 …. 1.94 First Mortgage Managed Investments Pty Ltd v Pittman [2014] NSWCA 110 …. 6.36, 6.37 Fisher v Brooker [2009] 1 WLR 1764 …. 6.110 Fleming v Beevers [1994] 1 NZLR 385 …. 1.40 Flower v Sadler (1882) 10 QBD 572 …. 2.50 Forster v Jodoex Australia Pty Ltd (1972) 127 CLR 421 …. 6.60

Freeman v Brown [2001] NSWSC 1028 …. 3.56 Friedeberg-Seeley v Klass (1957) 101 Sol Jo 275 …. 2.44 Fry v Lane (1888) 40 Ch D 312 …. 4.2 Furphy v Nixon (1925) 37 CLR 161 …. 2.52 Fysh v Page (1956) 96 CLR 233 …. 6.110

G G R Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd (1991) 42 NSWLR 80 …. 1.97 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 …. 1.103, 3.96, 3.99, 3.100, 3.101, 3.103, 3.106, 3.107, 3.111, 4.7, 4.26, 4.28, 4.73 Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 …. 6.52 Geelong Building Society (in liq) v Thomas (1996) V ConvR 54-545 …. 4.28 Gibbons v Wright (1954) 91 CLR 423 …. 1.38 Gillespie v Gillespie [2013] QCA 99 …. 6.108, 6.109, 6.110 Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674 …. 1.80, 1.82 Goldsworthy v Bricknell [1987] Ch 378 …. 3.19 Gould v Vaggelas (1985) 157 CLR 215 …. 6.44 GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 191 ALR 342; [2001] FCA 1761 …. 4.68, 4.72 Great Western Railway Co v Sutton (1869) LR 4 HL 226 …. 2.46 Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 …. 6.3, 6.15 Green v Duckett (1883) 11 QBD 275 …. 2.46 Groves v Groves [2013] QSC 277 …. 3.102 Gutnick v Indian Farmers Fertiliser Cooperative Ltd [2016] VSCA 5 …. 6.8, 6.9, 6.15 Guy v Crown Melbourne Ltd (No 2) [2018] FCA 36 …. 4.17, 4.33, 5.16,

5.26, 5.43, 5.80

H Hampton v BHP Billiton Minerals Pty Ltd (No 2) [2012] WASC 285 …. 4.74 Hanave Pty Ltd v LFOT Pty Ltd (1999) 43 IPR 545 …. 6.44 Hancock Family Memorial Foundation Ltd v Porteous [2000] WASCA 29 …. 6.5 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 …. 1.100 — v Jenkins (1922) 31 CLR 341 …. 3.17, 3.59 Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810 …. 3.25, 3.40, 3.76, 3.77 Haskew v Equity Trustees Executors and Agency Co Ltd (1919) 27 CLR 231 …. 3.45, 3.72, 3.76 Hatch v Hatch (1804) 9 Ves Jun 292 …. 3.40 Havyn Pty Ltd v Webster [2005] NSWCA 182 …. 6.34, 6.43, 6.52 Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 …. 1.33, 1.112, 2.13, 2.30, 2.35, 2.47, 6.102, 6.103 Hawthorn v Fraser [1892] 2 Ch 27 …. 1.81 Henderson v McSharer [2015] FCA 396 …. 6.32 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 …. 6.21, 6.23, 6.25, 6.31 Hennessey v Craigmyle [1986] ICR 461 …. 2.33 Henville v Walker (2001) 206 CLR 459 …. 6.44, 6.46, 6.49, 6.52 Highfield Property Investments Pty Ltd v Commercial & Residential Developments (SA) Pty Ltd [2012] SASC 165 …. 4.74 Hills v Street (1828) 130 ER 973 …. 2.46 Hitchcock v Coker [1853–42] All ER Rep 452 …. 2.48 Hooper & Grass’ Contract, Re [1949] VLR 269 …. 2.13, 2.28, 2.42, 2.52 Horsler v Zorro [1975] Ch 302 …. 6.8

Hourigan v Trustees Executors & Agency Co Ltd (1934) 51 CLR 619 …. 6.109 House v R (1936) 55 CLR 499 …. 5.135, 6.36 Hughes and Vale Pty Ltd v New South Wales (1954) 93 CLR 1 …. 2.62 Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91 …. 5.50 Huguenin v Baseley (1807) 14 Ves 273; 33 ER 526 …. 3.12, 3.40, 3.64, 3.87, 4.37 Hungerfords v Walker (1989) 171 CLR 125 …. 6.14 Hunter BNZ Finance Ltd v CG Maloney Pty Ltd (1989) 18 NSWLR 420 …. 6.5, 6.15 Hurley v McDonald’s Australia Ltd [1999] FCA 1728 …. 5.65, 5.160 Huyton SA v Peter Cremer GmbH & Co [1999] CLC 230 …. 2.6, 2.33 Hyde v Watts (1843) 152 ER 1193 …. 6.5

I I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 …. 6.21, 6.25, 6.27, 6.41, 6.44, 6.46 Inche Noriah v Shaik Allie Bin Omar [1929] AC 127 …. 3.65, 3.72, 3.78 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653 …. 6.43 Investec Bank (Australia) Pty Ltd v Naude [2014] NSWSC 165 …. 5.42 Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15 …. 5.50, 5.64, 5.67, 5.72, 5.73, 5.79, 5.102, 5.103, 5.104, 5.105 Ivanof v Philip M Levy Pty Ltd [1971] VR 167 …. 6.6, 6.15

J J & S Holdings Pty Ltd v NRMA Insurance Ltd, Re (1982) 41 ALR 539; [1982] FCA 78 …. 2.47, 2.49 J M Allan (Merchandising) Ltd v Coke [1963] 2 QB 340 …. 1.40

J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 …. 6.79 JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 …. 6.13, 6.14 James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 …. 3.49, 3.58 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 …. 6.46 Jedda Investments Pty Ltd v Krambousanos (1997) 72 FCR 138 …. 4.35 Jenyns v Public Curator (Qld) (1953) 90 CLR 113 …. 3.23, 3.47, 3.49, 3.81, 4.18, 5.77, 5.81 Jetstar Airways Pty Ltd v Free [2008] VSC 539 …. 5.155, 5.159, 5.177, 5.180, 5.190, 5.192 Jewellery Group Pty Ltd v Australian Competition and Consumer Commission [2013] FCAFC 144 …. 1.81 Joelco Pty Ltd v Balanced Securities Ltd [2009] QSC 236 …. 4.74 Johnson v Agnew [1980] AC 367 …. 6.8 — v Buttress (1936) 56 CLR 113 …. 1.33, 1.38, 1.112, 3.6, 3.7, 3.8, 3.18, 3.25, 3.27, 3.29, 3.35, 3.38, 3.40, 3.42, 3.45, 3.51, 3.57, 3.59, 3.62, 3.63, 3.66, 3.70, 3.72, 3.76, 3.78, 3.82 — v Smith [2010] NSWCA 306 …. 4.38, 5.82 Johnstone v Victorian Lawyers RPA Ltd [2003] FCA 1052 …. 4.67 Jones v Merionethshire Permanent Benefit Building Society [1892] 1 Ch 173 …. 2.13, 2.48 — v Padavatton [1969] 1 WLR 328 …. 1.25, 1.86 Jonsson v Arkway Pty Ltd [2005] NSWSC 304 …. 5.118 Juliana, The (1822) 2 Dods 504 …. 3.23

K Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 …. 4.2, 4.3, 4.4, 4.7, 4.17, 4.18, 4.19, 4.20, 4.22, 4.25, 4.26, 4.27, 4.29, 4.33, 5.21

Kali Bakhsh Singh v Ram Gopal Singh (1913) 30 TLR 138 …. 3.73 Kelly v R (1902) 27 VLR 522 …. 2.20 Kennedy v Thomasson [1929] 1 Ch 426 …. 1.82 — v Thorne [2016] FamCAFC 189 …. 1.116, 2.72 Kerridge v Simmonds (1907) 4 CLR 253 …. 2.48 Kesarmal v NKV Valliappa [1954] 1 WLR 380 …. 2.14 Khan v Khan (2004) 62 NSWLR 229 …. 3.13, 3.83, 3.89 Kingsnorth Trust Ltd v Bell [1986] 1 All ER 423 …. 3.94 Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 …. 6.21, 6.25, 6.29, 6.30, 6.52 Knowles v Victorian Mortgage Investments Ltd [2011] VSC 611 …. 5.106, 5.118, 5.120, 5.124, 5.141 Kolmar Group AG v Traxpo Enterprises Pvt Ltd [2010] EWHC 113 …. 2.30 Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343 …. 5.27, 5.67, 5.133, 5.137, 5.146 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 …. 6.9, 6.107 Kramer v McMahon [1970] 1 NSWR 194 …. 6.15, 6.20 Kranz v National Australia Bank Ltd [2003] VSCA 92 …. 3.112

L Lamotte v Lamotte (1942) 42 SR (NSW) 99 …. 3.40 Lampropoulos v Kolnik [2010] WASC 193 …. 4.30 Landmark Operations Ltd v J Tiver Nominees Pty Ltd [2008] SASC 322 …. 5.67 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 …. 1.102 Lauvan Pty Ltd v Bega [2018] NSWSC 154 …. 5.116 Legione v Hateley (1983) 152 CLR 406 …. 1.103, 4.73 Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 …. 1.32

Linderstam v Barnett (1915) 19 CLR 528 …. 3.73 Lindsay Petroleum Co v Hurd (1874) 5 PC 221 …. 6.109, 6.110 Ling v Pan Pac Investment Ltd; Ling v Wu [2015] NSWSC 850 …. 4.39, 4.40 Linkenholt Pty Ltd v Quirk [2000] VSC 166 …. 5.118 Liptak v Commonwealth Bank of Australia [1998] SASC 6887 …. 1.112, 3.103 Lisciandro v Official Trustee in Bankruptcy (1995) ATPR 41-436 …. 4.27 Lloyds Bank Ltd v Bundy [1975] QB 326 …. 3.13, 3.49, 3.84 London v Westminster Loan and Discount Co Ltd v Bilton (1911) 27 TLR 184 …. 1.38 Lopwell Pty Ltd v Clarke [2009] NSWCA 165 …. 1.108, 4.6, 4.30, 4.35, 4.36, 4.49 Louth v Diprose (1992) 175 CLR 621 …. 1.38, 1.103, 1.108, 3.42, 4.3, 4.4, 4.7, 4.8, 4.16, 4.19, 4.20, 4.21, 4.28, 4.30, 4.31, 4.35, 4.49, 4.73 — v — (No 1) (1990) 54 SASR 438 …. 1.108 Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 …. 4.6 Luong v Du [2013] VSC 723 …. 4.14 Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd [2010] FCA 423 …. 6.67 Lyons v Smart (1908) 6 CLR 143 …. 2.42

M M J Leonard Pty Ltd v Bristrol Custodians Ltd (in liq) [2013] NSWSC 1734 …. 3.40, 3.66 Mackintosh v Johnson [2013] VSCA 10 …. 4.16 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 …. 5.51 MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) 133 CLR 125 …. 1.37

Magnacrete Ltd v Douglas-Hill (1988) 48 SASR 565 …. 2.17, 2.47, 2.69 Maguire v Makaronis (1997) 188 CLR 449 …. 6.11 Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2007] NSWSC 12 …. 3.8, 3.29, 3.32 Malouf v Constantinou [2017] NSWSC 923 …. 3.40, 3.66, 3.68, 3.69, 3.70, 3.72, 3.75 Manchester Trust v Furness [1895] 2 QB 539 …. 4.26 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 …. 6.44 Markan v Bar Association of Queensland [2013] QSC 146 …. 4.67 Markarian v R (2005) 228 CLR 357 …. 6.81, 6.82 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 …. 6.23, 6.27, 6.28, 6.41, 6.44, 6.46, 6.52, 6.53 Maskell v Horner [1915] 3 KB 106 …. 2.29, 2.31, 2.46 Mason v New South Wales (1959) 102 CLR 108 …. 2.20, 2.21, 2.22, 2.23, 2.28, 2.29, 2.31, 2.34, 2.42, 2.46, 2.58, 2.62, 2.63, 2.64 May v Brahmbhatt [2013] NSWCA 309 …. 2.72 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 …. 6.2, 6.9 McIntosh v Suncorp-Metway Ltd [2013] QSC 255 …. 4.74 McIntyre v Nemesis DBK Ltd [2010] 1 NZLR 463 …. 2.42, 2.52 McKay v National Australia Bank Ltd [1998] 1 VR 173 …. 2.50 — v — [1998] 4 VR 677 …. 2.20, 2.28, 2.32, 2.39, 2.50 McLarnon v McLarnon (1968) 112 Sol Jo 419 …. 2.44 McNamara v Commonwealth Trading Bank of Australia Ltd (1984) 37 SASR 232 …. 3.78 Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 …. 6.74 Melbourne Tramway & Omnibus Company Ltd v Mayor of Melbourne (1903) 28 VLR 647 …. 2.59 Melverton v Commonwealth Development Bank of Australia (1989) ASC 55-921 …. 4.27

Metz Holdings Pty Ltd v Simmac Pty Ltd (No 2) [2011] FCA 981 …. 6.30 Meyers v Casey (1913) 17 CLR 90 …. 1.92 Micarone v Perpetual Trustees [1999] SASC 265 …. 3.81, 3.86, 3.92, 4.6, 4.21, 4.25 — v Perpetual Trustees Australia Ltd (unreported, Supreme Court of South Australia, Duggan J, 19 November 1997) …. 3.78 Midland Bank plc v Shepherd [1988] 3 All ER 17 …. 3.19 Miller v Cook (1870) LR 10 Eq 641 …. 4.2 Minister for Immigration and Ethnic Affairs v Ozmanian (1996) 71 FCR 1 …. 6.58 Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23 …. 6.24 Mitchell v Homfray (1881) 8 QBD 587 …. 3.40 — v Pacific Dawn Pty Ltd [2007] QCA 074 …. 2.72 Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia [2002] FCAFC 197 …. 5.23, 5.24 Moore v Vestry of Fulham [1894] 1 QB 399 …. 2.50 Morgan v Palmer (1824) 107 ER 554 …. 2.58, 2.59 Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710 …. 1.109 Multi-span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd [2001] NSWSC 696 …. 3.40, 3.66 Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 …. 6.2, 6.23 Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 …. 6.28, 6.52 Musca v Astle Corp Pty Ltd (1988) 80 ALR 251 …. 6.55 Muschinski v Dodds (1985) 160 CLR 583 …. 1.105, 4.74, 5.75 Mushroom Composters Pty Ltd v I S & D E Robertson Pty Ltd [2015] NSWCA 1 …. 1.87 Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 …. 1.83, 2.54, 2.56 Mutual Finance Ltd v John Wetton & Sons Ltd [1937] 2 KB 389 …. 2.13, 2.67

N Nadinic v Drinkwater [2017] NSWCA 114 …. 6.8, 6.14, 6.15 Nalbandian v Commonwealth [2017] FCA 45 …. 2.72 National Westminster Bank plc v Morgan (1985) 17 HLR 360 …. 3.5, 3.19, 3.23, 3.48, 3.49, 3.51, 3.56 Nattrass v Nattrass [1999] WASC 77 …. 3.63, 3.66, 3.78 Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 …. 5.131 Newbigging v Adam (1886) 34 Ch D 582 …. 6.3, 6.13 Nguyen v Taylor (1992) 27 NSWLR 48 …. 5.146 Nicholas v Thompson [1924] VLR 554 …. 6.5 Nicols v Jessup [1986] 1 NZLR 226 …. 4.23, 4.38 Nixon v Furphy (1925) 25 SR (NSW) 151 …. 2.46, 2.52 — v Philip Morris (Aust) Ltd (1999) 95 FCR 453 …. 6.55 Nolan v Westpac Banking Corporation Ltd (1989) ASC 55-930 …. 3.78 North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 …. 2.47, 2.52, 6.102 NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98 …. 5.17, 5.38, 5.61, 5.170, 5.202, 5.203, 5.204, 5.205, 5.206 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 …. 6.76, 6.79, 6.80

O Occidental Worldwide Investment Corporation v Skibs A/S Avanti (The Siboen and the Sibotre) [1976] 1 Lloyd’s Rep 293 …. 2.7, 2.30, 2.47, 2.69 O’Connor v Hart [1985] 1 NZLR 159 …. 4.3, 4.10, 4.27, 4.35 Optus Networks Ltd v Telstra Corporation Ltd (No 3) [2009] FCA 728 …. 4.74

O’Rourke v Hoeven [1974] 1 NSWLR 622 …. 1.94 Orr v Ford (1989) 167 CLR 316 …. 6.109 Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd [2007] FCA 1319 …. 4.74 O’Sullivan v Management Agency & Music Ltd [1985] QB 428 …. 6.18 Ottoway Engineering Pty Ltd v Westpac Banking Corporation (No 3) [2017] FCA 1500 …. 4.74 Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 …. 5.25 Owen v Homan (1853) 4 HLC 997 …. 4.26 Owen & Gutch v Homan (1853) 4 HL Cas 997 …. 3.90 Owners – Strata Plan No 61288 v Brookfield Australian Investments Ltd (2013) 85 NSWLR 479 …. 2.72 Oxley v Jones (1938) 38 SR (NSW) 362 …. 4.26

P Pacific Carriers Ltd v BNP Paribus (2004) 218 CLR 451 …. 1.85 Pacific National (ACT) Ltd v Queensland Rail (2006) FCA 91 …. 5.9 Paciocco v Australia and New Zealand Banking Group Ltd [2014] FCA 35 …. 5.141, 5.177 — v — (2015) 236 FCR 199; 321 ALR 584 …. 4.38, 5.7, 5.37, 5.38, 5.41, 5.42, 5.43, 5.47, 5.50, 5.51, 5.52, 5.53, 5.54, 5.57, 5.58, 5.63, 5.64, 5.71, 5.75, 5.76, 5.79, 5.82, 5.131, 5.137, 5.139, 5.141, 5.160, 5.171, 5.174, 5.188 — v — (2016) 258 CLR 525 …. 5.43, 5.48, 5.50, 5.59, 5.67, 5.160, 5.174, 5.188 Page v Horne (1848) 11 Beav 227 …. 3.42 Pao On v Lau Yiu Long [1980] AC 614 …. 2.7, 2.26, 2.27, 2.33, 2.36, 2.52, 2.69 Park Avenue Nominees Pty Ltd v Boon [2001] NSWSC 700 …. 5.117

Patterson v Dolman [1908] VLR 354 …. 1.82 Peanut Marketing Board v Cuda (1984) 79 FLR 368 …. 2.8 Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10 …. 4.6, 4.15, 4.30, 4.52, 4.55, 4.56, 5.67 Permanent Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501 …. 3.78, 4.2 Perpetual Trustee Co Ltd v Burniston (No 2) (2012) 271 FLR 122 …. 5.67 — v Khoshaba [2006] NSWCA 41 …. 5.131, 5.133, 5.134, 5.135, 5.137, 5.146, 5.148, 6.36 Perpetual Trustees Victoria Ltd v Burns [2015] WASC 234 …. 6.13 Phillips v Hutchinson [1946] VLR 270 …. 3.40 Pitt v Coomes (1835) 111 ER 178 …. 2.49 Plevin v Paragon Personal Finance Ltd [2014] UKSC 61 …. 5.172 Poosathurai v Kanappa Chettiar (1919) LR 47 Ind App 1 …. 3.15, 3.19 Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 …. 4.26 Powell v Powell [1900] 1 Ch 243 …. 3.78 — [2002] WASC 105 …. 3.58, 3.59, 3.60 Precision Pools Pty Ltd v Federal Commissioner of Taxation (1992) 37 FCR 554 …. 1.82 President of India v La Pintada Compania Navigacion SA [1985] AC 104 …. 6.14 Printing and Numerical Registering Company v Sampson (1875) LR 19 Eq 462 …. 1.75 Provident Capital Ltd v Papa [2013] NSWCA 36 …. 5.137, 5.144, 5.148 P’s Bill of Costs, Re (1982) 45 ALR 513 …. 1.38 PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 …. 5.39, 5.64, 5.72, 5.82, 5.84 Public Service Employees Credit Union Co-operative Ltd v Campion (1984) 75 FLR 131 …. 2.67

Q Qantas Airways Ltd v Cameron (1996) 66 FCR 246 …. 5.65 QNI Resources Pty Ltd v Sino Iron Pty Ltd (2017) 1 Qd R 167 …. 6.42 Quek v Beggs (1990) 5 BPR 97,405 …. 3.40, 3.63, 3.66, 3.81, 3.87, 3.88

R R v Clarke (1927) 40 CLR 227 …. 1.82 — v Her Majesty’s Attorney-General for England and Wales [2003] UKPC 22 …. 2.41, 3.26 — v Paulson [1921] 1 AC 271 …. 6.7 Radcliff v Price (1902) 18 TLR 466 …. 3.40 Radin v Commonwealth Bank of Australia [1998] FCA 1361 …. 3.108 Rafferty v Madgwicks (2012) 287 ALR 437 …. 6.25 Rapid Roofing Pty Ltd v Natalise Pty Ltd [2007] QCA 94 …. 6.25 Rasch Nominees Pty Ltd v Bartholomaeus [2009] SASC 87 …. 4.74 Razdan v Westpac Banking Corporation [2014] NSWCA 126 …. 4.68, 4.74 Redwood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 …. 1.82 Reese River Silver Mining Co v Smith (1869) LR 4 HL 64 …. 6.8 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 …. 5.50 Rhodes v Bate (1866) 1 Ch App 252 …. 3.76 Riches v Hogben [1986] 1 Qd R 31 …. 1.40 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 …. 1.74 Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 …. 3.78, 3.80, 5.133 Robertson v Robertson [1930] QWN 41 …. 2.67 Robinson v 470 St Kilda Road Pty Ltd [2018] FCAFC 84 …. 6.42, 6.52 Ronald Elwyn Lister Ltd v Dunlop Canada Ltd (1978) 19 OR (2d) 380 …. 2.36

Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 …. 4.74 Royal Bank of Scotland v Etridge (No 2) [1998] 4 All ER 705 …. 3.89, 3.92 — v — (No 2) [2002] 2 AC 773; [2001] 3 WLR 1021 …. 3.52, 3.78, 3.111 Royal Boskalis Westminster NV v Mountain [1999] QB 674 …. 2.19, 2.45

S Salt v Cooper (1880) 16 Ch D 544 …. 1.94 Sargent v ASL Developments Ltd (1974) 131 CLR 634 …. 6.4, 6.5, 6.6, 6.7 Sargood Brothers v Commonwealth (1910) 11 CLR 258; Vol XVI ALR 483 …. 2.30, 2.34 Saxon v Saxon [1976] 4 WWR 300 …. 2.19, 2.45 Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana [1983] 2 AC 694 …. 4.26 Scarf v Jardine (1882) 7 App Cas 345 …. 6.4, 6.6 Scolio Pty Ltd v Cote (1992) WAR 475 …. 2.68 Seidler v Schallhofer [1982] 2 NSWLR 80 …. 1.40 Senanayake v Cheng [1966] AC 63 …. 6.9 Seven Network News Ltd v News Ltd [2007] FCA 1062 …. 6.28 SH Lock (Australia) Ltd v Kennedy (1988) 12 NSWLR 482 …. 6.36 Shahid v Australasian College of Dermatologists [2008] FCAFC 72 …. 6.54 Shakespeare Haney Securities Ltd v Crawford [2009] QCA 85 …. 5.119 Sharman v Kunert (1985) 1 NSWLR 225 …. 5.142 Shaw v Woodcock (1827) 108 ER 652 …. 2.46 Shevill v Builders Licensing Board (1982) 149 CLR 620 …. 6.2 Shivas v Bank of New Zealand [1990] 2 NZLR 327 …. 2.69 Shoppe v Nathan & Co (1892) 1 QB 245 …. 2.58 Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 …. 1.32 Singtel Optus Pty Ltd v Australian Competition and Consumer Commission

(2012) 287 ALR 249 …. 6.75 Sion v NSW Trustee and Guardian [2013] NSWCA 337 …. 1.86 Skeate v Beale (1840) 113 ER 688 …. 2.44, 2.46 Slade’s Case (1602) 4 Rep 92b …. 1.8, 1.9 Smith v Smith [2004] NSWSC 663 …. 4.37 — v William Charlick Ltd (1924) 34 CLR 38 …. 2.2, 2.10, 2.17 Smolonogov v O’Brien (1982) 44 ALR 347 …. 4.66 South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 …. 1.32 Spectra Pty Ltd v Pindari Pty Ltd [1974] 2 NSWLR 617 …. 1.82 Spira v Commonwealth Bank of Australia (2003) 57 NSWLR 544 …. 2.42, 2.52 Spong v Spong (1914) 18 CLR 544 …. 3.28, 3.35, 3.62, 3.75, 3.78 State Bank of New South Wales v Chia [2000] NSWSC 552 …. 3.101, 3.102, 3.103, 3.104, 3.105, 3.107, 3.108, 3.110 State Bank of New South Wales Ltd v Layoun [2001] ANZ ConvR 487 …. 3.112 Steele v Williams (1853) 155 ER 1502 …. 2.58 Steiner v Magic Carpet Tours Pty Ltd (1984) ATPR 40-490 …. 6.54 Stern v McArthur (1988) 165 CLR 489 …. 1.103, 4.73 Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 …. 5.42 Stickney v Keeble [1915] AC 386 …. 1.94 Stilk v Myrick (1809) 170 ER 1168 …. 1.83, 2.53, 2.55 Stivactas v Michaletos (No 2) (1993) Aust Contract R 90-031 …. 3.8, 3.9, 3.14, 3.28, 3.29, 3.46, 3.72, 3.78 Stranborough v Warner 4 Leon 3 …. 1.8 Swishette Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 45 …. 5.38

Syros Shipping Co SA v Elaghill Trading Co [1981] 3 All ER 189 …. 2.7

T T A Sundell & Sons Pty Ltd v Emm Yannaoulatos (Overseas) Pty Ltd (1955) 56 SR (NSW) 323 …. 2.53, 2.54 T D Keegan Ltd v Palmer [1961] 2 Lloyd’s Rep 449 …. 2.46 Talbot & Olivier v Shann [2005] WASCA 34 …. 3.40, 3.66 Tameeka Group Pty Ltd (No 3) [2016] FCA 733 …. 5.21, 5.25, 5.42 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 …. 1.76, 1.104, 4.3, 4.4, 4.18, 5.21 Taylor v Johnson (1983) 151 CLR 422 …. 1.32 — v Third Szable Holdings Pty Ltd [2001] VCAT 1841 …. 5.117 Teachers Health Investments Pty Ltd v Wynne [1996] ASC 56-356 …. 4.25 Technology Leasing Ltd v Lenmar Pty Ltd [2012] FCA 709 …. 5.67 Tenji v Henneberry & Associates Pty Ltd (2000) 98 FCR 324; [2000] FCA 550 …. 6.21, 6.23, 6.25, 6.27, 6.28 Thorne v Kennedy [2015] FCCA 484 …. 1.115 — v — (2017) 350 ALR 1; [2017] HCA 49 …. 1.108, 1.110, 1.113, 1.114, 1.117, 1.118, 1.119, 2.72, 3.5, 3.6, 3.9, 3.10, 3.11, 3.12, 3.21, 3.25, 3.33, 3.35, 3.42, 3.51, 3.59, 3.62, 3.81, 4.4, 4.7, 4.18, 4.19, 4.20, 4.28, 4.35, 5.78 — v Motor Trade Association [1937] 3 All ER 157 …. 2.69 Thors v Weekes (1989) 92 ALR 131 …. 1.92 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 …. 6.58, 6.60 Todd v Nicol [1957] SASR 72 …. 1.40 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 …. 5.63, 5.65, 5.67, 5.68, 5.70, 5.137, 5.139, 5.142, 5.151 Tooth v Fleming (1859) Legge 1152 …. 1.82 Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR

106 …. 1.81 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277; [2012] FCAFC 190 …. 6.78, 6.82, 6.94, 6.95, 6.96, 6.97 Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 …. 6.78 — v Milreis Pty Ltd (1977) 29 FLR 144 …. 6.30 — v Mobil Oil Australia Ltd (1984) 4 FCR 296 …. 6.64 — v Stihl Chain Saws (Aust) Pty Ltd (1995) ATPR 41-375 …. 6.80 Tranchita v Retravision (WA) Pty Ltd [2001] WASCA 265 …. 3.35, 3.72 Transmarket Trading Pty Ltd v Sydney Futures Exchange Ltd (2010) 188 FCR 1 …. 5.65 Travel Compensation Fund v Tambree (2005) 224 CLR 627 …. 6.43, 6.44, 6.48 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 …. 1.83 Tropical Traders Ltd v Goonan (1964) 111 CLR 41 …. 6.4, 6.5, 6.7 Tufton v Sperni (1952) 2 TLR 516 …. 3.45 Turner v Windever [2005] NSWCA 73 …. 4.13, 4.30 Twenty Ninth Macorp Nominees Pty Ltd v George [2017] VSC 136 …. 3.102 Twyford v Manchester Corporation [1946] Ch 236 …. 2.31

U Unilever Australia Ltd v Goodman Fielder Consumer Foods Pty Ltd [2009] FCA 1305 …. 6.67 Union Bank of Australia Ltd v Whitelaw [1906] VLR 711 …. 3.3 Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573 …. 3.24, 3.27, 3.41, 3.49, 3.65, 3.72, 3.76, 3.81 Unit 11 Pty Ltd v Sharpe Partners Pty Ltd (2006) 150 FCR 405 …. 6.43 United Group Rail Services Ltd v Rail Corporation New South Wales (2009)

74 NSWLR 618 …. 5.50 United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 …. 1.95, 1.97 Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529 …. 6.91 Universe Tankships Inc of Monrovia v International Transport Workers’ Federation [1983] 1 AC 366 …. 2.5, 2.7, 2.30, 2.33, 2.39, 2.40, 2.41, 2.66, 2.67, 2.69, 6.39 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 …. 1.87

V Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 …. 6.9, 6.10, 6.11, 6.37 Vale v Rosychamp Pty Ltd [2008] NSWSC 1373 …. 5.67 Valpy v Manley (1845) 135 ER 673 …. 2.46 Vantage Navigation Corporation v Suhail & Saud Bahwan Building Materials LLC (‘The Alev’) [1989] 1 Lloyd’s Rep 138 …. 2.13, 2.52 Verduci v Golotta [2010] NSWSC 506 …. 3.13, 3.40 Video Ezy International Pty Ltd v Sedema Pty Ltd [2014] NSWLR 143 …. 5.82 Violet Home Loans Pty Ltd v Schmidt [2013] VSCA 56 …. 5.67, 5.82, 5.90 Visnic v Sywak [2009] NSWCA 173 …. 4.6 Vroon BV v Foster’s Brewing Group Ltd [1994] 2 VR 32 …. 1.80

W W v G (1996) 20 FamLR 49 …. 1.40 Waldon v Marshall YB 43 Edward III, Michs No 38 …. 1.5 Walker v Citigroup Gobal Markets Pty Ltd (2005) 226 ALR 114 …. 6.54 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 …. 1.103, 4.73

Warburton v Whiteley (1989) NSW ConvR 55-453 …. 3.96 Ward v Lloyd (1843) 7 Scott NR 499 …. 2.50 Wardley Australia Ltd v McPharlin (1984) 3 BPR 9500 …. 3.49 — v Western Australia (1992) 175 CLR 514 …. 6.29, 6.44, 6.52 Warramunda Village Inc v Pryde (2001) 105 FCR 437 …. 6.62 Warren v Coombes (1979) 142 CLR 531 …. 5.134 Watkins v Combes (1922) 30 CLR 180 …. 3.14, 3.16, 3.56, 3.59, 3.62, 3.78 Watton v Brinth (1400) YB 2 Henry IV, Michs No 9 …. 1.6 Webb v Australian Agricultural Machinery Pty Ltd (1990) 6 WAR 305 …. 4.27 Werrin v Commonwealth (1937) 59 CLR 150 …. 2.61 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 …. 5.126, 5.131, 5.136, 5.138, 5.160 — v Public Trustee [1942] SASR 109 …. 3.40, 3.63 Western Australia v Wardley Australia Ltd (1991) 30 FCR 245 …. 6.27 Westmelton (Vic) Pty Ltd v Archer 6 Shulman [1982] VR 305 …. 1.38, 3.40, 3.65, 3.66, 3.67, 3.68, 3.70, 3.74 Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 …. 1.108, 2.66, 6.5 — v Haynes [2017] SASC 23 …. 5.118 Westwill Pty Ltd v Heath (1989) 52 SASR 461 …. 4.23 Whereat v Duff [1972] 2 NSWLR 147 …. 3.65, 3.66, 3.72, 3.79 White Rose Flour Milling Co Pty Ltd v Australian Wheat Board (1944) 18 ALJR 324 …. 2.46, 2.52 Wichals v Johns (1599) Croke, Eliz 74 …. 1.10 Wik Peoples v Queensland (1996) 141 ALR 129 …. 2.42 Wilkinson v ASB Bank Ltd [1998] 1 NZLR 674 …. 3.89 — v Osborne (1915) 21 CLR 89 …. 1.40 William Whiteley Ltd v R (1909) 101 LT 741 …. 2.31, 2.61

Williams v Bayley (1866) LR 1 HL 200 …. 1.90, 2.13, 2.67 — v Johnson [1937] 4 All ER 34 …. 1.38, 3.40 — v Maalouf [2005] VSC 346 …. 4.16 — v Roffey Brothers & Nicholls (Contractors) Ltd [1991] 1 QB 1 …. 2.55 Wilton v Farnsworth (1948) 76 CLR 646 …. 4.7, 4.19 Witham v Commercial Union Capital Ltd [2002] EWCA Civ 1776 …. 2.14 Wolfe v Permanent Custodians Ltd [2013] VSCA 331 …. 5.125 Wong v R (2001) 207 CLR 584 …. 6.82 Wood v Downes (1811) 18 Ves 120 …. 3.40 — v Little (1921) 29 CLR 564 …. 1.40 Woodside Energy Ltd v Electricity Generation Corporation (2014) 306 ALR 25 …. 2.52 Woolworths Ltd v Kelly (1991) 22 NSWLR 189 …. 1.84, 5.160 Wu v Ling [2016] NSWCA 322 …. 4.3, 4.13, 4.17, 4.38, 4.39, 4.40

Y Yerkey v Jones (1939) 63 CLR 649 …. 3.42, 3.85, 3.89, 3.91, 3.95, 3.96, 3.97, 3.98, 3.99, 3.102, 3.103, 3.104, 3.110, 3.111, 3.112 York v Lucas (1985) 158 CLR 661 …. 6.26, 6.40

Z Zamet v Hyman [1961] 1 WLR 1442 …. 3.42 Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445 …. 6.54

Table of Statutes References are to paragraphs

Commonwealth Australian Consumer Law see Competition and Consumer Act 2010 Sch 2 Australian Securities and Investments Commission Act 2001 …. 2.74, 2.93, 4.58, 4.62, 4.68, 5.2, 5.6, 5.7, 5.9, 5.11, 5.13, 5.14, 5.27, 5.84, 6.1, 6.21, 6.29, 6.30, 6.40, 6.41, 6.42, 6.75, 6.77, 6.111 Pt 2 …. 2.73 Pt 2 Div 2 Subdiv BA …. 5.153 s 12BA(1) …. 4.64 s 12BA(2) …. 4.63 s 12BAA …. 4.62 s 12BAB …. 4.62 s 12BF …. 6.21, 6.40 s 12BF(1) …. 5.162, 5.197 s 12BF(2) …. 5.164, 5.198 s 12BF(3) …. 5.198 s 12BG(1) …. 5.169 s 12BG(2)(a) …. 5.189 s 12BG(2)(b) …. 5.192 s 12BG(3) …. 5.185, 5.189, 5.193 s 12BK(1) …. 5.167 s 12BK(2) …. 5.167

s 12BK(2)(a) …. 5.167 s 12BK(2)(b) …. 5.167 s 12BK(2)(c) …. 5.167 s 12BK(2)(d) …. 5.167 s 12BK(2)(e) …. 5.168 s 12BK(2)(f) …. 5.168 s 12BL(1) …. 5.199 s 12BL(2) …. 5.199 s 12CA …. 4.58, 4.59, 4.60, 4.61, 4.63, 4.64, 4.68, 4.72, 6.21, 6.40 s 12CB …. 6.21, 6.40 s 12CB(1) …. 5.7, 5.28 s 12CB(2)(a) …. 5.29 s 12CB(2)(d) …. 2.74 s 12CB(3)(a) …. 5.36 s 12CB(3)(b) …. 5.35 s 12CB(4)(a) …. 5.9 s 12CB(4)(b) …. 5.11 s 12CB(4)(c) …. 5.34 s 12CC …. 5.43 s 12CC(1)(a) …. 5.32, 5.46 s 12CC(1)(b) …. 5.32 s 12CC(1)(c) …. 5.32 s 12CC(1)(d) …. 5.32 s 12CC(1)(e) …. 5.32 s 12CC(1)(f) …. 5.32 s 12CC(1)(g) …. 5.32 s 12CC(1)(h) …. 5.32 s 12CC(1)(i) …. 5.32

s 12CC(1)(j) …. 5.32 s 12CC(1)(l) …. 5.32, 5.49 s 12CC(2)(a) …. 5.32, 5.46 s 12CC(2)(b) …. 5.32 s 12CC(2)(c) …. 5.32 s 12CC(2)(d) …. 5.32 s 12CC(2)(e) …. 5.32 s 12CC(2)(f) …. 5.32 s 12CC(2)(g) …. 5.32 s 12CC(2)(h) …. 5.32 s 12CC(2)(i) …. 5.32 s 12CC(2)(j) …. 5.32 s 12CC(2)(l) …. 5.32, 5.49 s 12DG …. 6.21, 6.40 s 12DJ …. 2.75 s 12DJ(2) …. 2.93, 6.57 s 12GB(1) …. 2.93, 6.57 s 12GB(3) …. 2.93, 6.57 s 12GBA(2) …. 6.77 s 12GBA(3) …. 2.93, 6.56 s 12GD …. 6.21, 6.56 s 12GD(5) …. 6.63 s 12GD(6) …. 6.63 s 12GF …. 6.21, 6.30, 6.41, 6.42 s 12GF(2) …. 6.111 s 12GH …. 5.84 s 12GLA …. 6.56 s 12GLB …. 6.56

s 12GM …. 6.21, 6.29 s 12GM(1) …. 6.27, 6.28 s 12GM(5) …. 6.111 s 12GM(7) …. 6.21 s 12GM(7)(a) …. 6.21 s 12GM(7)(b) …. 6.30 s 12GM(7)(c) …. 6.30 s 12GM(7)(d) …. 6.30 s 12GM(7)(e) …. 6.30 s 12GM(7)(f) …. 6.30 s 12GM(7)(g) …. 6.30 s 12GNB …. 6.56 s 12GND …. 6.56 Carriage of Goods by Sea Act 1991 s 7(1) …. 5.199 Competition and Consumer Act 2010 Pt VIB …. 6.54 s 4(2)(a) …. 4.63, 5.22 s 4(2)(b) …. 5.22 s 4(2)(c) …. 5.22 s 131A …. 4.62 s 137C …. 6.54 s 139B …. 5.84 Sch 2 …. 2.73, 2.74, 2.93, 4.1, 4.58, 4.60, 4.62, 4.64, 4.68, 4.74, 5.2, 5.4, 5.5, 5.7, 5.9, 5.11, 5.13, 5.14, 5.27, 5.55, 5.56, 5.84, 5.105, 5.172, 5.185, 6.1, 6.21, 6.25, 6.26, 6.29, 6.30, 6.40, 6.41, 6.42, 6.54, 6.63, 6.75, 6.77, 6.111 Pt 2-1 …. 6.54

Pt 2-2 …. 6.54 Pt 2-3 …. 5.153 Pt 3-1 …. 6.54 Pt 5-5 …. 4.62, 5.7 s 2 …. 4.64, 6.26, 6.40 s 13 …. 6.28, 6.53 s 16 …. 6.21 s 20 …. 4.58, 4.59, 4.60, 4.61, 4.62, 4.63, 4.64, 4.68, 4.69, 4.74, 5.5, 6.21, 6.40, 6.54 s 21 …. 5.5, 5.26, 6.54 s 21(1) …. 5.7, 5.28 s 21(2)(a) …. 5.29 s 21(3)(a) …. 5.36 s 21(3)(b) …. 5.35 s 21(4)(a) …. 5.9 s 21(4)(b) …. 5.11 s 21(4)(c) …. 5.34 s 22 …. 5.5, 5.43, 5.73 s 22(1)(a) …. 5.32, 5.46 s 22(1)(b) …. 5.32 s 22(1)(c) …. 5.32 s 22(1)(d) …. 5.32 s 22(1)(e) …. 5.32 s 22(1)(f) …. 5.32 s 22(1)(g) …. 5.32 s 22(1)(h) …. 5.32 s 22(1)(i) …. 5.32 s 22(1)(j)(i) …. 5.32

s 22(1)(l) …. 5.32, 5.49 s 22(2) …. 5.105 s 22(2)(a) …. 5.32, 5.46 s 22(2)(b) …. 5.32 s 22(2)(c) …. 5.32 s 22(2)(d) …. 2.74, 5.32 s 22(2)(e) …. 5.32 s 22(2)(f) …. 5.32 s 22(2)(g) …. 5.32 s 22(2)(h) …. 5.32 s 22(2)(i) …. 5.32 s 22(2)(j)(i) …. 5.32 s 22(2)(l) …. 5.32, 5.49 s 22(3)(d) …. 2.74 s 23 …. 6.21, 6.40 s 23(1) …. 5.162 s 23(2) …. 5.164 s 23(3) …. 5.165 s 23(4) …. 5.166 s 23(5) …. 5.166 s 24(1) …. 5.169 s 24(2)(a) …. 5.189 s 24(2)(b) …. 5.192 s 24(3) …. 5.185, 5.189 s 25 …. 5.193 s 26(1) …. 5.197 s 26(1)(a) …. 5.199 s 26(1)(b) …. 5.199

s 26(1)(c) …. 5.199 s 26(2) …. 5.198 s 27(1) …. 5.167 s 27(2) …. 5.167 s 27(2)(a) …. 5.167 s 27(2)(b) …. 5.167 s 27(2)(c) …. 5.167 s 27(2)(d) …. 5.167 s 27(2)(e) …. 5.168 s 27(2)(f) …. 5.168 s 28(3) …. 5.199 s 28(4) …. 5.199 s 50 …. 2.75, 2.77, 2.83, 6.21, 6.40 s 50(1) …. 2.74 s 80 …. 6.54 s 87F(1) …. 6.111 s 168 …. 2.93, 6.57 s 168(2) …. 2.93, 6.57 s 224 …. 6.78 s 224(2) …. 6.77 s 224(3) …. 2.93, 6.56 s 232 …. 6.21, 6.56 s 232(4) …. 6.63 s 232(6) …. 6.63 s 232(7) …. 6.63 s 236 …. 6.21, 6.30, 6.41, 6.42 s 236(2) …. 6.111 s 237 …. 6.21, 6.29, 6.30, 6.42

s 237(1) …. 6.27 s 237(2) …. 6.28, 6.111 s 238 …. 6.30 s 239 …. 6.56 s 243 …. 6.21, 6.30, 6.42 s 243(a) …. 6.21 s 243(b) …. 6.30 s 243(c) …. 6.30 s 243(d) …. 6.30 s 243(e) …. 6.30 s 243(f) …. 6.30 s 243(g) …. 6.30 s 243(h) …. 6.30 s 246 …. 6.56 s 247 …. 6.56 s 250 …. 6.56 s 278 …. 6.26, 6.40 s 278(2) …. 4.62 Competition and Consumer Legislation Amendment Act 2011 …. 5.5 Sch 2, s 4 …. 5.11 Constitution Ch III …. 6.65 Consumer Credit (Queensland) Act 1994 …. 5.106 Federal Court of Australia Act 1976 …. 6.60 s 21 …. 6.56 Migration Act 1958 …. 6.58 National Consumer Credit Protection Act 2009

s 12 …. 5.112 Sch 1 …. 5.3, 5.60, 5.106, 5.117, 5.118, 5.121, 5.122, 5.129, 5.131, 5.132, 5.136, 5.137, 5.140, 5.141, 5.143, 5.144, 5.146, 6.1, 6.38, 6.113 s 3(1) …. 5.109 s 3(2) …. 5.110 s 4 …. 5.111 s 5(1) …. 5.112 s 5(2)(a) …. 5.112 s 5(2)(b) …. 5.112 s 5(3) …. 5.112 s 5(4) …. 5.112 s 6 …. 5.114 s 7 …. 5.113 s 8 …. 5.113 s 9 …. 5.113 s 10 …. 5.113 s 11 …. 5.113 s 12 …. 5.113 s 13(1) …. 5.115 s 13(2) …. 5.115 s 13(3) …. 5.115 s 13(5) …. 5.115 s 50 …. 5.144 s 70 …. 5.125 s 76 …. 5.124, 5.132, 6.38 s 76(1) …. 5.140 s 76(2)(b) …. 5.143

s 76(2)(c) …. 5.143 s 76(2)(d) …. 5.143 s 76(2)(e) …. 5.143 s 76(2)(g) …. 5.143 s 76(2)(h) …. 5.143 s 76(2)(i) …. 5.143 s 76(2)(j) …. 5.143 s 76(2)(k) …. 5.144 s 76(2)(l) …. 5.144 s 76(2)(m) …. 5.144 s 76(2)(n) …. 5.144 s 76(2)(o) …. 5.143 s 76(2)(p) …. 5.143 s 76(4) …. 5.146 s 76(5) …. 5.146 s 76(6) …. 5.132 s 77 …. 5.125, 6.38 s 78 …. 5.107, 5.108, 5.120 s 78(1) …. 5.123, 5.132 s 78(1)(a) …. 5.120 s 78(1)(b) …. 5.120 s 78(1)(c) …. 5.120 s 78(1)(d) …. 5.120 s 78(2) …. 5.121, 5.122 s 78(3) …. 5.122 s 80 …. 6.113 s 80(1) …. 5.128 s 80(2) …. 5.108

s 204 …. 5.136 National Credit Code see National Consumer Credit Protection Act 2009 Sch 1 Trade Practices Act 1974 …. 4.69, 4.74, 5.4, 5.5, 5.6, 5.105, 6.25, 6.32, 6.44, 6.49, 6.76, 6.78, 6.96, 6.99 Pt IV …. 6.78 s 51AA …. 4.58, 4.60, 4.68, 4.69, 4.71, 4.73, 4.74, 5.4, 5.160 s 51AB …. 5.4, 5.5, 5.9, 5.160 s 51AC …. 5.4, 5.5, 5.9, 5.24, 5.43, 5.44, 5.160 s 51AC(3) …. 5.43 s 51AC(4) …. 5.43 s 52 …. 6.86 s 52A …. 5.4 s 53(e) …. 6.86 s 53(g) …. 6.86 s 53A …. 2.77 s 53C …. 6.86 s 60 …. 2.77, 2.78, 2.86, 2.89, 2.90 s 76 …. 6.78 s 76E …. 6.78 s 82 …. 6.32, 6.42, 6.47, 6.49 s 87 …. 6.24, 6.28, 6.32, 6.33, 6.42 s 87B …. 5.25, 6.89, 6.96, 6.99 Trade Practices Amendment (Fair Trading) Act 1998 …. 5.4 Trade Practices Legislation Amendment Act 1992 …. 5.4 s 8 …. 5.4 Trade Practices Revision Act 1986 …. 5.4 Treasury Legislation Amendment (Small Business and Unfair Contract

Terms) Act 2015 …. 5.158 Uniform Consumer Credit Code …. 5.106

Australian Capital Territory Leases (Commercial and Retail) Act 2001 s 22(1) …. 5.8 s 22(2)(a) …. 5.32 s 22(2)(b) …. 5.32 s 22(2)(c) …. 5.32 s 22(2)(d) …. 5.32 s 22(2)(e) …. 5.32 s 22(2)(f) …. 5.32 s 22(2)(g) …. 5.32 s 22(2)(i) …. 5.32 s 22(4) …. 5.29 Supreme Court Act 1933 ss 25–32 …. 1.93

New South Wales Contracts Review Act 1980 …. 2.73, 2.74, 5.125, 5.129, 5.130, 5.131, 5.133, 5.136, 5.137, 5.140, 5.143, 5.146, 5.157, 5.160, 6.1, 6.35, 6.112 s 4 …. 5.137, 6.35 s 4(1) …. 5.136 s 7 …. 5.125, 5.137 s 7(1) …. 5.125, 6.35 s 7(2) …. 5.125 s 9 …. 5.137 s 9(1) …. 5.140

s 9(2)(a) …. 5.143 s 9(2)(b) …. 5.143 s 9(2)(c) …. 5.143 s 9(2)(d) …. 5.143 s 9(2)(f) …. 5.143 s 9(2)(g) …. 5.143 s 9(2)(h) …. 5.143 s 9(2)(i) …. 5.143 s 9(2)(j) …. 2.74, 5.143 s 9(2)(k) …. 5.143 s 9(2)(l) …. 5.143 s 9(4) …. 5.146 s 9(5) …. 5.146 s 16 …. 5.128, 6.112 Retail Leases Act 1994 s 62B(1) …. 5.8 s 62B(2) …. 5.8 s 62B(3)(a) …. 5.32 s 62B(3)(b) …. 5.32 s 62B(3)(c) …. 5.32 s 62B(3)(d) …. 5.32 s 62B(3)(e) …. 5.32 s 62B(3)(f) …. 5.32 s 62B(3)(g) …. 5.32 s 62B(3)(h) …. 5.32 s 62B(3)(i) …. 5.32 s 62B(3)(j) …. 5.32 s 62B(3)(k) …. 5.32

s 62B(4)(a) …. 5.32 s 62B(4)(b) …. 5.32 s 62B(4)(c) …. 5.32 s 62B(4)(d) …. 5.32 s 62B(4)(e) …. 5.32 s 62B(4)(f) …. 5.32 s 62B(4)(g) …. 5.32 s 62B(4)(h) …. 5.32 s 62B(4)(i) …. 5.32 s 62B(4)(j) …. 5.32 s 62B(4)(k) …. 5.32 s 62B(5) …. 5.29 s 62B(6) …. 5.30 s 62B(7)(a) …. 5.36 s 62B(7)(b) …. 5.35 s 72AA …. 6.40 State Transport (Co-ordination) Act 1931 s 22 …. 2.62

Northern Territory Business Tenancies (Fair Dealings) Act s 79(1) …. 5.8 s 79(2)(a) …. 5.32 s 79(2)(b) …. 5.32 s 79(2)(c) …. 5.32 s 79(2)(d) …. 5.32 s 79(2)(e) …. 5.32 s 79(2)(f) …. 5.32

s 79(2)(g) …. 5.32 s 79(2)(h) …. 5.32 s 79(2)(i) …. 5.32 s 79(2)(k) …. 5.32 s 80(1) …. 5.8 s 80(2)(a) …. 5.32 s 80(2)(b) …. 5.32 s 80(2)(c) …. 5.32 s 80(2)(d) …. 5.32 s 80(2)(e) …. 5.32 s 80(2)(f) …. 5.32 s 80(2)(g) …. 5.32 s 80(2)(h) …. 5.32 s 80(2)(i) …. 5.32 s 80(2)(k) …. 5.32 s 81(a) …. 5.29 s 81(b) …. 5.30 s 102(a)(i) …. 6.40 Residential Tenancies Act s 22 …. 5.154 Supreme Court Act ss 61–70 …. 1.93

Queensland Retail Shop Leases Act 1994 s 46A(1) …. 5.8 s 46A(2) …. 5.8 s 46A(3)(a) …. 5.29 s 46A(3)(b) …. 5.29 s 46A(3)(c) …. 5.30

s 46A(4) …. 5.35 s 46B(1)(a) …. 5.32 s 46B(1)(b) …. 5.32 s 46B(1)(c) …. 5.32 s 46B(1)(d) …. 5.32 s 46B(1)(e) …. 5.32 s 46B(1)(f) …. 5.32 s 46B(1)(g) …. 5.32 s 46B(1)(h) …. 5.32 s 46B(1)(i) …. 5.32 s 46B(1)(j) …. 5.32 s 46B(1)(k) …. 5.32 s 46B(2) …. 5.35 s 46B(4)(a) …. 5.36 s 46B(4)(b) …. 5.35 Schedule to the Health Practitioner Regulation National Law Act 2009 s 39 …. 5.60 Supreme Court Act 1995 ss 242–249 …. 1.93

South Australia Residential Tenancies Act 1995 …. 5.154 Supreme Court Act 1935 ss 20–28 …. 1.93

Tasmania Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 r 3 …. 5.8 Supreme Court Civil Procedure Act 1932

ss 10–11 …. 1.93

Victoria Fair Trading Act 1999 Pt 2B …. 5.155, 5.159 s 32W …. 5.155, 5.188 Residential Tenancies Act 1997 s 28 …. 5.154 Retail Leases Act 2003 s 77(1) …. 5.8, 5.30 s 77(2)(a) …. 5.32 s 77(2)(b) …. 5.32 s 77(2)(c) …. 5.32 s 77(2)(d) …. 5.32 s 77(2)(e) …. 5.32 s 77(2)(f) …. 5.32 s 77(2)(g) …. 5.32 s 77(2)(h) …. 5.32 s 77(2)(i) …. 5.32 s 77(2)(j) … 5.32 s 77(2)(l) …. 5.33 s 77(2)(m) …. 5.33 s 77(2)(n) …. 5.33 s 77(3)(a) …. 5.36 s 77(3)(b) …. 5.35 s 78(1) …. 5.8, 5.30 s 78(2)(a) …. 5.32 s 78(2)(b) …. 5.32

s 78(2)(c) …. 5.32 s 78(2)(d) …. 5.32 s 78(2)(e) …. 5.32 s 78(2)(f) …. 5.32 s 78(2)(g) …. 5.32 s 78(2)(h) …. 5.32 s 78(2)(i) …. 5.32 s 78(2)(j) …. 5.32 s 78(2)(l) …. 5.33 s 78(2)(m) …. 5.33 s 78(2)(n) …. 5.33 s 78(3)(a) …. 5.36 s 78(3)(b) …. 5.35 s 79(a) …. 5.29 s 79(c) …. 5.30 s 80 …. 6.40 Supreme Court Act 1986 s 29 …. 1.93

Western Australia Commercial Tenancy (Retail Shops) Agreements Act 1985 s 3 …. 4.11 s 9 …. 4.11 s 15C …. 5.8 s 15C(2)(a) …. 5.32 s 15C(2)(b) …. 5.32 s 15C(2)(c) …. 5.32 s 15C(2)(d) …. 5.32

s 15C(2)(e) …. 5.32 s 15C(2)(f) …. 5.32 s 15C(2)(g) …. 5.32 s 15C(2)(h) …. 5.32 s 15C(2)(i) …. 5.32 s 15C(2)(j) …. 5.32 s 15C(2)(l) …. 5.33 s 15C(2)(m) …. 5.33 s 15C(2)(n) …. 5.33 s 15C(3)(a) …. 5.36 s 15C(3)(b) …. 5.35 s 15D …. 5.8 s 15D(2)(a) …. 5.32 s 15D(2)(b) …. 5.32 s 15D(2)(c) …. 5.32 s 15D(2)(d) …. 5.32 s 15D(2)(e) …. 5.32 s 15D(2)(f) …. 5.32 s 15D(2)(g) …. 5.32 s 15D(2)(h) …. 5.32 s 15D(2)(i) …. 5.32 s 15D(2)(j) …. 5.32 s 15D(2)(l) …. 5.33 s 15D(2)(m) …. 5.33 s 15D(2)(n) …. 5.32 s 15D(3)(a) …. 5.36 s 15D(3)(b) …. 5.35 s 15E(a) …. 5.29

s 15E(b) …. 5.30 s 15E(c) …. 5.30 s 15F …. 6.40 Supreme Court Act 1935 ss 24–25 …. 1.93

International Hague Rules …. 5.199

New Zealand Judicature Act 1908 s 16 …. 1.93 United Kingdom Consumer Rights Act 2015 …. 5.155 Judicature Act 1873 …. 1.93, 1.94, 1.95, 1.97, 1.98, 1.99 Unfair Terms in Consumer Contracts Regulations 1999 …. 5.155

Contents Preface Table of Cases Table of Statutes Chapter 1 Conscience in Contract Law Introduction Origins of contract law — a brief history Will theory Freedom as non-interference The abstract individual The public/private dichotomy Strengths and weaknesses of will theory Freedom as non-interference The abstract individual The public/private dichotomy Reformulations of will theory Charles Fried Rick Bigwood Dori Kimel Freedom as non-domination Will theory in modern contract law Anatomy of a legally binding contract Agreement

Consideration Intention to create legal relations Certainty of terms Vitiating factors Equity in modern contract law The relationship between common law and equity Defining conscience in modern contract law Distinguishing between duress, undue influence and unconscionable conduct Chapter 2 Duress Elements of duress Compulsion of the will Objective test Rejection of overborne will theory in Australia Applied pressure Express or implicit threats Threats by contracting parties and third parties Threats or acts against third parties Compulsion Indicia of compulsion Protest No other practical choice Independent advice Whether took steps to avoid Illegitimate pressure Unlawful acts Physical violence or imprisonment

Unlawful actual or threatened seizure, detention or interference with goods Improper use of legal process Non-performance of contractual obligations Demands by public officials and money paid under an invalid law Lawful acts The law pre-Karam The law post-Karam Consumer protection legislation Harassment Coercion Defences Remedies Remedy and penalty under ACL and ASIC Act Chapter 3 Undue Influence Defining undue influence Actual undue influence Not a free act Influence was ‘undue’ Matters the courts will have regard to in determining undue influence Propriety or improvidence of the transaction Circumstances surrounding the transaction Characteristics of the weaker party and nature of relationship between the parties Examples of actual undue influence Presumed undue influence Relationships of influence

Presumed relationships of influence Actual relationships of influence Substantial benefit Academic criticism Australian law unclear Rebutting the presumption Examples of presumed undue influence Third parties Volunteer Notice Agency Principle in Yerkey v Jones Chapter 4 Unconscionable Conduct Historical origin and rationale Twin elements of unconscionable conduct Special disability Inequality of bargaining power Inequality of information Inability to read or comprehend English Age and physical frailty Special disability may be ‘constitutional’ or ‘situational’ Unconscientiously take advantage Knowledge of weaker party’s special disability Exploitation Rebutting the presumption Remedies Examples of unconscionable conduct

Consumer protection legislation Legislative boundaries ACL does not apply to financial products or services Requirement that person ‘engage in conduct’ Requirement that conduct be ‘in trade or commerce’ Meaning of ‘unconscionable’ in ss 20 and 12CA Chapter 5 Legislative Proscriptions on Unconscionable Conduct, Unjust Contracts and Unfair Terms Statutory unconscionable conduct Legislative history of the prohibition on unconscionable conduct Prohibition on unconscionable conduct Scope of prohibition Limits of the prohibition Meaning of ‘unconscionable’ — the legislation Applicable legal principles in assessing impugned conduct Defining the evaluative statutory standard Applying the evaluative statutory standard Examples of unconscionable conduct Unconscionable interest and other charges — National Credit Code (NCC) Unconscionable interest and other charges Unjust contracts Scope of the legislation Types of transaction Focus on contracts not investments NCC (s 76) does not apply in certain circumstances The court’s three-staged task Identifying ‘unjust’ contracts

Matters to be considered by the court Examples of unjust contracts Unfair terms Legislative history of the UCTL Rationale of the UCTL Unfair terms void Meaning of ‘consumer contract’ Meaning of ‘small business contract’ Meaning of ‘standard form contract’ Meaning of ‘unfair’ Exclusion Examples of unfair terms Chapter 6 Remedies and Defences Remedies Rescission of the contract Rescission: an election Rescission at common law and in equity Rescission in consumer protection legislation Damages Damages under ACL and ASIC Act Enforcement of consumer protection legislation by regulators Declarations of wrongdoing Injunctions Compliance programs Adverse publicity orders Civil monetary penalties Defences

Affirmation Equitable defences Time limits under consumer protection legislation Index

[page 1]

Chapter 1 Conscience in Contract Law INTRODUCTION 1.1 The law described in this text is best understood when explained by reference to the legal principles underpining the formation of modern, legally enforcable contracts. Unconscionable conduct provides parties with an ‘excuse’ not to perform a contract that they would otherwise be compelled by law to perform or pay damages for nonperformance.1 1.2 Aristotle famously argued that it is impossible to understand the nature of an acorn without some understanding of how that acorn will one day grow into an oak.2 The reverse is also true. It is impossible to truly understand the nature of an oak without some understanding of how it first began its existence as an acorn. The same observation can be made about contract law.3 Contract law is not static; it is growing and changing all the time.4 What we know as modern contract law is to a large extent a product of the needs and ideas of the time.5 In particular, the dominant theory of contract law, will theory, emerged out of the [page 2] liberal ideas and increasing commercialisation that characterised the

19th century.6

ORIGINS OF CONTRACT LAW — A BRIEF HISTORY 1.3 Modern contract law is grounded in the common law and the common law has its roots in England. Various accounts of the early history of England, known as the ‘Anglo-Saxon Era’, describe the law as being almost completely unwritten and derived from local customs.7 The population of England was divided into, and ruled from, numerous small shires and kingdoms. Their inhabitants had over time developed their own customs that came to be carefully observed by countless ensuing generations.8 It was not until the 11th century, in the wake of the Norman Conquest, that these customs came, to some extent, to be recorded and unified by a central government. After seizing power in 1066, William I established a strong central government which laid the foundation for the development of the common law. The law, after the Norman Conquest, was administered by only one set of courts. This resulted in the uniform application of the law since the same courts would usually make similar decisions about cases that had similar facts.9 1.4 It is from these historical events, and the early beginnings of common law, that contract law developed. Early contract law, however, unlike modern contract law, was not based on consent or agreement. At that time a contracting party could enforce a contract indirectly in either one of two ways. A contracting party could either complete certain written formalities as required by the law or, using tort law, show that a breach of the contract resulted in damage or loss to the plaintiff.10 A contracting party seeking to enforce a contract by invoking the common law had only four available remedies from which to choose. These remedies were [page 3]

those of ‘debt’, ‘detinue’, ‘account’ and ‘covenant’.11 The usefulness of these remedies in enforcing contracts was limited. A claim for debt could only be successful where the debt was for a certain and fixed sum of money which could be proved. A claim for detinue could only assist a party in recovering the cost of the specific chattel that was being withheld. Consequently, detinue could offer no assistance at all if the party suffered any other loss as a result of a breach of the contract such as, for example, where the chattel was returned in an impaired condition. A party could only employ a claim for covenant where the contract was sealed in writing. A claim for account was equally unhelpful. A claim for account was cumbersome and limited in scope.12 1.5 A new form of claim, however, that was capable of promoting and sustaining the growth of contract law emerged in the 14th century and became known as assumpsit. Assumpsit was a claim that grew out of trespass on the case. Where, under a contract, a party had incurred loss as a result of the actions of the other contracting party, and that contract was not contained in a deed, the wronged party would instead sue for trespass. For example, in the case of Waldon v Marshall,13 which was decided in 1369, a claim was successfully brought by the plaintiff for the negligent treatment of his horse by the defendant resulting in the death of the horse. Although the court expressly recognised that the arrangement between the plaintiff and defendant was one of contract, the claim was decided by the court as a matter of trespass because the contract was not contained in a deed. 1.6 The claim of trespass was essentially one of negligence, which was known as misfeasance.14 However, in the pleadings in contract cases the plaintiff would typically allege that the defendant undertook to do certain work (described as assumpsit). Assumpsit was initially only employed by litigants and the courts in cases where a contracting party’s actions caused harm or damage. But over time a variety of different types of assumpsit arose to deal with the many different kinds of circumstances in which one or more parties may breach a contract.15 In particular, assumpsit for non-feasance arose to provide parties with a remedy where the other contracting party had caused damage not because of their

[page 4] negligent actions, or misfeasance, but rather through their failure to act at all or non-feasance. Assumpsit for non-feasance was often used in cases involving contracts for the construction of buildings.16 Assumpsit for nonfeasance was, however, not always successful in cases where there was no misfeasance at all or, in other words, in cases of pure nonfeasance.17 For example, an action brought for the non-performance of a builder of his promise to build a roof would be unsuccessful in itself unless as a result of the failure to build the roof, rain had damaged the interior of the house.18 As a result of the shortcomings of assumpsit for non-feasance, an action arose which combined assumpsit with an action for deceit. An illustration of this type of action can be found in Doige’s Case.19 In that case the plaintiff had bargained with the defendant to purchase a property for which he paid the sum of 100 pounds. The defendant, after having received the plaintiff’s money, transferred the property to another. The court held that the defendant, by ‘disabling’ himself from performing the contract, had ‘deceived’ the plaintiff. 1.7 Assumpsit coupled with deceit gave rise to yet another type of assumpsit: indebitatus assumpsit.20 Where a debtor is indebted to a creditor, the creditor had an action of debt. Where, however, the debtor undertook to discharge the debt by a certain date and did not fulfil that undertaking then the debtor had ‘deceived’ the creditor. In these circumstances the creditor had an action not in deceit but in indebitatus assumpsit. 1.8 Finally in the late 16th and early 17th century the courts concluded that agreement itself was the basis for a legal obligation.21 The matter was resolved in the momentous decision reached in Slade’s Case.22 In this case the defendant, Humphrey Morley, had agreed to purchase from the plaintiff, John Slade, crops of both wheat and corn for a sum of money to be fixed at a future date. The defendant later refused to pay the plaintiff any money at all for these crops. The court held that ‘(e) very contract executory imports in itself an assumpsit’.23 In other words, an exchange of promises was in itself sufficient

consideration to support a legally enforceable contract. Consequently, a plaintiff did not have to [page 5] prove that the defendant’s breach of contract resulted in loss or damage before the plaintiff could obtain a remedy at all from the courts. 1.9 It is a matter of some debate as to whether Slade’s Case marked the beginning of modern contract law or whether modern contract law emerged much later in the 19th century. Scholars such as Grant Gilmore, P S Atiyah and Morton Horowitz argue that ‘(m)odern contract law is fundamentally a creature of the nineteenth century’24 and hence of the liberal theory which pervaded that age. Scholars, however, such as A W B Simpson and C H S Fifoot disagree. These scholars argue that the formation of modern contract law, or will theory, can be traced back as far as the 16th century. Implicit in this more conservative position is the argument that the evolution of modern contract law is as natural and as unshakeable as rock formations in a mountain range. 1.10 Simpson and Fifoot argue that although the majority of contract law texts only began to emerge in the 19th century they used the language and principles of contract law as settled by Elizabethan courts. Fifoot asserts that ‘whatever its value in the modern law, the doctrine of consideration still rests upon the foundations laid by Elizabethan lawyers’.25 Fifoot refers to a number of Elizabethan cases to illustrate his point. These cases include that of Wichals v Johns in which the court held that: [If] there is a mutual promise, the one to the other, so that, if the plaintiff doth not [discharge his promise], the defendant may have his action against him; and a promise against a promise is good consideration.26

Simpson, like Fifoot, points to a number of cases decided in the 16th century supporting a modern concept of consideration or bargain. Simpson argues that these cases are not ‘simply a jungle of unrelated

instances’ but are evidence of a settled ‘modern’ law of contract. Simpson concedes that there was a scarcity of texts published in the 16th century that outlined the modern principles of contract law whereas in the 19th century such texts abounded. Simpson explains that so few texts were written at the time of the 16th century in England simply because no ‘literary tradition’ yet existed of describing the law in terms of general principles that could be applied to many different kinds of contracts. This tradition when it did emerge was inspired by, and drew heavily [page 6] from, the literary tradition of civil countries that included such eminent writers as Jean Domat, Samuel von Pufendorf and Hugo Grotious. 1.11 Gilmore, Atiyah and Horowitz fervently disagree with the arguments and conclusions drawn by Simpson and Fifoot. These jurists argue that modern contract law was not settled in the 16th century but rather only came to coalesce as late as the 19th century. They contend that modern contract law was borne from the political, social and economic climate of the latter part of the 18th century and into the 19th century. This modern law of contracts, they argue, was a marked departure from the law that had previously governed contractual disputes. Horowitz asserts that for the greater part of the 18th century ‘law was conceived of as protective, regulative, paternalistic, and above all, a paramount expression of the moral sense of the community’.27 The courts of the 18th century, unlike modern-day courts, were concerned with the ‘fairness of an exchange’.28 In other words, the courts were anxious to ensure that the underlying bargain struck was a good bargain for all of the contracting parties. The courts would refuse the specific performance of any contract in which they determined the consideration to be inadequate.29 This conception of contract law was made possible by the dominance of legal concepts of property. These courts adopted a ‘title theory of contractual exchange’ in which the purpose of a contract was to transfer title to the specific thing

contracted for. Horowitz notes that this theory was suited to an 18th century society in which the marketplace was small and goods were not generally thought to be fungible. Consequently, courts could rather easily gauge whether a contract contained a fair bargain because such contracts often only involved the sale of a specific thing. Atiyah also notes that during this age many transactions were customary. Most men assumed the craft or status of their fathers. For example, a blacksmith became a blacksmith because his father had been a blacksmith. It followed that the substance of such transactions was also informed by custom. To continue the example, the kind of work performed by a blacksmith and the kind of money to be paid for this work were all determined by custom. The blacksmith did the kind of work that all the other blacksmiths did and was paid the same amount that all the other blacksmiths were paid. This all changed with the emergence of the modern law of contract. 1.12 Modern contract law began to emerge in the period from the late 18th century to the middle of the 19th century. It was during this time that [page 7] the ideas of liberalism began to gain greater currency in England. Liberalism is powered by the idea that society is composed of atomised, self-interested individuals operating in a free (laissez-faire) market economy. The growing popularity of liberalism coincided with, and to some extent was fed by, the momentous changes being wrought upon the economy and society of England by the Industrial Revolution. Industry soared as it, and much of the population, moved from cottages in rural villages to factories in towns and cities. Atiyah argues that increased commercial activity created a need for fixed and certain rules of contract law. Consequently, jurists began to pen texts in which they attempted to enunciate general principles of law that could be applied to all kinds of different contracts.30 These principles, which collectively came to be known as ‘consensus’ or ‘will’ theory, were heavily influenced by liberalism.31

WILL THEORY 1.13 The central concept underpinning both liberalism32 and will theory is a conception of freedom as non-interference; all other concepts common to liberalism and will theory are ultimately derived from this conception of freedom. From the conception of freedom as noninterference are drawn the concept of the abstract individual and the split between the public and private spheres of human activity. These concepts are outlined below. 1.14 Briefly, by way of an overview, proponents of classical will theory assert that the touchstone of contract law is consent. These theorists assert that the courts enforce a contract for the reason that the parties to the contract have freely consented to its creation and to its enforcement. Under will theory a contract, once created, becomes in itself an entity or creature, separate from that of the parties. A contract is much like a form of self-imposed ‘legislation’ between the parties. The parties through mutual consent create a contract that then governs their conduct [page 8] in relation to a particular matter. A contract ceases to govern the conduct of the parties when the parties, again through mutual consent, create a fresh contract to terminate the earlier contract between them. 1.15 While will theory, and liberalism, has attracted significant criticism it remains, to this day, the main lens through which we view contracts. The central concepts of both liberalism and will theory continue to echo in the reported cases.

Freedom as non-interference 1.16 Most liberal thinkers define freedom as being the absence of interference or restraint.33 This classical liberal conception of freedom is

known as ‘negative freedom’34 or ‘freedom as non-interference’.35 Under this conception of freedom as non-interference, a person is considered to be free to the extent that he or she is not deliberately interfered with or restrained by others.36 Conversely, a person ceases to be free when others interfere with or prevent him or her from attaining a goal. Liberals, however, are insistent that mere incapacity to achieve some goal does not alone amount to a deprivation of strict freedom as non-interference.37 Liberals argue that, for example, lameness does not restrict a person’s freedom as non-interference to run but that being deliberately, physically restrained by another does.38 Liberals consider freedom as non-interference to be distinguishable from people’s wants or desires.39 For liberals the process of determining whether a person enjoys freedom as non-interference is a value-free, empirical one of determining whether that person is [page 9] interfered with or hindered in any way.40 It would seem that any kind of government is in itself antithetical to the liberal conception of freedom as non-interference. Liberals, however, believe that without government people live short, brutal lives in a ‘state of nature’. 41 Liberals, therefore, argue that people surrender a portion of their freedom to a government so that the government will protect their greater freedom, namely their lives and their property.42 The legitimate role of government, according to liberals, is merely that of a ‘nightwatchman’ or ‘traffic policeman’.43 Closely associated with this nightwatchman view of government is the doctrine of laissez faire which asserts that government should abstain from interfering in the workings of the market as much as is consistent with protecting people’s freedom.44 1.17 Just as freedom as non-interference is the central concept of liberalism, the central concept of a will theory of contract law is the ‘sanctity of contract’ or ‘freedom of contract’. This concept was developed by the courts from the liberal conception of freedom as non-

interference.45 Indeed freedom of contract is sometimes seen as the ‘flagship liberal doctrine’ or the epitome of freedom as noninterference.46 Like freedom as non-interference, freedom of contract requires that people’s freedom be, as much as possible, unfettered.47 Under this concept people are free to enter into contracts with others, on whatever terms they choose, and to have these contracts enforced by the courts either by a court order for specific performance of the contract, or by damages in lieu of performance.48 Freedom of contract entails that the courts, in enforcing contracts, do not impose upon the contracting parties any obligation or liability other than that to which the parties have already expressly [page 10] agreed or consented to. The role of the courts is simply to play ‘umpire’ between the contracting parties when something goes wrong.49 1.18 The conception of freedom as non-interference, and its counterpart the freedom of contract, makes a number of assumptions about the nature of people that are common to most strains of liberalism.50 Freedom as non-interference assumes that people possess certain characteristics and that people flourish best when left alone. This idea of human nature is referred to by liberals as the ‘abstract individual’.

The abstract individual 1.19 Liberals view people in an atomised way as individuals in abstraction from society and societal relations. Indeed, most liberals consider society itself to be a fiction describing what they see as really just a collection of individuals.51 Further to this, liberals believe that all individuals possess certain fundamental rights, simply by virtue of the fact of being human, and that these rights are not just prior to but also have priority over society.52 1.20

According to liberal thought all individuals are inherently

equal.53 All individuals are equally endowed by nature with the same faculties54 or, more pessimistically, all individuals are equally vulnerable to attack.55 Liberals believe that individuals are all equally selfinterested and rational beings. The abstract individual is seen by liberals as being concerned only with the pursuit of his or her own happiness or prosperity.56 Early liberals, in particular, see individuals as being driven by desire for the accumulation [page 11] of material possessions.57 This pursuit of self-interest is assisted by what most liberals believe to be the individual’s innate ability to reason.58 The dominant view of liberalism is that all individuals possess the ability to reason (the ability to think, weigh and calculate) and that they employ this ability to further their own self-interest.59 It follows that reason is seen by liberals to be an indispensable part of freedom as noninterference.60 Liberals argue that government should not interfere in the activities of individuals because it is individuals themselves, and not government, who know best their own interests and how to pursue them.61 1.21 Similarly, freedom of contract is premised on the same assumptions about human nature. Will theorists assert, as outlined above, that obligations under a contract are voluntarily assumed by the parties to the contract. In other words, it is the will of the parties that forms the basis for contract law. This presupposes that the will of people is itself something that is ‘inherently worthy of respect’.62 It also assumes that people are self-interested and rational in that they know their own interests and how to pursue these interests. Accordingly, the image of contracting parties, under will theory, is one of ‘steely-eyed bargainers’ who have carefully weighed or calculated their own interests under a contract.63 1.22 To maintain the fiction of the abstract individual, and mark out

the boundaries of legitimate government or court interference, human activity is split into two different spheres: the public and the private.

The public/private dichotomy 1.23 Liberals argue that although the individual’s freedom as noninterference must be limited to some extent by government there should be a ‘minimum area’ of freedom as non-interference that is inviolable.64 It is thought by liberals that this minimum area affords the minimum amount of freedom as non-interference necessary for abstract [page 12] individuals to develop their abilities and pursue their own self-interest.65 This minimum area is referred to by liberals as the private sphere and, conversely, the area in which government interference is deemed to be legitimate is referred to as the public sphere.66 1.24 Although liberals haggle over just where the boundaries between the public and private spheres lie,67 the public sphere is generally thought to include law, politics and government. More broadly, the public sphere refers to that which bears no immediate relation to any particular person, or group of people, but rather concerns people generally without distinction.68 For example, the orders of a magistrate are public because they are made according to law and are indifferent to the kinds of people to whom they are applied.69 In contrast, the private sphere is the sphere of family and domestic life. The private sphere is personal and refers to particular people or groups of people. Marriage, for example, is private because it refers to a union between two particular people who are over a certain age. 1.25 Will theory also distinguishes between a private and public sphere.70 Will theory imagines a ‘realm of private agreement’ which is beyond government interference.71 Will theorists assert that the courts are to enforce a contract as agreed between the parties and are not permitted to peer beyond the contract, into the private sphere, to

consider any other conduct or thing except where it can be used as an aid to construe the terms of the contract. The courts are not permitted, for example, to consider the fairness of the bargain struck or what the parties’ actual intentions were. A will theory approach to contract law also gives rise to the ‘presumption’ that parties to a domestic agreement, especially on matters deeply ensconced within the private sphere, do not intend that agreement to be legally enforceable.72 For example, in the case of [page 13] Balfour v Balfour73 a court refused to enforce an agreement in which the husband agreed to pay his wife maintenance. The court held that these types of agreements are simply ‘arrangements’ between spouses and the parties do not intend such arrangements to be legally enforceable.74 More recently, in Ashton v Pratt75 the New South Wales Court of Appeal held that a couple engaged in an extramarital relationship did not intend their arranagement to be legally enforcable. Bathurst CJ observed: Although it may be readily inferred from the context in which the conversations took place that it was intended that Ms Ashton would occupy a position which could be described as Mr Pratt’s mistress, apart from concentrating on Mr Pratt’s needs and wants there is no delineation of the extent of Mr Ashton’s obligations. There is no evidence to suggest that the position of his mistress imposes any particular obligation on a person occupying that position. Reasonable persons would not expect that question to be determined by a court.76 [emphasis added]

1.26 Conversely, will theory presumes that strangers in business or commerce who enter into an agreement do intend to be legally bound.77 1.27 Over the years a great deal of criticism has been levelled at will theory and, in response, many alternative reformulations of will theory have been proposed. These criticisms and reformulations are outlined below.

Strengths and weaknesses of will theory

1.28 The main strength of a will theory of contract law is that, as outlined above, the theory represented the very first real attempt by jurists to organise contract law by reference to overarching principles. Great will theorists like Addison, who first propounded the theory, declared contract law to be ‘a universal law … founded upon … fundamental principles’.78 These general principles replaced the distinctions that had been previously drawn by the courts between different types of contracts [page 14] like mortgages, leases or commercial contracts.79 The theory also replaced those transactions, informed by status and custom, which had been drawn from the medieval age of feudalism. Will theory gave greater coherency and consistency to the law. This coherency was important to those who were engaged in commerce. At the time will theorists such as Addison first began to pen their texts a new age of commerce and industry was dawning. This new age required investment and this was not possible if investors lacked a sense of security around their commercial transactions. Increasingly in this new age contracts were also being used for the sale of fungibles. Courts could not as easily gauge the value of fungibles as it could the title to real property. Will theory provided the courts with a justification for not inquiring into the fairness of a bargain. 1.29 It was not long, however, before jurists became aware of the many weaknesses of will theory.80 Many of the weaknesses of will theory in accounting for contract law are rooted in, or shared with, the weaknesses of liberalism in accounting for a legitimate government. In particular, will theory shares the same weaknesses that undermine the liberal conception of freedom as non-interference: the abstract individual and the divide between the public and private spheres.

Freedom as non-interference 1.30

Freedom as non-interference has been widely criticised as

providing a poor definition of freedom for two main, but related, reasons. First, freedom as non-interference has been criticised for providing a ‘constitutionally poor’ definition of freedom in that it is unable to conceive of or discern any interference that might actually enhance rather than diminish freedom generally.81 The conception of freedom as non-interference does not permit government interference in the lives of people even where it might be to alleviate limitations to freedom such as a handicap, some kind of inability or poverty.82 Indeed, it can be argued that, contrary to the assertions of liberals, the meaning of, or any definition of, freedom cannot be separated from the value of freedom or ability.83 Freedom as non-interference is, as discussed above, justified and prized by liberals on the basis that it allows people to pursue their own self-interest. It follows that it is only by knowing what we are free [page 15] to do that we are able to identify serious restrictions on our freedom.84 Likewise, we only value freedom because it permits us to do something. On the other hand, however, simply being left alone may not be enough to enable us to do it.85 1.31 The second main criticism of freedom as non-interference is that it is ‘sociologically poor’ in that it fails to recognise the ways in which a person’s freedom can be limited without any deliberate interference or restraint at all.86 For example, a powerful despot does not have to actually restrain people in order to interfere with people’s choices or activities. People will naturally alter their choices and activities for fear that a despot might decide one day to restrain or interfere with them.87 As pointed out above, freedom as non-interference also overlooks the way that unintentional acts of others or the unintended effects of social arrangements interfere with or restrict people’s activities.88 Examples of such unintentional interference or restraint include, as listed above, poverty, disability and ignorance.

1.32 Criticisms of freedom as non-interference are equally applicable to the idea of freedom of contract. First, freedom of contract does not take into account the ways in which courts interfere in people’s activities to enforce contracts; it is ‘constitutionally poor’. In practice, parties to a contract cannot, and do not, exhaustively define the scope of their liability. In order to enforce a contract the courts must necessarily interpret the terms of a contract and fill in any gaps.89 The courts, in interpreting a contract, do not inquire after the intentions of the parties to the contract as the parties themselves personally understood them to be. Instead, the courts determine the intentions of the parties by construing the contract objectively.90 The courts will also fill in any gaps in a contract with terms that the parties have not expressly consented to. In this process the courts may imply terms either in fact or in law. Where terms are implied in fact, they are terms that the court has held to be necessary to make a contract workable and are based on the presumed intention of the [page 16] parties.91 Terms that are implied in law are not based on the intention of the parties in any way at all. The courts imply terms in law in certain kinds of contracts.92 Common examples include a contract for the sale of goods in which the court will imply terms of reasonable fitness and merchantable quality and a contract for the construction of a house in which the courts will imply many terms by law including a condition that the house be reasonably fit for habitation on completion of the contract. The courts imply these terms on the basis of public policy.93 This policy includes, as seen from the examples provided above, the protection of consumers and homeowners. 1.33 The second main criticism of freedom as non-interference that it is ‘sociologically poor’ is also applicable to freedom of contract. Will theory assumes that people are rational, self-sufficient, ‘steely-eyed bargainers’. In reality we come to contracts with our freedom already shaped by inferior or superior bargaining power and this influences how

we behave and the terms of our contracts. Contract law doctrines, like duress, undue influence and unconscionable conduct, exist to prevent parties to a contract from taking advantage of their positions of power. The doctrine of duress prevents a party from enforcing a contract in which a weaker party was threatened with some kind of interference or restraint if the weaker party did not enter into the contract.94 Similarly, the doctrines of undue influence and unconscionable conduct prevent a party from enforcing a contract in which it appears that the party may have unfairly benefited from their position of strength or influence over a weaker contracting party.95 The substance of the doctrines of duress, undue influence and unconscionable conduct is described in Chapters 2, 3 and 4 respectively. In addition to these contract law and equitable doctrines, a raft of legislation has also been enacted in an effort to protect consumers in their dealings with more powerful companies who supply essential goods and services.96 Freedom of contract, therefore, is sociologically [page 17] poor because it cannot account for the existence of such doctrines and legislation which aim to even out, to some extent, the disparity of power between parties regardless of whether that power has been abused or not.

The abstract individual 1.34 Like freedom as non-interference, the liberal conception of human nature, epitomised by the abstract individual, has been subjected to intense criticism. Critics have argued that the concept of the abstract individual is both ‘empirically false’ and ‘conceptually incoherent’.97 It is said that the abstract individual is empirically false because, rather than being detached from society, people are in fact ‘socially interdependent and socially constructed’.98 People are dependent upon society in many different ways including in the formation of a sense of identity and in the shaping of values and interests.99 Critics also argue that the abstract individual is conceptually incoherent because it is

impossible to understand a person’s values or interests outside society.100 It is only within the context of society that a person’s values or interests are rendered intelligible.101 1.35 The argument that people are socially interdependent and socially constructed has two main implications which work to undermine liberalism, and will theory, generally. First, because people cannot be abstracted from society, social phenomena cannot be explained without reference to society and social practices.102 The liberal justification for legitimate government, namely that people in a state of nature consent to being governed, is artificial and flawed because it is described without any reference to the social practice of consent or promise.103 Likewise, the justification given by will theorists for the enforcement of contracts by [page 18] the court, namely that contracting parties consent to such enforcement, is also artificial and flawed. 1.36 Will theorists assume that all contracts are bilateral executory agreements that have, accordingly, been formed through a deliberate exchange of offer and acceptance. The reality is that such contracts are rare.104 Every day in the community hundreds of contracts are formed without a deliberate or formal exchange of offer and acceptance. Relational theorists, in particular, have detailed the many ways in which will theory fails to match actual contractual practice and this will be discussed below. Some simple examples, however, of the informality of most ‘contract making’ can be found in mass transport or in large retail stores. No formal negotiation occurs between a customer at a grocery store and the store checkout operator over a tin of beans. Offer and acceptance is not formally exchanged over the beans either. Even more informal is the transaction in which a passenger purchases a ticket to board a bus, tram, train or plane.

1.37 This difficulty with the will theory account of contracts is highlighted in the case of MacRobertson Miller Airline Services v Commissioner of State Taxation (WA).105 In that case the court was unanimous in holding that the airline ticket was not a written document embodying the agreement but the court had immense difficulty in deciding when and where this agreement had been formed. Stephen J conceded that ‘[t]he doctrine, of the formation of contracts by offer and acceptance, encounters difficulties when sought to be applied … to the everyday contractual situations which are a feature of life in modern urban communities’.106 Stephen J also notes that passengers would have little opportunity or power to negotiate the terms of the contract with the airline. Many bargains struck in the community are created through the use of standard forms. Large organisations, such as transport or telecommunication companies, use standard forms that are drafted with the assistance of lawyers well before the commercial transaction. Consumers have little or no opportunity to negotiate the terms of this contract. Accordingly, jurists such as Atiyah suggest that in most contracts the source of contractual liability is not to be found in what the parties intend but rather in what they do.107 Most contracts are created at the same time that they are performed or, at least, partly performed. [page 19] For example, the passenger becomes liable to pay a fare when he or she actually climbs aboard the bus. 1.38 The second implication arising from the fact that people are socially interdependent and socially constructed is that people may not be the best judge of their own interests.108 If people’s interests are determined by society then they may be ignorant, mistaken or misled about the value of these interests.109 It follows that if people do not possess perfect information about their interests their ability to employ their reason in pursuit of these interests may also be impaired or flawed.110 The idea that people are the best judges of their own interests

is also contradicted in contract law by the existence of such doctrines as undue influence and unconscionable conduct and the great expanse of legislation aimed at protecting consumers. The doctrines of both undue influence and unconscionable conduct do not assume that people are all self-interested, coolly rational and invulnerable to exploitation. On the contrary, these doctrines expect that people may sometimes be exploited by others because they are ignorant,111 mentally unwell,112 drunk,113 poorly educated114 or even emotionally attached to another.115 The doctrine of undue influence in particular also recognises the impact that certain types of relationship have, and the disparities of power that they entail, in relation to people’s decision making. These relationships include, for example, that between parent and child,116 religious advisor and advisee,117 solicitor and client118 and physician and patient.119 Indeed, the very existence of the doctrines of undue influence, duress, unconscionable conduct and statutory unconscionability shows that the law itself recognises that people are inherently, and unavoidably, socially constructed and socially interdependent. [page 20]

The public/private dichotomy 1.39 Critics of liberalism have attacked the public/private divide as being an artificial division of human activity. The public sphere, far from being separate from and independent of the private sphere, has a direct impact on people and activities within the private sphere. Critics have emphasised how the personal circumstances of people are ‘structured’ by the public sphere such as by laws about rape and abortion or policies on childcare and the allocation of welfare benefits.120 A further example is that of marriage, an activity that is relegated to the private sphere but in the public sphere parliaments and judges have made laws regulating marriage. It is these laws that determine who can marry, how they can marry and rights to be ascribed to married people. 1.40 In the same way, the divide between the public and private is

equally hollow in relation to contract law. As shown above, the courts actually play a significant role in the formation and enforcement of contracts. A contract is only binding because the court can exercise its coercive power to hold parties to their agreement. Indeed, the very bargain to exchange ownership, in some right or thing, only has any meaning because the law recognises ownership in certain rights or things and recognises that those things can be exchanged. For example, the court will not enforce a contract that it regards as having violated basic community standards. It deems these kinds of contracts, such as those that promote sexual immorality121 or corruption in public life,122 to be illegal on the grounds of public policy. The court refuses to enforce these contracts in order to protect not the parties to the contract but instead the wider community.123 The presumption or inference, as described above, that agreements between spouses and immediate family members are not intended to be legally enforceable is also weakening.124 Courts are increasingly prepared to find that contracts between spouses and relatives were intended to be legally enforceable.125 [page 21]

REFORMULATIONS OF WILL THEORY 1.41 There have been numerous attempts by many theorists to reformulate will theory in response to the criticism levelled at it. Three very different reformulations of will theory are canvassed below which illustrate the diversity or breadth of the reformulations currently in existence. 1.42 First is the promise theory developed by Charles Fried.126 The strain of liberalism adopted by promise theory is, like will theory, classic, or more correctly libertarian, liberalism. Second, Rick Bigwood advanced a theory which, although it is not a complete theory of contract law, is particularly pertinent to this text.127 Bigwood’s theory of ‘legal contractual exploitation’ seeks to account for the doctrines of

duress, undue influence and unconscionable conduct.128 Bigwood develops his exploitation theory within the context of his own version of the ‘liberal conception of contract’.129 Third is a theory of contract law developed by Dori Kimel using a very different version of liberal theory than that employed by Fried or Bigwood.130 Kimel’s theory is based on a communitarian version of liberalism. He argues that a more coherent account of contract law can be found by adopting a broader conception of freedom. He takes his conception of freedom from the teleological, perfectionist concept of freedom propounded by Joseph Raz. 1.43 Alongside these three theories is an outline of republican theory. Republican theory, or republicanism, is not a reformulation of will theory but a theory of government, a predecessor of liberalism. Although not a reformulation of will theory, republicanism offers a different conception of freedom (from liberalism), being freedom from non-domination (rather than freedom from non-interference). A republican conception of freedom may provide a better framework within which to understand doctrines of duress, undue influence and unconscionable conduct and the myriad of consumer protection legislation that sometimes alters the lense through which we see the law. [page 22]

Charles Fried 1.44 Fried’s promise theory is a conscious restatement of a liberal theory of contract law.131 Fried begins by considering what he claims to be the foundations of a civilized society: ‘respect for person, property and contract’.132 Accordingly, the ‘first principle’ of liberalism is that ‘we be secure in what is ours’.133 This security leaves us free to create or strive for whatever we desire and to reap the reward, or shoulder the failure, of such enterprise. Nothing is beyond our will or power. The only exception of course that Fried makes is other free human beings who ‘share our self-consciousness, our power of self-determination’.134 To exploit people in the same way as natural resources is immoral. Yet,

Fried notes, people are part of the natural world and they are indeed a natural resource. To not use this human resource is to limit or hinder our ability to achieve our goals. Fried says that a ‘crucial moral discovery’ came when we realised that we could have access to this resource, morally and without sacrificing our freedom, through mutual cooperation secured by trust. I give my cooperation to you because I trust you to do what is right rather than what is prudent for you to do. Fried argues that the device that gives form to this trust is promise. People are morally obligated to keep their promises because they have ‘intentionally invoked a convention whose function it is to give grounds — moral grounds — for another to expect performance’.135 Fried calls this moral obligation the ‘promise principle’ and claims that it is this principle that forms the basis of contract law. 1.45 One of the strengths of promise theory is that, unlike will theory, it makes a conscious attempt to identify and account for the morals that underlie contract law. Fried deals with the big moral questions of contract law such as why contracts should be enforced by courts at all. In doing so Fried highlights the importance of contract law.136 Fried shows us that contract law is important because the morals that underpin contract law also underpin our idea of a good society and good government.137 Perhaps the greatest strength, however, of promise theory is in the concessions made by Fried.138 He concedes that will theory is wrong in asserting [page 23] that liability under contract law is exclusively derived from the will of the parties. He admits that contract law ‘imposes contractual liability on the basis of a complex of moral, political, and social judgments’.139 This concession allows Fried to successfully account for the existence of default rules, or gap filling by courts, and the objective approach taken by courts in interpreting contracts. 1.46 Fried admits that parties to a contract do not provide for every

contingency. He further admits that where a gap does emerge in a contract it is filled by moral and legal principles other than the promise principle. Fried identifies three different kinds of principles that he says assists the courts in filling the gaps in a contract. First, there is a fairness principle which is based on encouraging contracting parties to exercise due care. Second, there is an administrative principle that is based on the application of the rule that is least likely to involve court error. The third and final principle is based on the idea that risk between the parties under a contract should be shared. Fried, however, considers that this final principle, which is essentially concerned with the redistribution of wealth, is one that is more appropriately wielded by a democratically elected government than a court. Nevertheless, Fried argues that the existence of these principles generally does not threaten the supremacy of the promise principle because they are only invoked by the court where the will of the parties is silent. In acknowledging the existence of such principles Fried is also able to account for the objective approach taken by courts in interpreting contracts. He argues that parties make contractual promises in the context of such principles, that ‘promises, like every human expression, are made against an unexpressed background of shared purposes, experiences, and even a shared theory of the world’.140 Fried claims that this ‘congruence of background’ ensures that the court’s interpretation of a contract coincides with the parties’ actual intentions.141 1.47 Although Fried’s concession as to the existence of principles other than the promise principle is significant, his theory ultimately provides a poor account of contract law in three main ways. First, promise theory fails to account for the primacy of the promise principle over other principles of contract law.142 Fried admits that contract law is not solely derived from the promise principle.143 He claims, however, that [page 24] the promise principle takes priority over other principles of contract law. According to Fried other moral and legal principles of contract law

are only supplemental to the promise principle. Fried asserts that these moral and legal principles do not compete with or threaten the promise principle because these principles are only applied by courts when there is no promise. The primacy of the promise principle is central to promise theory because the promise theory is built upon the idea that the promise principle forms ‘the moral basis of contract law’.144 Fried, however, does not explain why the promise principle should be accorded this primacy. He argues that we have a moral obligation to keep our promises because we have invoked an institution in which others place their trust in us to keep our promises. An obvious reply to Fried’s argument is that people are not morally entitled to trust us to keep our promise if, in doing so, we violate another moral principle that supersedes the promise principle.145 The promise principle, as articulated by Fried, does not preclude the possibility that there may be other moral principles that may override the promise principle. Indeed, an example where this is the case under contract law is where, as discussed above, the courts will refuse to enforce a contract on the ground of public policy. 1.48 Second, promise theory, like will theory, provides a poor or inaccurate account of how contracts are actually formed both in practice and under contract law. The relationship of trust described by Fried, from which he claims springs the moral obligation to keep promises, is not evident in most commercial transactions.146 To repeat the example of mass transport given above, it would seem unlikely that a passenger could, or would, have a relationship of trust with a large commercial airline of the type envisaged by Fried. Fried’s promise principle does not take into account the vast disparities of power between parties or the informality of most contract making such as in the areas of mass transport or consumer transactions. It is also important to note that most of these contracts are subject to gap filling by courts and it would seem the more that courts fill gaps the less important or valuable Fried’s promise principle is in accounting for the practice of contract making.147 1.49 Third, promise theory fails to account for those doctrines, in particular the doctrines of duress and unconscionable conduct, in which

an express promise is set aside by the courts. Fried contends that a contract is set aside for duress because the contracting party had offered [page 25] something he or she had no right to offer, namely a threat to do harm or a wrong to a party unless he or she enters into a contract.148 This account of duress, however, is of little assistance to courts. There are many situations in the practice of contract making in which the parties apply pressure or make threats. Fried’s promise principle is unable to tell courts which threats should be considered improper such as whether or not threats by trade unionists to boycott parties or goods should be permitted.149 Yet the courts must be able to work out whether or not certain types of threats or pressure should or should not be permitted in order to determine whether a contract has been created under duress and should be set aside. Fried is similarly unhelpful in his account of unconscionable conduct. He argues that all cognitive flaws in a transaction, or procedural unconscionability, should be dealt with as cases of mistake or good faith. He argues, however, that where the doctrine of unconscionable conduct is used to relieve a party from a hard bargain it involves a redistribution of property which ought properly to be done by a democratically elected legislature. Fried suggests that the only times in which this kind of unconscionable conduct ought to be invoked is at times of market failure. The weakness of Fried’s argument is obvious in that all contract law is in a sense distributive.150 All contract law is essentially about the transfer of some kind of property from one person to another. Further to this, the market failure referred to by Fried is far more common than he appreciates.151 In any market place, for example, one does not have to look too far to find domination of some corner of the market by a few select powerful companies or individuals. 1.50 Although Fried’s conscious reformulation of a liberal theory of contract law is an improvement on will theory it ultimately fails to provide a coherent theory of contract law. Like will theory, Fried’s

theory is unable to account for many important features of contract law and does not reflect how contracts are actually formed by people in the real world.

Rick Bigwood 1.51 It is not Bigwood’s intention, in propounding his theory of legal contractual exploitation, to develop a complete liberal theory of contract law like Fried. Bigwood’s aim is more modest than that. It is simply to develop a theory to account for what he sees as the ‘precept against exploitation’ common to doctrines such as duress, undue influence and [page 26] unconscionable conduct.152 Bigwood contends that the only way he can meaningfully develop such a theory is within an ‘ideological context’ and, as he correctly observes, ‘the distinct ideology underlying classical contract law which widely persists today, is liberal individualism’.153 1.52 Bigwood provides much the same description of liberal individualism as that provided by Fried and other classical liberal thinkers. Bigwood states that liberal individualism holds the individual to be of primary importance over and above social or collective goals. Further to this, liberal individualism accords each individual with an ‘untrammelled entitlement’154 to pursue his or her own self-interest (‘subject only to an observance of the like freedom and equal opportunity of all others’) or, in other words, an entitlement to freedom as non-interference. The individual is considered by Bigwood to be a ‘rational and independent moral agent’ and as such the best judge of his or her own interests.155 It follows that Bigwood, consistent with classical liberalism, maintains that to respect the autonomy of an individual is to respect their choices. 1.53 It is against the background of this classical version of liberalism that Bigwood distinguishes between contract as a ‘facilitative

institution’ (‘Contract1’) and contract as ‘a mere instrument’ (‘Contract2’). Bigwood argues that Contract1 refers to ‘(c)ontract as an institution’, that is the system of rules that broadly defines or gives structure to the vehicle or mechanism of contract.156 Bigwood equates Contract1, by way of example, to other social institutions like the free market. By contrast, Contract2 refers to ‘(c)ontract as instrument’, that is the ‘normative device’ used to regulate particular contracts between people within Contract1. Bigwood argues that judges, when adjudicating contractual disputes, are confined to the norms within Contract2 in reaching their decision. It is within this Contract2, as defined by Bigwood, that he proposes to develop his liberal theory of legal contractual exploitation. 1.54 Bigwood contends that such a theory must be concerned with procedural rather than substantive justice between the contracting parties. This is because liberal individualism is amoral and therefore unconcerned with whether or not the bargain between the contracting parties is a commercially fair one. Bigwood goes on to argue that liberal individualism, however, being concerned with individual autonomy, is [page 27] concerned with whether the formulation of the bargain was procedurally fair or just. It is at this point that Bigwood parts company with more traditional liberal theories of contract law, like that of Fried. Bigwood argues that although consent forms the very core of liberal individualism (and ‘all things being equal, “a man (sic) cannot be unfairly treated with his own consent”’157) it is wrong to focus only on consent or lack of consent given by the weaker party to the contract. Bigwood asserts that a contract always has two or more parties giving their consent to the formulation of the contract. He contends that to set aside a contract because of a lack of consent on the part of the weaker party alone is to deny other contracting parties the benefit of the bargain that they had contracted for and had expected to receive.

1.55 Bigwood argues that there must be ‘some sufficiently compelling, individualized reason (or set of reasons)’ for visiting the ‘misfortune’ of the weaker party on the contracting parties.158 There has to be, Bigwood says, some culpability on the part of the other contracting party or parties. In particular, the other contracting party or parties must have exploited the vulnerabilities of the weaker party. Bigwood then goes on to define exploitation. He asserts that exploitation involves the ‘wrongful utilization’ (either active or passive) of the weaker party.159 The precise nature of this duty not to exploit others is ‘highly contextual and purpose-dependent’.160 That is, the scope of the duty is largely determined by the nature of the relationship between the contracting parties and the social institutions (both formal and informal) in which the parties contract. In describing the duty Bigwood develops the idea of a ‘legal neighbourhood’161 — that where a contracting party becomes aware of the fact that their counterpart is ‘particularly vulnerable’ then that party has a negative duty to refrain from taking advantage in the transaction in a way that would ordinarily be permissible in commercial relationships.162 Bigwood insists that it is this idea which regulates the relationship between contracting parties ‘who are abstractly free and self-interested yet, on particular occasions, not on arm’s length or on an equal footing’.163 [page 28] 1.56 Bigwood’s theory of legal exploitation, however, is internally inconsistent or incoherent for two main overlapping reasons. First, the abstract individual, which underpins the conception of freedom as noninterference, is inconsistent with Bigwood’s theory and, in particular, his idea of legal neighbourhood. The abstract individual, as outlined above, is conceived of by liberals to be an entirely rational, self-sufficient and self-interested being. Liberals view the abstract individual as being separate from, and even prior to, society. The idea of legal neighbourhood, however, presupposes that not all individuals are entirely, or at least not always, rational or self-sufficient. Further, Bigwood suggests that the precise content of the duties incumbent upon

a contracting party is to be defined by reference to the relationship between the contracting parties and in the context of the social institutions in which the parties are placed. It follows from this that the abstractness of the liberal conception of the inividual is fundamentally at odds with Bigwood’s idea of legal neighbourhood. 1.57 Second, Bigwood’s idea of legal neighbourhood is inconsistent, or at least highlights problems, with his distinction between contract as an institution and contract as an instrument: Contract1 and Contract2. Bigwood’s distinction between Contract1 and Contract2 reflects the liberal distinction between the public and private spheres of activity as outlined above. The distinction between the public and private, which aims to protect freedom as non-interference, is a hollow one. The public sphere has a great impact on the way that the private sphere is organised and operates. Likewise, Contract1 has an impact on Contract2 as shown by Bigwood’s idea of legal neighbourhood. 1.58 Liberal theory, which embodies a conception of freedom as noninterference, is unable to yield a coherent account of those doctrines which are concerned to protect weaker parties to a contract. A reformulation of will theory which centres on a different conception of freedom would seem to be more likely to be sucessful in providing a coherent account of contract law, and in particular the doctrines of duress, undue influence and unconscionable conduct. This is what Dori Kimel sets out to do in his reformulation of will theory.

Dori Kimel 1.59 Kimel joins in the chorus of criticism against liberal theories of contract law, and in particular Fried’s promise theory. He argues that the weaknesses of these liberal theories of contract law are rooted in the ‘rigid conception of the freedom of contract’ employed by these [page 29] theories164 and that this rigid conception of freedom of contract

involves a freedom from non-interference. This conception of freedom as noninterference requires that people have the freedom to make contracts on whatever terms they deem fit and that these contracts be enforced by the court regardless of any moral, social or economic reasons that might justify its non-enforcement. Kimel again correctly notes that this conception of freedom as non-interference has been roundly criticised by many jurists who have pointed out that contract law limits this freedom in many ways. He argues that the rigid conception of freedom of contract as non-interference arises from a ‘misunderstanding’ of liberalism and a failure to appreciate the differences that exist between contracts and promises.165 1.60 Kimel argues that freedom as non-interference is drawn from a particular idea of liberalism but this is only one version of liberalism. He points to the work of Joseph Raz as providing a very different idea of liberalism.166 Raz, unlike libertarian liberals, contends that government can be a source of, rather than just a threat to, freedom. This idea of freedom, Kimel points out, allows for the government to take ‘perfectionist action … in pursuit of non-individualistic goals’.167 In other words, this idea of freedom permits government to foster and implement certain kinds of community values. It is helpful here to outline Raz’s definition of freedom because it is this definition that forms the foundation of Kimel’s liberal theory of contract law. Raz defines freedom as personal autonomy that, he argues, should be positively promoted by government. Raz considers people to be autonomous if they are able to pursue their chosen ‘valuable activities’ and relationships.168 Raz argues that government bears the ‘doublesided’ duty of promoting autonomy.169 On one side this duty requires that government allows people to choose how to lead their own lives from the options available to them. On the other side this duty requires that government takes whatever action necessary to ensure that people have the ‘basic capacities (physical and mental)’ or resources to enable them to take advantage of these options.170 The types of activities a government might undertake to discharge this side of its duty have been identified by Raz to include establishing an

[page 30] educational and welfare system and enacting social legislation such as anti-discrimination laws.171 Raz argues further that given government’s duty to promote the autonomy or ‘well-being’ of people, government should ensure that ‘attractive options are available and that meaningless and worthless options are eliminated’.172 1.61 This conception of freedom adopted by Raz is teleological or target based. In other words, Raz contends that some kinds of coercion or constraint by government over people’s chosen activities may enhance rather than reduce people’s autonomy. He argues that an ‘autonomous life is valuable to the extent that it is engaged in valuable activities and relationships’.173 Accordingly, government coercion or restraint in relation to an activity that is not valuable does not reduce people’s autonomy. Raz gives as an example the law against murder. Murder is not generally thought to be a valuable activity so people’s autonomy is not reduced by the government’s restraint or denial of the opportunity to murder. Raz also contends that coercion does not reduce people’s autonomy if it is done for ‘good reasons’.174 He gives the famous example of the story of Ulysses and the Sirens. Raz argues that if a protective friend, rather than Ulysses himself, had tied Ulysses to the mast of his ship this act could not be described as coercive. This act is not coercive because it was done by the friend for the very good reason of preventing Ulysses from rushing to the Sirens’ call to his death. 1.62 Kimel argues that Raz’s teleological, perfectionist conception of freedom provides a better account of contract law than the rigid conception of freedom as non-interference endorsed by libertarians like Fried. Kimel argues that the perfectionist concept of freedom can account for a court’s refusal to enforce, or to set aside, certain types of contracts. For example, this perfectionist conception of freedom can account for a court’s refusal to enforce contracts that offend public policy or contracts created under duress or through unconscionable conduct. Kimel argues that support for the replacement of a rigid conception of freedom with a perfectionist conception of freedom can

be found in taking stock of, what he says, are the many important differences between promises and contracts. He observes that libertarians, like Fried, argue that respect for the autonomy of people means that courts should enforce their voluntary undertakings. He argues that there are significant differences between the practice of promising and the practice of contracting. These differences [page 31] mean that contract, and this rigid idea of the freedom of contract, is not as significant for personal autonomy as promises. One of the differences between promises and contracts is the kinds of circumstances or relationships in which that they are created. Promises are typically made in circumstances where there is a close personal relationship between the parties whereas contracts are often created in circumstances where the parties are personally detached. Kimel argues that promises and contracts also differ in effect. Promises, when kept, have the effect of reinforcing trust in personal relationships. Contracts, unlike promises, have built into them means by which they can be enforced. The result is that contracts are unable to reinforce personal relationships in the same way that promises do. Kimel even suggests that contracts may well undermine close personal relationships. Instead, he claims, the function of contract law is to establish a system by which certain things can be done by parties who do not have a personal relationship. 1.63 Kimel’s observations as to the weaknesses of a libertarian account of contract law are valuable and insightful. He correctly identifies the rigid conception of freedom as the main cause of the weaknesses of the libertarian account of contract law, although he notes that he is certainly not the first to have made this observation. He is, however, unique in that he attempts to provide a more coherent account of contract law than the libertarian account, by offering a broader, richer conception of freedom. This perfectionist conception of freedom is not resistant or antithetical to government action and is value based. The perfectionist conception of freedom is, therefore, able to account for all of those doctrines of contract law that operate independently of

the will of the parties. The perfectionist conception of freedom can, for instance, provide a coherent account of duress and unconscionable conduct. Like Ulysses and the protective friend, the courts set aside the contracts that have been produced under duress or unconscionable conduct for good reasons. Kimel also provides some useful insights into the differences between contracts and promises showing that, contrary to the assertions or assumptions of libertarians like Fried, the two practices are not identical. In noting these differences, Kimel shows that respect for the autonomy of people does not necessarily mean that their promises ought to be legally enforced, indeed it may mean that they ought not to be legally enforced at all. 1.64 The sharp distinctions drawn by Kimel between promises and contracts have been the subject of some criticism.175 It has been pointed [page 32] out for instance that the enforceability of contracts may allow for personally detached parties to foster personal relationships.176 It has also been pointed out that even in personal relationships where people make promises to each other people still choose to create contracts to reinforce or formalise these promises.177 The most obvious and pertinent example is the marriage contract.178 Although these are all valid criticisms of Kimel’s distinctions between contract and promise it does not go to the heart of his argument. As he has noted, the distinctions between contract and promise may only provide some support for the idea that personal autonomy does not necessarily entail a rigid conception of the freedom of contract but that is all. The heart of Kimel’s argument is his broad conception of freedom that he adopts in delivering his own liberal theory of contract law. 1.65 Kimel’s teleological, perfectionist version of liberalism has been branded controversial.179 And for mainstream liberals the perfectionist conception of freedom is indeed controversial. The perfectionist conception of freedom is akin to positive freedom, the polar opposite of

the widely accepted liberal conception of freedom as non-interference or negative freedom.180 Positive conceptions of freedom have long been the target of fierce criticism by liberal and non-liberal thinkers alike. One of the most common and salient criticisms of positive conceptions of freedom is that it gives governments an unlimited licence to interfere in the lives of its citizens.181 Since perfectionist freedom seeks to remove all obstacles to freedom, such as handicap, illness or lack of education, it permits governments to interfere in the lives of people at all levels so long as the freedom of people is enhanced overall. Kimel does not need to define freedom this broadly in order to provide a better account of contract law. He need not be sucked into the polarisation of negative and positive conceptions of freedom by conventional liberal thinkers. 1.66 There is an alternative or middle-ground, conception of freedom — the republican conception of freedom as non-domination. Freedom as non-domination dispenses with the ‘all or nothing’ approach of negative and positive conceptions of freedom but essentially achieves the same end result that Kimel sought. Freedom as non-domination permits governments and courts to interfere to some extent in the lives of people [page 33] to advance certain social values but without the unlimited licence of a perfectionist conception of freedom.

Freedom as non-domination 1.67 Republicanism enjoys a long, rich tradition that predates liberalism.182 Like liberalism, this tradition is a broad one populated by many different diverse thinkers. Despite the breadth of the republican tradition certain thinkers can be identified as having made an important contribution to the development of republican theory. These thinkers include Aristotle, Cicero, Machiavelli, Harrington, Montesquieu, Madison and, in more recent times, Sunstein, Skinner and Pettit.

1.68 The overarching principle of republicanism is freedom defined as non-domination. The republican conception of freedom (unlike its liberal counterpart) is consequentialist rather than deontological. That is, freedom as non-domination is embraced by republicans as a goal and not a restraint. The type and content of all other republican concepts, and the government institutions or laws that they might promote, are all dependent upon what might best advance freedom as non-domination. In order to achieve freedom as non-domination the individual cannot be an abstract concept but must be seen in the context of the community. Unsurprisingly, republicans draw no distinction between public or private power. Unlike liberal thinkers, republicans did not map out areas in which to designate the legitimate exercise of public power. To a republican, power is simply power. 1.69 ‘Freedom as non-domination’ is a term first coined by Pettit to describe the republican conception of freedom. He defines domination as the capacity of a government, or an agency of government, to arbitrarily interfere in the choices that an individual is in a position to make. Although his definition expressly refers to governments and government agents, his definition is equally applicable to contract law and contracting parties. Under Pettit’s definition of freedom an individual may be interfered with by the law or parties but remain free if that interference is not arbitrary. The definition of freedom as nondomination is broken down by Pettit into three elements or conditions: the law or parties must have the capacity to interfere, this interference must be arbitrary in nature, and the interference needs to affect the choices of an individual. In explaining the first [page 34] condition of domination, Pettit describes a range of behaviour which he regards as interference. This description includes ‘coercion of the body’, such as physical restraint or obstruction, ‘coercion of the will’ which may involve punishment or the threat of punishment, and ‘manipulation’, which encompasses such covert behaviour as agenda fixing. Nevertheless, interference, whatever form it may take, is

essentially concerned with altering the range of choices that can be made by an individual or the consequences of those choices. The capacity of the law or parties to interfere in this sense must be an actual capacity, a capacity ready to be exercised. 1.70 The second element of Pettit’s definition requires that the interference of the law or parties be of a type which is arbitrary. Interference becomes arbitrary when it is subject only to the discretion, or whim, of the law or parties. In relation to others, an agent acts arbitrarily when he or she interferes to worsen the ‘choice situation’ of an individual with regard to the interests of that individual. An agent, therefore, ceases to act arbitrarily when he or she is compelled to track the interests of those individuals. An agent tracks the interests of an individual when he or she is guided by those interests or at least those interests which are relevant. Pettit argues that relevant interests are those interests which are not exceptional to any individual, but are shared in common with others. For instance I, like the rest of the community, may have an interest in the government using its coercive powers to enforce contracts made between people but I might also have an interest, or desire, not to have a contract enforced against me; I may wish to be an exception to these laws. Pettit argues that the role of government is to govern the whole community, not just individuals. Consequently, interference contrary to an exceptional interest, as in the example given, does not amount to domination. However, community interests may be an inappropriate guide for state action to the extent that they fail to reflect factional or minority interests. The question of what interests are to be tracked is answered through the process of public discussion between the general community and leaders of minority groups. It is through the political process of discussion that particular interests are recognised and are held out as guiding state action. Though the process of defining domination might be political, it is not value-laden. Once a community establishes those interests which their government should track, domination becomes a simple issue of fact as to whether government has indeed tracked those interests. 1.71 The third condition of domination stipulates that the arbitrary interference of the law or parties must adversely affect certain choices

that may be made by a citizen. The domination of the law or parties, therefore, need not be complete. The law or parties need only interfere [page 35] arbitrarily in one area of a citizen’s existence or in one area of choice, in order to dominate that citizen. In order to safeguard against this sort of domination by the law or parties, both must be required to track the interests of citizens. Citizens can compel the law or parties to track their interests by commencing proceedings in a court or tribunal or possibly even through the political process. Accordingly, republican theory is concerned to design and establish institutions which best facilitate the identification and tracking of citizens’ interests. 1.72 A further important aspect of freedom as non-domination is the subjectivity of domination.183 People need to think or feel that they are free as well as being actually free. The law or parties need only interfere arbitrarily in the lives of some people within the community to dominate all people within the community. People have a vested interest in knowing who is, and how far, they are dominated. Domination quickly becomes common knowledge throughout the community. As a result, even those who are not actually dominated, but are aware of those in the community who are, feel much the same effects of domination. These people who do not feel that their freedom is secure suffer some of the same psychological side-effects as those who are dominated in that they then feel compelled to keep a watchful, or ‘weather’, eye on the powerful, waiting for any indication that they might be the next to be dominated. This is why republicans would be concerned with what may seem to others to be an insignificant act of domination between private parties to a contract. Regardless of whether this type of domination is unlikely to occur to a majority of people within the community every person within that community would feel vulnerable to domination on learning of the domination of another. This is a violation of freedom never dreamt of by liberals: a violation of freedom without any interference in the activities of a person whatsoever.

1.73 Freedom as non-domination arguably provides a more ready explanation for the doctrines and consumer protection legislation that are the focus of this text than freedom as non-interference. These doctrines and legislation can be viewed as promoting the freedom of contracting parties or consumers from domination by stronger parties or suppliers of goods and services. For example, the doctrine of unconscionable conduct can be understood to vitiate agreements produced by the domination of one contracting party over another. That is, the agreement is the result of one contracting party’s arbitary interference with the decision-making ability of the other party. [page 36]

Will theory in modern contract law 1.74 Despite the criticisms of classical will theory, and the existence of innumerable reformulations and alternatives, will theory (classical or otherwise) permeates our thinking about contract law. The central tenets of will theory frequently find expression in reported cases.184 1.75 The high point of this expression can be found in the 19thcentury English case of Printing and Numerical Registering Company v Sampson.185 In that case, Jessel MR declared: … if there is one thing which more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contract when entered into freely and voluntarily shall be held sacred and shall be enforced by the Courts of Justice.186

1.76 In Australia, over a century later, in Tanwar Enterprises Pty Ltd v Cauchi187 Kirby J asserted: The basic principle is that, subject to statute, a party of full capacity is bound by legal obligations assumed in a valid agreement with another. Equity, it is said, mends no man’s bargain … This rule is founded not only upon ancient authority of the common law that is normally respected by equity. Legal policy reinforces the rule. It represents an important attribute of economic freedom. Certainty in contractual obligations, freely assumed, is an economically valuable feature of a modern market economy.188

1.77 At about the same time, in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd189 Kirby J again asserted: … courts are not always well placed to determine whether, in all the circumstances, a bargain that was struck was fair or hard as between the

[page 37] transacting parties. To do this would involve the re-examination of many transactions and a risk that courts would usurp the economic freedom of individuals normally to decide for themselves the transactions that they would, and would not, agree to.190

1.78 While it has been observed, in the late 20th and early 21st centuries, that ‘remedial legislation suggests the need for caution in dealing with the unwritten law as if laissez faire notions of untrammelled “freedom of contract” provide a universal legal value’191 the courts, nonetheless, continue to identify the ‘social and commercial importance’192 of giving effect to contracting parties’ intentions.

ANATOMY OF A LEGALLY BINDING CONTRACT 1.79 In modern contract law, a legally enforcable contract between two or more parties usually must contain the following four main elements:193 agreement; consideration; an intention to create legal relations; and certainty of terms.

Agreement 1.80 Agreement is usually determined by a court by identifying an offer made by one or more parties and an acceptance of that offer by

the other party or parties,194 although, of course, the formal language of offer and acceptance is not necessary to constitute a contract.195 1.81 An offer consists of an express or implied promise to do something in exchange for something or, alternatively, a promise to do something. An offer may be conditional.196 Obviously, to be effective, the offer must [page 38] be communicated.197 An offer may be conveyed by words or conduct to a particular party198 or to ‘all the world’.199 Importantly, the offer (however or to whomever it is made) must consist of a promise as distinct from merely a statement.200 The courts take an objective approach to determining whether an offer has been made, that is, whether a reasonable person in the position of the offeree would regard it to be an offer.201 1.82 Once made, an offer can be revoked anytime before acceptance.202 If an offer is accepted, before it is revoked, there is consensus ad idem,203 a legally binding contract (provided that all of the other elements identified above are present). An offer may be accepted in many different ways provided that such acceptance is communicated to the offeror204 and made with knowledge of the offer.205 The offer itself may stipulate the mode of its acceptance.206 Otherwise, an offer may be accepted expressly [page 39] or implicitly by words or conduct.207 The acceptance must correspond exactly with the terms of the offer, it must be an unqualified assent to the offer.208 Any purported acceptance which adds or otherwise varies the terms of the offer will be ineffective and will amount to a counteroffer.209

Consideration 1.83 The promisee must give consideration in exchange for the promisor’s promise to do something.210 It is the price that the promisee pays to acquire the promisor’s promise.211 The consideration given by the promisee must be valuable and not illusory. Consideration has been described as valuable where it consists of either the conferral of a benefit (or the avoidance of a disbenefit212) or incurring some detriment.213 By contrast, consideration which consists of a promise to do something which the promisee is already bound to do214 or something which is illegal215 does not amount to valuable consideration. It is convenient to note here that the courts have relied on the absence of valuable consideration to strike down those agreements, procured by threats, to vary an existing agreement (in the alternative to invoking the doctrine of duress).216 1.84 Importantly (and consistent with the liberal conception of freedom of contract outlined above) while the courts require that the promisee provide valuable consideration, the courts are unconcerned with the commercial adequacy of that consideration. The contracting parties [page 40] are free to reach their own bargains ‘untroubled by the paternalistic superintendence of the courts’.217

Intention to create legal relations 1.85 The parties must not only agree on terms but also intend that they will be legally bound by those terms.218 Whether or not the parties intended to be legally bound is determined objectively from what was said and done in context.219 1.86 In resolving the parties’ intentions the courts have recourse to certain ‘presumptions’.220 Consistent with classical will theory, as

outlined above, the courts tend to infer that parties to social or domestic agreements (that is, matters deep within the private sphere) do not intend to be legally bound by them.221 Conversely, the courts tend to infer that parties to commercial agreements do intend to be legally bound by them.222 [page 41]

Certainty of terms 1.87 There is no agreement if there is no consensus on essential terms or if such terms are incapable of definite or precise meaning.223 1.88 Consistent with the freedom of contract, what is an essential term is determined by the parties. Inessential terms which are either absent or indefinite can be implied or severed by courts respectively. Importantly, in keeping with the freedom of contract, the court’s construction of the agreement must be faithful to the parties’ intentions.224

Vitiating factors 1.89 If the four elements outlined above are present a legally binding contract is formed. The terms of the contract must be performed (or damages paid in lieu of performance) unless the parties reach a further agreement that either varies or terminates their initial agreement. The courts will enforce the contract without regard to any subsequent complaint by a contracting party that the bargain struck is not commercially sound or fair. The law is not ‘a panacea for adjusting any contract between persons when it shows a rough edge to one side or other’.225 There are, however, vitiating factors which may destroy the legal validity of a contract and excuse parties from performance. 1.90 One such vitiating factor is duress. The common law doctrine of duress is outlined in Chapter 2. While the doctrine of duress may be seen, superficially, as undermining the freedom of contract, it has otherwise been rationalised as being a preservor of genuine freedom to

contract (whether defined as freedom from exploitation226 or nondomination227). [page 42] In Equiticorp Finance Ltd (in liq) v Bank of New Zealand228 Kirby P (as he then was) observed: Many (if not most) of the cases dealing with economic duress have concerned parties in seriously unequal economic bargaining positions. One of them effectively overbears the will of another in a way that strikes the decision-maker as unconscionable. Such a case was Williams v Bayley (1866) LR 1 HL 200. Relief in such cases involves an arguably legitimate, if somewhat paternalist, intervention of law where the will of the party has been overborne or where what has occurred is so unconscionable as to call out for redress from the court. From one perspective, the relief offered can be seen as a defence of true freedom to contract and not an intervention by the courts to strike down contracts only achieved by duress. [original emphasis]

1.91 Equity has also developed principles to avoid contracts being used as a means to exploit weaker parties. Relevantly, these include the doctrines of undue influence and unconscionable conduct among others. An understanding of these principles is assisted by an understanding of the origin and purpose of equity.

EQUITY IN MODERN CONTRACT LAW 1.92 Equity plays an important role in modifying the harshness of contract law. To understand the role of equity in contract law, first we must understand the origin and purpose of equity. Equity developed because litigants who were unhappy with the decisions sometimes reached by the common law courts, or who were unable to obtain any remedy under the law, would petition the king, for relief. The volume of these petitions became so great that the task was ultimately delegated to the chancellor. In 1347 a proclamation declared that all such petitions were to be made to the chancellor and not to the king. In the 14th and 15th centuries the chancellor, who assisted the king in governing the country, was often not a lawyer but a priest, usually a bishop or

archbishop, valued for his learning and administrative skill. Naturally, chancellors in deciding the merits of the petitions before them were guided by the ideas propounded by the Roman Catholic Church in which they were well schooled. These ideas depended upon the theory that the law of God governed the universe and this law was greater than the law of man. The chancellor considered it his duty to intervene in any matter that he thought, according to his conscience, worked against the law of God. [page 43] Consequently a petition by a litigant to the chancellor was a petition to the conscience of the chancellor: May it please your most gracious Lordship, in honour of God and on the account of righteousness, to grant writs to cause the said Walter and Reginald to come before you in the King’s Chancery which is the court of conscience, there to answer thereto as reason and conscience demand, otherwise the said applicant is and will be without remedy, which God forfend.229

The appointment of Lord Nottingham, a lawyer, as chancellor in 1673 is generally considered to mark the beginning of the modernisation of equity.230 The office of chancellor no longer fell to priests but was instead almost exclusively taken up by lawyers. In the period from 1673 to 1827, this new breed of chancellor slowly began to systemise equity by placing greater emphasis on precedent and developing coherent principles. The coherent principles developed by the courts came to be embodied in a set of well-known maxims.231 For example, the maxim of ‘unclean hands’ holds that a court will not assist any litigant, seeking relief under equity, if they have themselves also engaged in any wrongdoing in the matter before the court.232 However, the maxims do not operate as rules and cannot provide a specific answer to a specific problem. 1.93 In England, until the late 19th century, equity was exclusively administered by the Court of Chancery. But in the colonies of Australia and New Zealand equity was never administered by a separate court to that of the common law but was administered by a separate jurisdiction

within the same courts as the common law. The separate administration of common law and equity was highly inefficient and disadvantageous. A litigant had to apply to two separate courts, or jurisdictions, for relief in common law or equity. If a litigant incorrectly chose one court, or jurisdiction, over the other, that litigant could lose all hope for relief. In 1873 the Judicature Act was passed in England abolishing the Courts of Chancery and empowering the same set of courts to apply both equity and common law. The Australian and New Zealand colonies passed virtually [page 44] identical legislation shortly afterwards.233 The fusion of the administration of common law and equity has prompted some to controversially suggest that there has also been a fusion of these two very different types of law.

THE RELATIONSHIP BETWEEN COMMON LAW AND EQUITY 1.94 In introducing the Judicature Act to parliament in England, Lord Selborne LC described the distinction between common law and equity as ‘real and natural’ and added further that ‘it would be a mistake to suppose that what is real and natural ought to be disregarded’.234 The orthodox view of the effect of the Judicature Act is that it altered court procedure only and left the common law and equity to continue to operate as two distinct systems of law. This orthodox view has been famously described by the jurist Ashburner using the fluvial metaphor that ‘the two streams of jurisdiction, though they run in the same channel, run side by side and do not mingle their waters’.235 Many judges, both before and after the publication of Ashburner’s text, have stated that the effect of the Judicature Act is procedural only and that the old divisions between common law and equity remain.236 For example, in the English case of Bank of Boston Connecticut v European

Grain and Shipping Ltd237 Lord Brandon states clearly, though perhaps not as poetically as Ashburner, that ‘the Judicature Acts, while making important changes in procedure, did not alter, and were not intended to alter, the rights of the parties’.238 An equivalent Australian example can be found in the case of O’Rourke v Hoeven239 in which Glass JA held that ‘the concurrent administration of law and equity … is not a fusion of two systems of principle but of the Courts which administer the two systems’.240 [page 45] 1.95 Despite the wide acceptance of this orthodox position, however, there are some judges who have tried to suggest that the Judicature Act has had the effect of not only consolidating the administration of the law by the courts but also of consolidating the law itself. Lord Diplock, in the case of United Scientific Holdings Ltd v Burnley Borough Council,241 has remarked that the ‘waters of the confluent streams of law and equity have surely mingled by now’.242 Lord Denning, in Federal Commerce and Navigation Ltd v Molena Alpha Inc,243 declared: Over 100 years have passed since the Supreme Court Judicature Act 1873. During that time the streams of law and equity have flown together and have combined so as to be indistinguishable the one from the other.244

1.96 More recently in the New Zealand case of Attorney General for England and Wales v R245 the Court of Appeal held that: Law and equity should be viewed as a consistent whole. The individual influences of the earlier discrete streams now work together to produce the appropriate outcome. While many doctrines are still recognisable as legal or equitable and an understanding of their historical origins often remains helpful, the focus now should be on their combined influence rather than their originally separate functions.246

1.97 The suggestion that the Judicature Act has resulted in the amalgamation of the common law and equity has been met with a great deal of fierce criticism. Meagher J, for example, has scornfully stated that this view, as expressed by Lord Diplock in United Scientific

Holdings, ‘is so obviously erroneous as to be visible, and one may confidently anticipate that no Australian court will ever follow in that regard’.247 The strongest opposition to the fusion of common law and equity has come from commentators Meagher, Gummow and Lehane. They stridently label proposals to merge common law and equity a ‘fusion fallacy’.248 These commentators argue that: Those who commit the fusion fallacy announce or assume the creation by the Judicature system of a new body of law containing elements of law and equity but in character quite different from its components. The

[page 46] fallacy is committed explicitly, covertly, and on occasion with apparent inadvertence. But the state of mind of the culprit cannot lessen the evil of the offence.249

1.98 Michael Tilbury explains that Meagher, Gummow and Lehane’s charge of fusion fallacy contains two elements.250 The first element asserts that remedies from one body of law cannot be used in support of rights from another body of law where this was not possible before the passing of the Judicature Act.251 That is, there cannot, or should not, be any ‘crossover of remedies’.252 The second, and more general, element asserts that there can be no importation of concepts from one body of law by the other because the two bodies of law are inherently foreign to each other. The logical conclusion of the second element of the fusion fallacy is that if there is a crossover of remedies or concepts between common law and equity the result is not the modification of common law or equity but instead the creation of an entirely new body of law. 1.99 The fusion fallacy has been subjected to intense scrutiny and criticism both by fellow commentators and, very recently, the courts. A number of commentators have recognised that it is one thing to argue that the Judicature Act did not fuse common law and equity and quite another to argue that common law and equity can never be fused.253 These commentators, like Julie Maxton, have noted that the development of common law and equity did not end with the passing of the Judicature Act.254 Maxton states that ‘acceptance of the orthodox

position does not demand any denial for the continuing evolution of common law and equitable principles’.255 Tilbury argues that the fusion fallacy ‘is a non-sequitur because the proposition that the Judicature Acts do not authorize fusion of principles, cannot lead to the conclusion that such a fusion is [page 47] prohibited. In short there is no fallacy’.256 Indeed, as these commentators are eager to demonstrate in detail, equity and common law have already on many fronts become fused since the Judicature Act. Examples given of this fusion have included estoppel, damages and illegality. Fiona Burns argues that in reality commentators and judges are growing less afraid of ‘integrating and intermixing’ common law and equity.257 1.100 A recent example of judicial fearlessness can be found in the Appeal Court case of Harris v Digital Pulse Pty Ltd.258 This case was concerned with both a breach of an employment contract and a fiduciary duty owed by an employee to his corporate employer. In the New South Wales Supreme Court Palmer J had awarded exemplary damages to the employer for the employee’s breach of his fiduciary duty. The employer appealed successfully to the Court of Appeal. Mason P, in his dissenting judgment, savagely criticised the idea that a common law award of exemplary damages for an equitable cause of action involves a fusion fallacy. Mason P referred to the fusion fallacy as a ‘bogey’ that ‘condemns law and equity to the eternal separation of two parallel lines’.259 In his attack on the fusion fallacy, Tilbury makes the powerful observation that ‘the common law is something of an expert in fusion’.260 Other commentators have implicitly recognised this and like Maitland have forecast that ‘(t)he day will come when lawyers will cease to inquire whether a given rule be a rule of equity or a rule of common law’.261

DEFINING CONSCIENCE IN MODERN CONTRACT LAW 1.101 Unconscionable conduct or unconscionability is not capable of easy or precise definition. In contract law, unconscionable conduct has many different and variable shades of meaning.262 The term ‘unconscionable conduct’ is used in broadly two distinct ways.263 [page 48] 1.102 First, unconscionable conduct is used as an organising idea informing specific equitable doctrines and rules which do not require a finding of unconscionable conduct per se. For example, equity’s rule on time and notices to complete does not require a finding that a party has engaged in any unconscionable conduct but the operation, or very existence, of the rule is grounded in a notion of unconscionability. As Deane and Dawson JJ observed in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd:264 The whole point of equity’s intervention in relation to stipulations as to time was that, in the absence of express or implied contractual provision to the contrary, it regarded it as inequitable or unconscionable for a party to a contract to rescind for breach of a time stipulation without having given reasonable warning to the party in default.

1.103 Second, unconscionable conduct is used to refer to specific equitable doctrines which require, among other things, a finding of unconscionable conduct. The Full Federal Court in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd265 noted that under the ‘rubric of unconscionable conduct’ equity will: (i)

Set aside a contract or disposition resulting from the knowing exploitation by one party of the special disadvantage of another. The special disadvantage may be constitutional, deriving from age, illness, poverty, inexperience or lack of education — Commercial Bank of Australia Ltd v Amadio.266 Or it may be situational, deriving from particular features of a relationship between actors in the transaction such as the emotional dependence of one on another267 – Louth v Diprose;268 Bridgewater v Leahy269 …

(ii) Set aside as against third parties a transaction entered into as a result of the defective comprehension by a party to the transaction, the influence of another and the want of

any independent explanation to the complaining party270 — Garcia v National Australia Bank Ltd271 … (iii) Prevent a party from exercising a legal right in a way that involves unconscionable departure from a representation relied on by another to his or her detriment — Waltons Stores (Interstate) Ltd v Maher;272 Commonwealth v Verwayen.273

[page 49] (iv) Relieve against forfeiture and penalty — Legione v Hateley;274 Stern v McArthur.275 (v) Rescind contracts entered into under the influence of unilateral mistake …

These equitable principles are outlined in Chapters 2 and 3. 1.104 In Tanwar Enterprises Pty Ltd v Cauchi276 the majority observe, however, that terms like ‘unconscionable’ and ‘unconscionable conduct’ can mislead and encourage a false notion that the court will set aside agreements whenever a party can point to conduct which ‘merits the epithet “unconscionable”’. Academic writers like Rickett complain that a lack of understanding or a loose application of the equitable, ‘unconscionable conduct’, doctrines leads to ‘unconscionability-abuse’ undermining commercial certainty in contracts.277 As Ricketts points out, each of these doctrines has its own specific requirements, or checklist, that can be met without reference to broader notions of conscience. 1.105 The courts have also cautioned against the use of notions of unconscionability to import personal or general ideas of conscience or fairness. Deane J remarked in Muschinski v Dodds:278 [P]roprietary rights fall to be governed by principles of law and not by some mix of judicial discretion … subjective views about which party ‘ought to win’ … and ‘the formless void of individual moral opinion’ … Long before Lord Seldon’s anachronism identifying the Chancellor’s foot as the measure of Chancery relief, undefined notions of ‘justice’ and what was ‘fair’ had given way in the law of equity to the rule of ordered principle which is of the essence of any coherent system of rational law. The mere fact that it would be unjust or unfair in a situation of discord for the owner of a legal estate to assert his ownership against another provides, of itself, no mandate for a judicial declaration that the ownership in whole or in part lies, in equity, in that other …

1.106 Similarly, Spigelman CJ in Attorney-General (NSW) v World

Best Holdings Ltd279 said: Unconscionability is a well-established but narrow principle in equitable doctrine. It has been applied over the centuries with considerable restraint

[page 50] and in a manner which is consistent with the maintenance of the basic principles of freedom of contract. It is not a principle of what ‘fairness’ or ‘justice’ or ‘good conscience’ requires in the particular circumstances of the case.

1.107 Kirby P, in Austotel Pty Ltd v Franklins Self-Serve Pty Ltd,280 also issued the following warning: The wellsprings of the conduct of commercial people are self-evidently important for the efficient operation of the economy. Their actions typically depend on self-interest and profit-making not conscience or fairness. In particular circumstances protection from unconscionable conduct will be entirely appropriate. But courts should, in my view, be wary lest they distort the relationships of substantial, well-advised corporations in commercial transactions by subjecting them to the overly tender consciences of judges.

DISTINGUISHING BETWEEN DURESS, UNDUE INFLUENCE AND UNCONSCIONABLE CONDUCT 1.108 It has been observed that the boundaries between the doctrines of duress, undue influence and unconscionable conduct are blurred.281 While these doctrines may seem at times to apply to the same or similar set of facts282 they are, in principle, quite distinct and separate. The key point of difference is the main focus of each of these doctrines. Duress and undue influence focus on the nature of the weaker party’s consent to the contract. Conversely, unconscionable conduct focuses on the use (or abuse) of power by the stronger party. [page 51]

1.109 Davy JA in Morrison v Coast Finance Ltd described the distinction between undue influence and unconscionable conduct in the following way: A plea of undue influence attacks the sufficiency of consent; a plea that a bargain is unconscionable invokes a relief against an unfair advantage gained by an unconscientious use of power by a stronger party against the weaker.283

1.110 The High Court has sought to delineate the boundaries between undue influence and unconscionable conduct in several decisions.284 All of these decisions have adopted the distinctions drawn by Mason and Deane JJ in the seminal case of Commercial Bank of Australia Ltd v Amadio.285 In that case Mason J held: Although unconscionable conduct … bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.286

1.111 Similarly Deane J in Amadio held that: The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party … Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so.287

1.112 Since both duress and undue influence focus on the weaker party’s quality of consent the boundaries between these doctrines may be particularly difficult to discern. But these doctrines do differ in two important ways. First, the doctrine of duress requires that the pressure applied to the weaker party must be of a kind that is illegitimate.288 The doctrine of undue influence is not constrained in this way and can apply to all abuses of power that have the effect of impairing the will of the [page 52]

weaker party. Second, the doctrines differ in terms of the the way in which the pressure typically (but not always) undermines the freedom of the weaker party. Weaker parties submit to duress, sometimes in protest, knowing that they have no other practical option left open to them; their consent to the contract has been wrung out of them. Conversely, weaker parties are often, but not always, sweetly hoodwinked by undue influence into falsely believing that they ought to consent to the contract. As Doyle CJ (with whom Prior and Lander JJ agreed) put it ‘(t)he law of undue influence is not concerned with the exercise of compulsion but with influence and persuasion’.289 Compare, for example, Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd290 (a classic duress case) with Johnson v Buttress291 (a classic undue influence case). In Hawker Pacific the weaker party received the implicit threat that unless a written agreement was signed, an urgently needed helicopter would not be released. In Johnson the weaker party (an elderly, illiterate and feebleminded man) was persuaded by his deceased wife’s relative to transfer the only property he owned to her. Duress is a naked, illegitimate abuse of power. Undue influence is, often, a subtle abuse of power that falls short of duress. 1.113 The boundaries between the doctrines of duress, undue influence and unconscionable conduct are neatly illustrated in the recent High Court decision of Thorne v Kennedy.292 1.114 The facts in Thorne concern the execution of a prenuptial agreement by a young woman shortly before she was due to be wed. A 36-year-old woman (Thorne) met her much older husband of 67 years (Kennedy) on an internet dating site. At the time of their meeting, Thorne was a single Eastern European woman, with no children, living in the Middle East. Thorne had no assets and spoke only a little English. Kennedy, however, was a wealthy property developer with three adult children from a previous marriage. Kennedy told Thorne that if he liked her then he would marry her but ‘you will have to sign paper. My money is for my children’.293 After a courtship of seven months Thorne moved to Australia to live with Kennedy. The couple were set to marry later that year. About 10 days before the wedding Kennedy took Thorne to see his solicitor for the signing of a prenuptial agreement.

Kennedy told Thorne that unless she signed the prenuptial agreement there would be [page 53] no wedding. By this time, the wedding dress had been made, the guests had been invited and Thorne’s parents and sister had arrived in Australia for the event. After being presented with the prenuptial agreement, Thorne sought independent legal advice. In a written advice, Thorne’s lawyer, Ms Harrison, concluded: I believe that you are under significant stress in the lead up to your wedding and that you have been put in a position where you must sign this Agreement regardless of its fairness so that your wedding can go ahead. I also understand from what you have told me that you are longing to have a child and you see your relationship with [Kennedy] as the opportunity to fulfill what may well be a long held desire. I hold significant concerns that you are only signing this Agreement so that your wedding will not be called off. I urge you to reconsider your position as this Agreement is drawn to protect [Kennedy’s] interests solely and in no way considers your interests.294

Following Ms Harrison’s advice some small amendments were made to the agreement. The amended agreement was forwarded to Ms Harrison by Kennedy’s lawyer under cover of a letter that stated Kennedy’s preference for Thorne to sign that same day given the impending nuptials. Ms Harrison explained to Thorne the effect of the minor amendments and told Thorne the agreement was the worst she had ever seen. In spite of this advice Thorne signed the amended agreement. The amended agreement contained a recital that within 30 days of the wedding the parties would sign another agreement in simlar terms. On receiving the second agreement, Thorne sought the advice of Ms Harrison who, again, urged Thorne not to sign. But Thorne did sign the second agreement and after less than four years of marriage Kennedy signed a separation declaration. 1.115 At first instance, the trial judge set aside both prenuptial agreements, finding that they were signed by Thorne under duress.295 The trial judge found that there was duress because there was an inequality of bargaining power.296 The trial judge described the circumstances of Thorne’s duress in the following way:

Every bargaining chip and every power was in Mr Kennedy’s hands. Either the document, as it was, was signed or the relationship was at an end. The husband made that clear.297 …

[page 54] Ms Thome’s powerlessness arises not only from her lack of financial equality, but also from her lack of permanent status in Australia at the time, her reliance on Mr Kennedy for all things, her emotional connectedness to their relationship and the prospect of motherhood, her emotional preparation for marriage, and the publicness of her upcoming marriage.298

1.116 Kennedy successfully appealed the decision at first instance.299 Relevantly, the Full Court held that the trial judge did not apply the correct test for duress.300 It was not enough to find that there was an inequality of bargaining power,301 there had to be a finding that the pressure was illegitimate or unlawful.302 The Full Court did not consider that Kennedy applied pressure to Thorne of a kind that was illegitimate or unlawful. Indeed, the Full Court did not even consider that Kennedy had subjected Thorne to undue influence or unconscionable conduct. 1.117 The High Court overturned the Full Court’s decision. The High Court was unanimous in finding that Kennedy had exploited Thorne’s position of special disadvantage and procured Thorne’s execution of the prenuptial agreement through unconscionable conduct.303 Unconscionable conduct is not restricted to conduct that is illegitimate or unlawful. 1.118 Undue influence is similarly not constrained. The plurality considered that although the trial judge had concluded that Thorne had executed the prenuptial agreement under ‘duress’, the trial judge’s reasoning suggested that the trial judge’s conclusion could more aptly be described as ‘undue influence’.304 The plurality held that it was open to the trial judge on the evidence to conclude that Thorne’s execution of the prenuptial agreement was not a free act.305

1.119 Gordon J, however, held that there should be no finding of undue influence.306 He considered that Thorne’s will had not been impaired. Gordon J pointed to the ‘evident correctness’ of Thorne’s assessment that she had ‘no choice’ but to sign the prenuptial agreement, if she wanted [page 55] to marry Kennedy, as proof of Thorne’s capacity to exercise independent judgment.307 Gordon J argued that Thorne’s ‘paucity of options’ may be relevant to determining whether Kennedy engaged in unconscionable conduct ‘[b]ut it says nothing about her will’.308

1.

N Sneddon, R Bigwood & M Ellinghaus, Cheshire and Fifoot’s Law of Contract, LexisNexis Butterworths, Sydney, 2012, at [1.78]; M Ellinghaus & T Wright, Australian Contract Code, Article 12.

2.

See Aristotle, The Nicomachean Ethics (2004 ed); Nicolas Fearn, Zeno and the Tortoise, Atlantic Books, London, 2001, Ch 6; Gerard J Hughes, Routledge Philosophy Guidebook to Aristotle, Taylor & Francis, London, 2003, at 14.

3.

William Holdsworth, Some Lessons From Our Legal History, Macmillan, New York, 1928, at 57; Alan Harding, A Social History of English Law, Peter Smith Publishing, Gloucester, MA, 1973.

4.

J H Baker, An Introduction to English Legal History, 4th ed, Oxford University Press, Oxford, 2002, preface; Harding, above note 3.

5.

Harding, above note 3.

6.

P S Atiyah, The Rise and Fall of Freedom of Contract, Oxford University Press, Oxford, 1979; Morton J Horwitz, ‘The Rise of Formalism’ (1975) 19 American Journal of Legal History 251; Grant Gilmore, The Death of Contract, Ohio State University Press, Columbus, OH, 1974.

7.

A K R Kiralfy, Potter’s Historical Introduction to English Law and its Institutions, Sweet & Maxwell, London, 1962, at 9. See also S F C Milsom, Historical Foundations of the Common Law, Butterworth-Heinemann, Oxford, 1981, at 11; Theodore F T Plucknett, A Concise History of the Common Law, 5th ed, Little, Brown and Company, Boston, MA, 1956, at 11.

8.

For further information see Milsom, Ch 1; Kiralfy, above note 7, Ch 2.

9.

Milsom, above note 7; L B Curzon, English Legal History, Macdonald and Evans,

London, 1979, at 57. 10.

Baker, above note 4, at 317; Curzon, above note 9, at 278; Milsom, above note 7, at 314.

11.

See Kiralfy, above note 7, at 450.

12.

Kiralfy, above note 7, at 460; Curzon, above note 9, at 283; Baker, above note 4, at 363.

13.

YB 43 Edward III, Michs No 38.

14.

Plucknett, above note 7, at 637; Baker, above note 4, at 329; Milsom, above note 7, at 316.

15.

Milsom, above note 7, at 322; Baker, above note 4, at 329–46; Plucknett, above note 7, at 638–46.

16.

Milsom, above note 7, at 323; Plucknett, above note 7, at 639.

17.

See Watton v Brinth (1400) YB 2 Henry IV, Michs No 9.

18.

See Plucknett, above note 7, at 640.

19.

(1442) YB 20 Hen VI, H, T, pl 4.

20.

Plucknett, above note 7, at 640; Milsom, above note 7, at 346; Curzon, above note 9, at 286.

21.

See Browning v Beston (1553) Plowd at 140; Stranborough v Warner 4 Leon 3.

22.

(1602) 4 Rep 92b.

23.

ibid.

24.

Morton J Horwitz, ‘The Historical Foundations of Modern Contract Law’ (1974) 87(5) Harvard Law Review 917 at 917.

25.

C H S Fifoot, History and Sources of the Common Law, Steven & Sons Ltd, London, 1949, at 412.

26.

(1599) Croke, Eliz 74.

27.

Horwitz, above note 6, at 257.

28.

Atiyah, above note 6, at 167.

29.

Horwitz, above note 24, at 923.

30.

These jurists, referred to by Atiyah, include J J Powell (1790), Chitty (1826), Addison (1847), Leake (1867), Sir Frederick Pollock (1875) and Sir William Anson (1879).

31.

See generally Atiyah, above note 6.

32.

Liberalism enjoys a long and rich or broad tradition. There are many different liberal thinkers and there are many different strains of liberalism from classical liberalism to welfare liberalism (see, for example, Alan Ryan, ‘Liberalism’ in Robert E Goodin & Philip Pettit (eds), A Companion to Contemporary Political Philosophy, Blackwell Publishing, Oxford, 1997, Ch 11; Jean Hampton, Political Philosophy, Westview Press, Boulder, CO, 1997, at 170–82; Maureen Ramsay, What’s Wrong with Liberalism?, Bloomsbury Publishing, London, 1997). This text will focus on classical liberalism on the basis that, as indicated above, this is what historically contributed to the emergence of will theory and represents the basic type of liberalism.

33.

Ramsay, above note 32, at 66; Isaiah Berlin, ‘Two Concepts of Liberty’ in Isaiah Berlin,

Four Essays on Liberty, Oxford University Press, Oxford, 1969, at 118, 123. 34.

Berlin, above note 33, at 122.

35.

Philip Pettit, A Theory of Freedom: From the Psychology to the Politics of Agency, Oxford University Press, Oxford, 2001, at 32; Philip Pettit, Republicanism: A Theory of Freedom and Government, Oxford University Press, Oxford, 1997.

36.

See Berlin, above note 33, at 122; John Stuart Mill, Essay on Liberty, Fontana Press, London, 1962, at 135; John Locke, An Essay, Concerning the True Original Extent and End of Civil Government, C T Research Publications, Woodbridge, CT, 1987, at 25; Thomas Hobbes, Leviathan, Penguin Books, London, 1985, at 261.

37.

Felix Oppenheim, Political Concepts: A Reconstruction, University of Chicago Press, Chicago, IL, 1980, at 67; Friedrich Hayek, The Constitution of Liberty, University of Chicago Press, Chicago, IL, 1960, at 83–7; Friedrich Hayek, ‘Freedom and Coercion’ in Damien Miller (ed), Liberty, Oxford University Press, Oxford, 1991; Berlin, above note 33; Ramsay, above note 32, at 40.

38.

Berlin, above note 33, at 122.

39.

Felix Oppenheim, ‘“Facts” and “Values” in Politics: Are They Separable?’ (1973) Political Theory 1 54 at 56; J P Day, ‘On Liberty and the Real Will’ (1970) Philosophy 95; J P Day, ‘Threats, Offers, Law, Opinion and Liberty’ (1977) American Philosophical Quarterly 14; W A Parent, ‘Recent Work on the Concept of Liberty’ (1974) American Philosophical Quarterly 11; Ramsay, above note 32, at 42.

40.

ibid.

41.

Hobbes, above note 36; Locke, above note 36; Berlin, above note 33, at 123; Ramsay, above note 32, at 19.

42.

ibid.

43.

Berlin, above note 33, at 127; Ramsay, above note 32.

44.

Ramsay, above note 32, at 39.

45.

James Gordley, The Philosophical Origins of Modern Contract Doctrine, Clarendon Press, Oxford, 1991, at 215; Patrick Atiyah, An Introduction to the Law of Contract, 5th ed, Clarendon Press, Oxford, 1995, at 8.

46.

Dori Kimel, From Promise to Contract: Towards A Liberal Theory of Contract, Hart Publishing, Oxford and Portland, OR, 2003, at 117.

47.

Kimel, ibid; Atiyah, above note 45, at 8.

48.

Kimel, above note 46; P S Atiyah, Essays on Contract, Oxford University Press, Oxford, 1986, at 13; Morris R Cohen, ‘The Basis of Contract’ (1933) 46 Harvard Law Review 551 at 575; Jay M Feinman, ‘The Significance of Contract Theory’ (1990) 58 University of Cincinnati Law Review 1283 at 1285.

49.

Atiyah, above note 48.

50.

Ramsay, above note 32, at 7.

51.

See, for example, Thomas Hobbes, Leviathan, 1985 (first published 1651), Penguin Classics, London, 1985, at 263: ‘But as men, for the atteyning of peace, and conservation of themselves thereby, have made an Artificall Man, which we call a Common-wealth; so also have they made Artificiall Chains, call Civill Lawes, which they themselves by

mutuall covenants, have fastened at one end, to the lips of that Man, or Assembly, to whom they have given the Soveraigne Power; and at the other end to their own Ears.’ 52.

Ramsay, above note 32, at 7. For example, Locke believes that the abstract individual possesses three rights: the right to life, liberty and property.

53.

Hobbes, above note 36, at 183; Locke, above note 36, at 25.

54.

Locke, ibid.

55.

Hobbes, above note 36.

56.

David Hume, Treatise on Human Nature, Bk III, Pt 2, Clarendon Press, London, 1888; Jeremy Bentham, Introduction to the Principles of Morality and Legislation, Clarendon Press, Oxford, 1967, at 125; Hobbes, above note 36, at 261; Ramsay, above note 32, at 12.

57.

Hobbes, above note 36, at 261; Locke, above note 36, at 25; Crawford B Macpherson, The Political Theory of Possessive Individualism, Clarendon Press, Oxford, 1964; Crawford B Macpherson, Democratic Theory, Clarendon Press, Oxford, 1973; Ramsay, above note 32.

58.

Hume, above note 56, Bk II, Pt 3; Hobbes, above note 36, at 261; Bentham, above note 56, at 125; Ramsay, above note 32, at 15.

59.

Ramsay, above note 32, at 16.

60.

ibid.

61.

ibid, at 19.

62.

Cohen, above note 48, at 575.

63.

Feinman, above 48, at 1286.

64.

Berlin, above note 33, at 124.

65.

ibid; Ramsay, above note 32, at 191.

66.

Ramsay, above note 32, at 191; Berlin, above note 33; Stanley I Benn & Gerald F Gaus, ‘The Liberal Conception of the Public and the Private’ in Stanley I Benn & Gerald F Gaus (eds), Public and Private in Social Life, Croom Helm, London, 1983.

67.

Ramsay, above note 32, at 191; Berlin, above note 33, at 124; Carole Pateman, ‘Feminist Critiques of the Public/Private Dichotomy’ in Benn & Gaus (eds), ibid, at 281.

68.

Benn & Gaus, above note 66, at 32.

69.

ibid.

70.

Jay Feinman, ‘The Significance of Contract Theory’ (1989–1990) 58 University of Cincinnati Law Review 1284 at 1286.

71.

ibid; and see further below at 1.42–1.43.

72.

R D Mulholland, ‘The Shifting Sands of Contract Law’ (1994) New Zealand Law Journal 216; M Schultz, ‘The Gendered Curriculum: Of Contracts and Careers’ (1991) 77 Iowa Law Review 55; R Graycar & J Morgan, The Hidden Gender of Law, Federation Press, Leichhardt, 1990, at 30; Peter Heffey, Jeannie Paterson & Andrew Robertson, Principles of Contract Law, Lawbook Co, Sydney, 2002, at 107.

73.

[1919] 2 KB 571.

74.

ibid, at 578. Other examples include Cohen v Cohen (1929) 42 CLR 91 (an agreement between husband and wife); Jones v Padavatton [1969] 1 WLR 328 (an agreement between mother and daughter).

75.

[2015] NSWCA 12.

76.

ibid, at [82].

77.

Edwards v Skyways [1964] 1 All ER 494 at 500; Banque Brussels Lambert SA v Australian National Industries Ltd (1989) 21 NSWLR 502 at 521.

78.

C G Addison, A Treatise on the Law of Contracts, and Rights and Liabilities ex Contractu, 1845.

79.

Atiyah, above note 48.

80.

Feinman, above note 70, at 1287.

81.

Pettit, A Theory of Freedom: From the Psychology to the Politics of Agency, above note 35, at 134.

82.

ibid.

83.

Charles Taylor, ‘What’s Wrong with Negative Liberty’ in David Miller (ed), Liberty, Oxford University Press, Oxford, 1991, at 141; Ramsay, above note 32, at 42.

84.

Taylor, above note 83, at 149; Ramsay, above note 32, at 44.

85.

Ramsay, above note 32, at 45.

86.

Pettit, A Theory of Freedom: From the Psychology to the Politics of Agency, above note 35, at 136.

87.

ibid.

88.

Ramsay, above note 32, at 48.

89.

Feinman, above note 70, at 1287.

90.

See Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Taylor v Johnson (1983) 151 CLR 422.

91.

BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Byrne v Australian Airlines Ltd (1995) 185 CLR 411.

92.

Byrne v Australian Airlines Ltd (1995) 185 CLR 411 at 448.

93.

Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 at 348; South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at 695.

94.

See, for example, Barton v Armstrong [1973] 2 NSWLR 598; Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298.

95.

See, for example, Johnson v Buttress (1936) 56 CLR 116; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Bridgewater v Leahy (1998) 158 CLR 66.

96.

See Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 per

French CJ, Gummow, Crennan, Keifel and Bell JJ at [5]: ‘[R]emedial legislation suggests the need for caution in dealing with the unwritten law as if laissez faire notions of untrammelled “freedom of contract” provide a universal legal value.’ 97.

Ramsay, above note 32, at 25.

98.

Ramsay, above note 32, at 33.

99.

Charles Taylor, Sources of the Self, Harvard University Press, Cambridge, MA 1990, at 34–6; Alasdair Macintyre, After Virtue, University of Notre Dame Press, Notre Dame, IN, 1981; Michael Walzer, Spheres of Justice, Basic Books, New York, 1983; Michael Sandel, Liberalism and the Limits of Justice, Cambridge University Press, Cambridge, MA, 1982; Stephen Mulhall & Adam Swift, Liberals and Communitarianism, Blackwell, Oxford, 1992; Ramsay, above note 32, at 24.

100. Gertrude Anscombe, Intention, Basil Blackwell, Oxford, 1957, at 37; Richard Norman, Reasons for Action, 1971, Basil Blackwell: Oxford, at 55; Ramsay, above note 32, at 34. 101. ibid. 102. Ramsay, above note 32, at 34. 103. Carole Pateman, The Problem of Political Obligation, University of California Press, Berkeley, CA, 1985. 104. Atiyah, above note 48, at 19. 105. (1975) 133 CLR 125. 106. ibid, at 136. 107. Atiyah, above note 48, at 21. 108. Ramsay, above note 32, at 33; Mark Sagoff, ‘Liberalism and Law’ in Douglas Maclean & Claudia Mills, Liberalism Reconsidered, Rowman & Allanheld, Totowa, NJ, 1983. 109. ibid. 110. Ramsay, above note 32. 111. Johnson v Buttress (1936) 56 CLR 113; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447. 112. Gibbons v Wright (1954) 91 CLR 423. 113. Blomley v Ryan (1956) 99 CLR 362. 114. Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447. 115. Louth v Diprose (1992) 175 CLR 621; Bridgewater v Leahy (1998) 194 CLR 457. 116. Bainbrigge v Browne (1881) 18 Ch D 188; London v Westminster Loan and Discount Co Ltd v Bilton (1911) 27 TLR 184. 117. Allcard v Skinner (1887) 36 Ch D 145. 118. Re P’s Bill of Costs (1982) 45 ALR 513; Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305. 119. Dent v Bennett (1839) 41 ER 105; Williams v Johnson [1937] 4 All ER 34. 120. Pateman, above note 103, at 295. 121. J M Allan (Merchandising) Ltd v Coke [1963] 2 QB 340; Andrews v Parker [1973] Qd R

93; Seidler v Schallhofer [1982] 2 NSWLR 80. 122. Wilkinson v Osborne (1915) 21 CLR 89; Wood v Little (1921) 29 CLR 564. 123. Wilkinson v Osborne (1915) 21 CLR 89 at 98. 124. Mulholland, above note 72. 125. See, for example, Todd v Nicol [1957] SASR 72; Riches v Hogben [1986] 1 Qd R 31; Fleming v Beevers [1994] 1 NZLR 385; W v G (1996) 20 FamLR 49. 126. Charles Fried, Contract as Promise: A Theory of Contractual Obligation, Harvard University Press, Cambridge, MA, 1981. 127. Rick Bigwood, Exploitative Contracts, Oxford University Press, Oxford, 2003. 128. ibid, at 4. 129. ibid, at 18. 130. Dori Kimel, ‘Neutrality, Autonomy, and Freedom of Contract’ (2001) 21 Oxford Journal of Legal Studies 473; Dori Kimel, From Promise to Contract: Towards a Liberal Theory of Contract, Hart Publishing, Oxford and Portland, OR, 2003. 131. Atiyah, above note 48, at 121; Atiyah, ‘Book Review: Contract as Promise’ (1981) 95 Harvard Law Review 509. 132. Fried, above note 126, at 1. 133. ibid, at 7. 134. ibid, at 8. 135. ibid, at 16. 136. Daniel Farber, ‘Book Review: Contract As Promise’ (1982) 66 Minnesota Law Review 561. 137. ibid. 138. Atiyah, above note 48, at 515. 139. ibid, at 69. 140. Fried, above note 126, at 88. 141. ibid. 142. Farber, above note 136, at 564. 143. Fried, above note 126, at 27, 62. 144. Fried, above note 126, at 1 (emphasis added). 145. Farber, above note 136, at 564. 146. ibid. 147. Atiyah, above note 48. 148. Fried, above note 126, at 97. 149. Atiyah, above note 48, at 131. 150. ibid, at 132. 151. ibid.

152. Bigwood, above note 127, at 2. 153. ibid, at 63. 154. ibid, at 64. 155. ibid. 156. ibid, at 76. 157. ibid, at 86 citing Lucas, On Justice, Clarendon Press, Oxford, 1980, at 10 citing Aristotle. 158. Bigwood, above note 127, at 86. 159. ibid, at 129. 160. ibid, at 5. 161. ibid, at 206. 162. ibid, at 209. 163. ibid, at 213. 164. Kimel, ‘Neutrality, Autonomy, and Freedom of Contract’, above note 130, at 473. 165. ibid, at 476. 166. In particular Kimel refers to Joseph Raz, The Morality of Freedom, Clarendon Press, Oxford, 1986 and Joseph Raz, ‘Liberty and Trust’ in Robert George (ed), Natural Law, Liberalism and Morality, Clarendon Press, Oxford, 1996, at 113. 167. Kimel, above note 130, at 476. 168. Raz, ‘Liberty and Trust’, above note 166, at 114. 169. ibid. 170. ibid. 171. ibid, at 115. 172. ibid, at 114. 173. ibid, at 120. 174. ibid, at 121. 175. Anthony J Bellia, ‘Promises, Trust and Contract Law’ (2002) 47 The American Journal of Jurisprudence 25. 176. ibid. 177. ibid. 178. ibid. 179. Curtis Bridgeman, ‘Liberalism and Freedom from the Promise Theory of Contract’ (2004) 67(4) Modern Law Review 684 at 692. 180. Berlin, above note 33. 181. Pettit, A Theory of Freedom and Government, above note 35, at 129–32. 182. Pettit, A Theory of Freedom and Government, above note 35; Quentin Skinner, Liberty Before Liberalism, Cambridge University Press, Cambridge, 1998; Pettit, A Theory of Freedom: From the Psychology to the Politics of Agency, above note 35, at 144.

183. Pettit, A Theory of Freedom and Government, above note 35, at 70–2. 184. See, for example (in addition to the cases referred to below), Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 9 per Gleeson CJ: ‘The general policy of the law is that people should enforce their contracts.’; Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 133 per Kirby P: ‘It is an attribute of a free society as we know it, that it is generally left to the parties themselves to make bargains.’; AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 194 per Mason and Wilson JJ: ‘[T]he courts strike a balance between the competing interests of freedom of contract and the protection of weak contracting parties.’; Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 at [31] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan and Heydon JJ: ‘The law of contract normally upholds the freedom of the parties, with no relevant disability, to agree upon the terms of their future relationships.’ 185. (1875) LR 19 Eq 462. 186. ibid, at 465. 187. (2003) 217 CLR 315. 188. ibid, at [106]. 189. (2003) 214 CLR 51. 190. ibid, at [85]. 191. Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 at [5] per French CJ, Gummow, Crennan, Keifel and Bell JJ. 192. Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 338 per McHugh JA. 193. See Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [24] per Gaudron, McHugh, Hayne and Callinan JJ. 194. Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 678 per Griffith CJ. 195. Vroon BV v Foster’s Brewing Group Ltd [1994] 2 VR 32 at 79 per Ormiston J. 196. See, for example, Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 184 (offer to buy horse subject to examination of fitness by expert). 197. See Hawthorn v Fraser [1892] 2 Ch 27 at 37 per Kay LJ. 198. Which, if acepted, would result in what is known as a ‘bilateral contract’. 199. Which, if acepted, would result in what is known as a ‘unilateral contract’. Typical examples of such a contract include offers for a reward. See, for example, Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. In that famous case the Carbolic Smoke Ball Co sold a product, known as ‘The Carbolic Smoke Ball’, which the comnpany claimed would ward off influenza if used in the prescribed manner. The company issued an advertisement offering to pay £100 to any person who had used their product as prescribed but had nonetheless succumbed to influenza. The court held that it was possible that an offer made ‘to all the world’ could ‘ripen’ into a contract. 200. Otherwise known as an ‘invitation to treat’ or an ‘offer to chaffer’, the statement is merely a request to others to make an offer or enter into negotiations: see Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 at 268 per Bowen LJ. A catalogue advertising goods for sale is an example of an invitation to treat: see Jewellery Group Pty Ltd v

Australian Competition and Consumer Commission [2013] FCAFC 144 at [34] per Greenwood and Besanko JJ. 201. See, for example, Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 at 266 per Bowen LJ: ‘How would an ordinary person construe it?’ 202. Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 678 per Griffith CJ. 203. ibid. 204. See Batt v Onslow (1892) 13 LR (NSW) Eq 79; Esanda Finance Corporation Ltd v Atanasovska [2014] NSWDC 169 at [25]. An exception to this general rule is the postal rule which provides that acceptance of an offer is complete (and hence a contract is formed) at the time that a letter conveying the acceptance is posted rather than when the said letter is received and read by the offeror: Adams v Lindsell (1818) 106 ER 250; Tooth v Fleming (1859) Legge 1152; Patterson v Dolman [1908] VLR 354. 205. R v Clarke (1927) 40 CLR 227 at 241 per Higgins J: ‘There cannot be assent without knowledge of the offer.’ 206. If the stipulated mode of acceptance is mandatory, purported acceptance by another mode will be ineffective to create a binding contract: Kennedy v Thomasson [1929] 1 Ch 426; Spectra Pty Ltd v Pindari Pty Ltd [1974] 2 NSWLR 617. 207. See, for example, Farmers’ Mercantile Union v Coade (1921) 30 CLR 113 in which conduct of making calls was found to have constituted acceptance of shareholder application. 208. Redwood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 at [66] per Tobias JA (with whom Spigelman CJ and Bryson JA agreed). 209. See, for example, Precision Pools Pty Ltd v Federal Commissioner of Taxation (1992) 37 FCR 554 at 560: the ATO purported to accept an offer of settlement made by a taxpayer with the qualification that payment was to be made by a certain date. The court held that this ‘acceptance’ was in fact a counter-offer because the qualification went beyond the terms of the offer. 210. That is, consideration must move from the promisee — unless the contract is contained in a deed: Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 164 per Mason CJ and Wilson J and at 164 per Toohey J. 211. Beaton v McDivitt (1987) 13 NSWLR 162 at 168 per Kirby P. 212. Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723. (See Chapter 2 (2.54 and 2.56).) 213. Cannane v Official Trustee in Bankruptcy (1996) 65 FCR 453 at 466 per Beaumont and Hill JJ (reversed without reference to the point in (1998) 192 CLR 557). 214. See Stilk v Myrick (1809) 160 ER 1168 in which sailors were unsuccessful in enforcing a promise to be paid the wages of two deserters if they stayed on to sail the ship home. 215. See Aravco Ltd v Qantas Airways Ltd (1995) 132 ALR 419 at 427 per Mahoney AP (Sheller and Powell JJA concurring). 216. See Chapter 2 (2.53–2.56). 217. Woolworths Ltd v Kelly (1991) 22 NSWLR 189 at 194 per Kirby P. 218. Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 at 457 per

Dixon CJ, Williams, Webb, Fullagar and Kitto JJ; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [24] per Gaudron, McHugh, Hayne and Callinan JJ. 219. Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [25] per Gaudron, McHugh, Hayne and Callinan JJ; Pacific Carriers Ltd v BNP Paribus (2004) 218 CLR 451 at [22] per Gleeson, CJ, Gummow, Hayne, Callinan and Heydon JJ; Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2012) 289 ALR 237 at [14] per Rares, Buchanan and Griffiths JJ. 220. Gaudron, McHugh, Hayne and Callinan JJ in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [26] disapproved of the use of the term: ‘For our part we doubt the utility of using the language of presumptions in this context. At best the use of the language does no more than invite attention to identifying the party who bears the onus of proof.’ See also Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2012) 289 ALR 237 at [12]–[13] per Rares, Buchanan and Griffiths JJ; Sion v NSW Trustee and Guardian [2013] NSWCA 337 at [40]–[41] per Emmett JA (Basten and Barrett JA agreeing); Ashton v Pratt [2015] NSWCA 12 at [73] per Bathurst CJ (McColl and Meagher JJA agreeing). 221. See Balfour v Balfour [1919] 2 KB 571 (agreement between husband and wife); Cohen v Cohen (1929) 42 CLR 91 (agreement between husband and wife); Jones v Padavatton [1969] 1 WLR 328 (agreement between mother and daughter); Sion v NSW Trustee and Guardian [2013] NSWCA 337 (agreement to care for elderly aunt and uncle); Ashton v Pratt [2015] NSWCA 12 (agreement between couple in an extramarital affair). 222. See Edwards v Skyways Ltd [1964] 1 All ER 494 at 500; Banque Brussels Lambert SA v Australian National Industries Ltd (1989) 21 NSWLR 502 at 521. 223. Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 at 436 per Barwick CJ; Mushroom Composters Pty Ltd v I S & D E Robertson Pty Ltd [2015] NSWCA 1 at [63] per Sackville AJA (McFarlane and Gleeson JJA agreeing). 224. Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 343 ALR 58 at [98] per Nettle J: ‘The court is not authorised under the guise of construction to make a new contract for the parties at odds with the contract to which they have agreed.’ 225. Bridge v Campbell Discount Co Ltd [1962] AC 600 per Lord Radcliffe at 626. See also Brusewitz v Brown [1923] NZLR 1106 per Salmond J at 1109: ‘The mere fact that a transaction is based on inadequate consideration or is otherwise improvident, unreasonable, or unjust is not in itself any ground on which this Court can set it aside as invalid.’ 226. See Bigwood, above note 127, Ch 7. 227. See above, 1.70–1.76. 228. (1993) 32 NSWLR 50 at 106. Note that Kirby P was also critical of the doctrine of economic duress (at 107) and his criticism was referred to in Australia and New Zealand Banking Group Ltd v Karam [2005] NSWCA 344 at [57]. 229. Cited in Kiralfy, above note 7, at 578. 230. G E Dal Pont & D R C Chalmers, Equity and Trusts in Australia and New Zealand, 2nd

ed, LBC Information Services, Sydney, 2000, at 6; Kiralfy, above note 7, at 595; Plucknett, above note 7, at 702. 231. A complete list of equitable maxims can be found in Patricia Loughlin, ‘The Historical Role of the Equitable Jurisdiction’ in Patrick Parkinson (ed), The Principles of Equity, 2nd ed, Lawbook Co, Sydney, 2003, at 3. 232. See Meyers v Casey (1913) 17 CLR 90 at 124 per Issacs J; Thors v Weekes (1989) 92 ALR 131; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 396. 233. Supreme Court Act 1933 (ACT) ss 25–32; Supreme Court Act (NT) ss 61–70; Supreme Court Act 1995 (Qld) ss 242–249; Supreme Court Act 1935 (SA) ss 20–28; Supreme Court Civil Procedure Act 1932 (Tas) ss 10–11; Supreme Court Act 1986 (Vic) s 29; Supreme Court Act 1935 (WA) ss 24–25; Judicature Act 1908 (NZ) s 16. 234. Hansard, 3rd Series, Vol 214 at 339. See also Hansard, 3rd Series, Vol 216 at 1601 at the speech of the then Attorney General Sir John Coleridge who said ‘[l]aw and Equity were two things inherently distinct’. 235. W Ashburner, Principles of Equity, 2nd ed, Butterworth & Co, London, 1933, at 18. 236. See Britain v Rossiter (1879) 11 QBD 123 at 129 per Brett LJ; Salt v Cooper (1880) 16 Ch D 544 at 549 per Sir George Jessel MR; Stickney v Keeble [1915] AC 386 at 417 per Lord Parker. 237. [1989] 1 All ER 545. 238. ibid, at 557. 239. [1974] 1 NSWLR 622. See also Felton v Mulligan (1971) 124 CLR 367 at 392 per Windeyer J. 240. ibid, at 626. 241. [1978] AC 904. 242. ibid, at 925. 243. [1978] QB 927. 244. ibid, at 974. 245. [2002] 2 NZLR 91. 246. ibid, at 103. 247. G R Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd (1991) 42 NSWLR 80 at 99. 248. R Meagher, W Gummow & J Lehane, Equity: Doctrines and Remedies, 3rd ed, Butterworths, Sydney, 1992, at 46. 249. ibid, at 47. 250. Michael Tilbury, ‘Fallacy or Furphy?: Fusion in a Judicature World’ (2003) 26(2) UNSW Law Journal 357 at 358. 251. ibid. 252. ibid. 253. See Julie Maxton, ‘Some Effects of the Intermingling of Common Law and Equity’ (1993) 5 Canterbury Law Review 299; Jill Martin, ‘Fusion, Fallacy and Confusion: A

Comparative Study’ (1994) The Conveyancer 13; Fiona Burns, ‘The Fusion Fallacy Revisited’ (1993) 5 Bond Law Review 152; Michael Tilbury, ‘Fallacy or Furphy?: Fusion in a Judicature World’ (2003) 26(2) UNSW Law Journal 357; Andrew Burrows, ‘We Do This At Common Law But That In Equity’ (2002) 22(1) Oxford Journal of Legal Studies 1; Andrew Burrows, Fusing Common Law and Equity: Remedies, Restitution and Reform, Sweet & Maxwell Asia, Hong Kong, 2002. 254. Maxton, above note 253. 255. ibid, at 300. 256. Tilbury, above note 253, at 11. 257. Burns, above note 253, at 155. 258. (2003) 56 NSWLR 298. 259. ibid, at [140]. 260. Tilbury, above note 253, at 369. 261. F W Maitland, Equity: A Course of Lectures, Cambridge University Press, Cambridge, MA, 1947, at 20. 262. Dal Pont, ‘The Varying Shades of “Unconscionable” Conduct — Same Term, Different Meaning’ (2000) 19 Australian Bar Review 135. 263. C Rickett, ‘Unconscionability and Commercial Law’ (2005) 24 The University of Queensland Law Journal 73 at 82; P Finn, ‘Uconscionable Conduct’ (1994) 8 Journal of Contract Law 37 at 38–9. 264. (1989) 166 CLR 623 at 654. 265. [2002] FCA 62 at [48]. 266. (1982–1983) 151 CLR 447. 267. See Chapters 3 and 4 respectively. 268. (1992) 175 CLR 621. 269. (1998) 194 CLR 457. 270. See Chapter 3. 271. (1988) 194 CLR 395. 272. (1988) 164 CLR 387. 273. (1990) 170 CLR 394. 274. (1982–1983) 152 CLR 406. 275. (1988) 165 CLR 489. 276. (2003) 217 CLR 315 at [23]–[26] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ. 277. Rickett, ‘Unconscionability and Commercial Law’, above note 263. 278. (1985) 160 CLR 583 at 616. 279. [2005] 63 NSWLR 557 at [120]. 280. (1989) 16 NSWLR 582.

281. Louth v Diprose (1992) 175 CLR 621 at 627 per Brennan J; Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 at 290 per Kiefel J (Lindgren J agreeing); Lopwell Pty Ltd v Clarke [2009] NSWSCA 165 at [49] per Macfarlan JA (with whome Ipp and Campbell JJA agreed); Thorne v Kennedy [2017] HCA 49 at [30] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. See also I J Hardingham, ‘Unconscionable Dealing’ in P D Finn, Essays in Equity, Law Book Co, Sydney, 1985, at 21–4; Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 Law Quarterly Review 238 at 249. 282. See, for example, Louth v Diprose (No 1) (1990) 54 SASR 438 at 448–9 per King CJ who observed at first instance that both undue influence and unconscionable conduct are present where the defendant ‘was in a position of emotional dominance which gave her influence over the [plaintiff] which she exercised unconscientiously to procure the gift of the house’. See also Thorne v Kennedy [2017] HCA 49 at [39] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ referring to Louth v Diprose (No 1). The majority in Thorne v Kennedy found that a prenuptial agreement was procured by both undue influence and unconscionable conduct. 283. (1965) 55 DLR (2d) 710 at 713. 284. Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Bridgewater v Leahy [1998] 194 CLR 457; Thorne v Kennedy [2017] HCA 49. 285. Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 (Amadio). 286. Amadio, at 461. 287. Amadio, at 474. 288. See Chapter 2 (2.5 and 2.38–2.72). 289. Liptak v Commonwealth Bank of Australia [1998] SASC 6887 at [48]. 290. (1991) 22 NSWLR 298. For a full summary of this case see Chapter 2 (2.13). 291. (1936) 56 CLR 113. For a full summary of this case see Chapter 3 (3.82). 292. [2017] HCA 49 (Thorne High Court). 293. Thorne High Court, at [5]. 294. Thorne High Court, at [9]. 295. Thorne v Kennedy [2015] FCCA 484 (Thorne First Instance). 296. Thorne First Instance, at [94]. 297. Thorne First Instance, at [93]. 298. Thorne First Instance, at [94]. 299. Kennedy v Thorne [2016] FamCAFC 189 (Thorne Full Court). 300. Thorne Full Court, at [75]. 301. Thorne Full Court, at [73]. 302. Thorne Full Court, at [71]. 303. Thorne High Court, at [63]–[65] per plurality, at [74] per Nettle J, at [79] per Gaudron J. 304. Thorne High Court, at [56].

305. Thorne High Court, at [59]. 306. Thorne High Court, at [79], [108]. 307. Thorne High Court, at [106]. 308. Thorne High Court, at [107].

[page 57]

Chapter 2 Duress 2.1 Duress is a common law doctrine. The rationale of the doctrine is that ‘the law will not give effect to an apparent consent which was induced by pressure exercised upon one party by another party when the law regards that pressure as illegitimate’.1 2.2 A concise description of the doctrine was given by Issacs J in the High Court decision of Smith v William Charlick Ltd,2 as follows: ‘Compulsion’ in relation to a payment of which refund is sought, and whether it is also variously called ‘coerion’, ‘extortion’, ‘exaction’, or ‘force’, includes every species of duress, or conduct analogous to duress, actual or threatened, exerted by or on behalf of the payee and applied to the person or the property, or any right of the person who pays, or, in some cases, of a person related to or in affinity with him.3

2.3 The doctrines of duress, undue influence and unconscionable conduct sometimes overlap in practice. The boundaries of these doctrines are outlined in Chapter 1. 2.4 In this chapter the elements of the duress doctrine are pulled apart and sketched, as are what might be considered to be the statutory equivalents of duress in consumer protection legislation.

ELEMENTS OF DURESS 2.5 McHugh JA, in the New South Wales Court of Appeal decision of Crescendo Management Pty Ltd v Westpac Banking Corporation,4

observed (citing Lord Diplock in Universe Tankships Inc of Monrovia v International Transport Workers’ Federation5) that ‘there are two [page 58] elements in the realm of duress: (a) pressure amounting to compulsion of the will of the victim and (b) the illegitimacy of the pressure exerted’.6 Each element is examined below.

COMPULSION OF THE WILL Objective test 2.6 Whether a threatened party has been coerced is to be determined objectively.7

Rejection of overborne will theory in Australia 2.7 Duress has been traditionally described in the English case law as a doctrine that operated to set aside a contract where a contracting party’s consent had been coerced or his or her will overborne. In Occidential Worldwide Investment Corporation v Skibs A/S Avanti Kerr J considered that a court, in finding duress, must ‘at least be satisfied that the consent of the other party was overborne by compulsion so as to deprive him of any animus contrahendi’.8 Similarly, Lloyd J in Syros Shipping Co SA v Elaghill Trading Co held that when determining whether a contract had been entered into under duress the court had to consider ‘whether the commercial pressure exercised by one party on the other was such as to vitiate the party’s consent by coercion of his will’.9 The Privy Council in Pao On v Lau Yiu Long held that ‘duress, whatever form it takes, is a coercion of his will’.10 Lord Scarman, in the frequently cited case of Universe Tankships Inc of Monrovia v International Transport Workers’ Federation (‘Universe Tankships’) considered that, ‘(t)here must be pressure, the practical effect of which is compulsion or the absence of choice’.11

2.8 The ‘overbearing of the will theory’12 enunicated in the English cases, however, has been rejected in Australia. Campbell J in Peanut Marketing Board v Cuda considered that ‘[duress is] not a matter of a person being left with no choice — it [is] a matter of the pressure [page 59] applied being of a kind which the law does not regard as legitimate’.13 McHugh JA, in Crescendo, expressly rejected the overborne will theory for three reasons.14 First, McHugh JA observed that the overborne will theory was unanimously rejected by the House of Lords in the criminal duress case of Director of Public Prosecutions v Lynch.15 Lord Simon of Glaisdale, for example, noted that ‘duress is not inconsistent with act and will, the will being deflected, not destroyed …’.16 Second, it is settled law that a contract entered into under duress is merely voidable and not void and this is plainly inconsistent with an overborne will theory.17 Third, it is also settled law that it is unnecessary for plaintiffs to prove that the illegitimate pressure to which they were subjected was the sole reason for their entry into the contract. This principle is, again, inconsistent with an overborne will theory.18 McHugh JA, in rejecting the overborne will theory, considered that: A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenace as legitimate …19 [emphasis added]

The circumstances in which courts have held that pressure applied by one party has induced another to enter into a contract are considered below.

Applied pressure 2.9 As McHugh JA observed, in rejecting the overborne will theory of duress, the proper approach to duress is to first ask whether any pressure applied by one party has induced the other party to enter into the contract.20 Absent applied pressure, there is no duress. As one

[page 60] commentator noted, duress ‘must come from without, and not from within’.21 2.10 In Smith v William Charlick Ltd22 (‘Charlick’) the High Court held that a miller’s payment of a surcharge on wheat was not paid under duress to the Wheat Harvest Board because the Board had no legal obligation to supply wheat to the miller. The Board had no legal entitlement to the surcharge but threatened not to supply wheat to the miller in the future unless the surcharge was paid. The High Court noted that, by virtue of the Board’s monopoly, the miller’s business depended on the Board for the supply of wheat23 but as Issacs J observed ‘(r)efusal to relieve from business difficulties is not the creation of those difficulties. It is not the same thing as weilding the whip or the rod’.24 2.11 Similarly, in Australia and New Zealand Banking Group Ltd v Karam25 the New South Wales Court of Appeal found that the Karam family did not sign an acknowledgment26 under duress because the ANZ bank was under no obligation to provide further financial accomodation to save the family company from its financial difficulties. In finding that no duress had been proven, the court observed: Once it is accepted, correctly, that the perilous financial circumstances of the Company were ‘not the Bank’s doing’, there is no basis for saying the Bank, in a legal sense, subjected the Karams to pressure.27

2.12 The Western Australian Court of Appeal also observed in Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd28 that ‘the defendant’s conduct must put the plaintiff under “pressure” in the ordinary sense of that word’.29 The court went on [page 61] to observe that, in determining whether pressure has been applied by

the defendant, the defendant’s conduct must be assessed ‘as a matter of substance and reality, and not mere form’.30 It follows that pressure may be applied by way of either an express or implicit, veiled, threat.

Express or implicit threats 2.13 Pressure may be applied either expressly or implicitly.31 An example of an implicit threat, giving rise to a finding that a contract had been entered into under duress, can be found in Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd.32 In that case the respondent, ‘Helicopter Charter’, ran a helicopter charter business and engaged the appellant, ‘Hawker Pacific’, to repaint one of its two helicopters for a fee of $5,200. Hawker Pacific repainted the helicopter but Helicopter Charter was dissatisfied with the work. The parties subsequently agreed that Hawker Pacific would repaint the helicopter for an increased fee of $5,500. On completion of the work Helicopter Charter took possession of the helicopter and used it in its business for several months. During this time Helicopter Charter complained about defects in the work done by Hawker Pacific and did not pay any part of the agreed fee. Hawker Pacific agreed to rectify the defects and the helicopter was returned to Hawker Pacific for this purpose. On collecting the helicopter, Hawker Pacific presented Helicopter Charter with a written agreement to pay the sum of $4,300 and release Hawker Pacific from all liability with respect to the paint job carried out on the helicopter. Prior to signing the agreement Helicopter Charter had told Hawker Pacific that the helicopter was needed urgently that day for charter work. Although no express threat was made by Hawker Pacific, the surrounding circumstances led Helicopter Charter to believe that Hawker Pacific would not release the helicopter [page 62] unless it signed the agreement. In particular, the trial judge found that Helicopter Charter’s manager and pilot, despite having been told that the helicopter was ready for collection, were directed to see Hawker Pacific’s manager who then argued as to what defects Hawker Pacific

was or was not responsible for and went on to state that ‘I don’t expect you to pay cash, but it is company policy to require payment before releasing the helicopter’.33 Helicopter Charter did not make payment but signed the agreement and took the helicopter. Helicopter Charter later commenced proceedings to set aside the agreement. Hawker Pacific argued, among other things, that it made no express threat to retain the helicopter unless the agreement was signed. Priestly JA, with whom Clarke and Hendley JJA agreed, held that: … it does not seem to me to be sufficient for the appellant’s purposes to show that no express threat was made. If circumstances for which the appellant was responsible conveyed the threat to the respondent, then the threat of duress would operate as forcefully as if it were put into words.34

Threats by contracting parties and third parties 2.14 The party applying pressure must be the party who either takes the benefit of the contract, entered into under duress, or otherwise takes the benefit with knowledge, actual or constructive, of the pressure being applied by another party.35 2.15 In the seminal case of Barton v Armstrong36 Jacobs JA observed that duress: … must consist in threats of violence calculated to cause fear of loss of life or of bodily harm or actual violence or unlawful imprisionment or threat thereof to one party … by the other party to the contract, or by someone acting with his knowledge and with his advantage. [emphasis added]

2.16 The Privy Council in Barton found that Mr Barton entered into a contract to sell shares in a company under duress after having received [page 63] threats of physical violence from his business colleague, Mr Armstrong, who also hired a ‘strongarm man’ to watch Mr Barton’s house.37 2.17 Conversely, pressure applied by a stranger will not entitle a contracting party to set aside a contract with a blameless party. In

Charlick, Isaacs J, after having reviewed the law on duress, held that ‘(i)t is clear that duress created by persons or circumstances unconnected with a party to a contract is no cause for impeaching the bargain with him’.38 Isaacs J’s statement was subsequently applied by Perry J in Magnacrete Ltd v Douglas-Hill39 who held that ‘(p)ressure by a third party acting independently of the contracting parties cannot constitute duress so as to provide a ground for avoidance’.40 In Magnacrete, Douglas-Hill held significant shares in a company which he later transferred to Magnacrete Ltd. Douglas-Hill subsequently sought to have the transaction set aside arguing that he had entered into the transaction under duress. Immediately prior to entering into the transaction Douglas-Hill had fallen into financial difficulty and had received a demand from his bank for repayment of money loaned to him for the purchase of the shares. 2.18 Similarly, in Dunwoodie v Teachers Mutual Bank Ltd41 McColl JA, with whom Ward JA agreed, held that Dunwoodie did not have an arguable defence of duress to the bank’s claim because the debt was incurred under pressure applied by a stranger and without the bank’s knowledge.42 In that case Mr Dunwoodie alleged that he incurred the debt after receiving death threats from members of a motorcycle gang who demanded that he withdraw the money and hand it over to them.43 McColl JA readily accepted that if Mr Dunwoodie had made the withdrawals in the circumstances he described that they were made under duress.44 McColl JA, however, went on to find that Mr Dunwoodie’s defence was not fairly arguable in law, because there was no suggestion that the bank either participated in, or was aware of, the pressure Mr Dunwoodie had been subjected to. [page 64]

Threats or acts against third parties 2.19 Acts or threats against relatives45 and employees46 of contracting parties may amount to duress.

Compulsion 2.20 The pressure applied by a party must have compelled the other to enter into the contract.47 Simply doing that which a party does not want to do does not make that act involuntary. An involuntary act is an act done without ‘a free exercise of the will’.48 The question of whether payments are made voluntarily or under compulsion is a question of fact and the party alleging compulsion bears the onus of proving it.49 2.21 The authorities indicate that to establish inducement or compulsion it must be shown that: (a) the party being compelled had a fear that if he/she did not accede to the demand then the party making the demand would take some step (other than an invocation of legal process) which would cause harm to the coerced party; and (b) that this fear was reasonable.50 2.22 In the High Court case of Mason v New South Wales Dixon CJ observed that money is paid involuntarily where there are: … just and reasonable grounds for apprehending that unless payment be made an unlawful and injurious course will be taken by the defendant in violation of the plaintiffs’ actual rights.51

[page 65] Similarly, Windeyer J noted that: … it was enough if the payor reasonably believed that if the payment was not made the means taken to enforce payment would subject the payor to serious risk of imprisonment or loss of possessions or other substantial loss.52

2.23 In Mason, the High Court held that permit fees were paid by an interstate carrier of goods under duress because he reasonably believed that if he did not pay the fees he would have his only truck seized by the state. Conversely, in Air India v Commonwealth (‘Air India’) the New South Wales Court of Appeal held that seven major international airlines did not pay additional rent to the Commonwealth under duress because it was not reasonable for the airlines to fear that the

Commonwealth would forfeit their leases if payment was not made. The Court of Appeal observed: It hardly seems to be reasonable to fear that the Commonwealth would determine the leases of seven major international airlines servicing Sydney and Australia because of a rent dispute involving the construction of a lease document, when they could be held to their leases and sued to fruitful verdicts. Bringing about an almost empty and nonproductive facility would hardly seem a likely course of action.53

2.24 While the fear which induced a party to enter into a contract needs to be reasonable it does not need to be the sole inducement or reason for entering into a contract. The Privy Council in Barton rejected a ‘but for’ approach to compulsion and held instead that: … we are prepared to accept … the test proposed by the majority, namely that the illegitimate means was a reason (not the reason, nor the prominent reason, nor the clinching reason) why the complainant acted as he did.54

2.25 It was argued unsuccessfully in Barton that, irrespective of the threatening behaviour encountered by Barton, Barton had a good reason to enter into a contract to purchase company shares being the removal of that shareholder’s interference in the company’s affairs.55 The Privy Council held, having established that serious threats of physical harm had in fact been made, that only in the ‘most unusual circumstances’ could there be any doubt Barton was induced by the threats to enter into the contract.56 [page 66]

Indicia of compulsion 2.26 The courts have identified a number of matters that may indicate the existence of coercion. These matters are evidentiary only and are not requirements in finding coercion. The Privy Council in Pao On v Lau Yiu Long57 identified the following evidentiary matters as useful in determining the existence of compulsion: … whether the person alleged to have been coerced did or did not protest; whether, at time he was allegedly coerced into making the contract, he did or did not have an

alternative course open to him such as an adequate legal remedy; whether he was independently advised; and whether after entering the contract he took steps to avoid it.58

2.27 In addition to the matters identified by the Privy Council in Pao On the courts have had regard to the personal circumstances and characteristics of the threatened party.

Protest 2.28 Protest may provide valuable evidence of the existence of duress.59 In Re Hooper & Grass’ Contract, Fullager J held that ‘a payment under protest is not a voluntary payment’.60 Fullager J was cited with approval by McLure P in the Western Australian Court of Appeal case of Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd61 (‘Verve Energy’). That case concerned the entry, under protest, by Verve Energy into a short-term agreement for the supply of gas.62 McLure P found that inducement was ‘plainly evident’ in Verve Energy’s conduct.63 Conversely, in McKay v National Australia Bank Ltd64 the court dismissed a claim of duress because no protest of the matters complained of had been made until some two years after the event. [page 67] 2.29 The presence, or absence, of protest, while a useful indicator, is not ultimately determinative of coercion. As Windeyer J in Mason v New South Wales explained: A protest at the time of payment may of course ‘afford some evidence, when accompanied by other circumstances, that the payment was not voluntarily made to end the matter’ (Maskell v Horner (1915) 3 KB 106, at p 120) … But there is no magic in a protest; for a protest may accompany a voluntary payment or be absent from one compelled … Moreover the word ‘protest’ is itself equivocal. It may mean the serious assertion of a right or it may mean no more than a statement that payment is grudgingly made.65

2.30 As recognised by Kerr J in The Siboen and The Sibotre, protest is just ‘one relevant factor’66 in determining the existence of coerion. But even the total absence of protest may not mean that the payment was

voluntary. Lord Scarman in Universe Tankships observed ‘(t)he victim’s silence will not assist the bully, if the lack of any practical choice but to submit is proved’.67 An example of Lord Scarman’s observation can be found in Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd68 (‘Hawker Pacific’). In that case a company engaged to repaint a helicopter refused to release it for a charter booked later that day unless the owner executed an agreement to pay an additional sum for the work and release the company from liability for any defects. The company argued, unsuccessfully, that the owner did not enter into the agreement under duress because, among other things, the owner made no complaint or protest after the duress could be said to have ceased to operate. Priestly JA held that the trial judge’s finding of duress should not be disturbed because it was open to the trial judge to make this finding on the evidence.69 2.31 Conversely, as Pickford LJ observed in Maskell v Horner,70 payment made under protest is not in itself sufficient to prevent the payment from being voluntary. An example of Pickford LJ’s observation can be found in Air India.71 In that case seven major international [page 68] airlines paid additional rent to the Commonwealth under protest. The New South Wales Court of Appeal held, however, that the payment was not made under duress. Applying the test set out in Mason, the court considered that the airlines’ fear, that the Commonwealth would forfeit their leases if they did not pay the additional rent, was unreasonable. 2.32 As evidenced in the example of McKay referred to above, a delay in registering a protest may indicate that an agreement was freely and vountarily enterted into.72 It may also indicate that an election was made to affirm the agreement.73 The absence or delay in registering a protest, however, will have no evidentiary value where the party applying the pressure has deliberately made itself unavailable to receive

any protest. In Atlas Express Ltd v Kafco (Importers & Distributers) Ltd,74 for example, the court found that the importers of basketware had paid an increased fee for carriage of their goods under duress and that the carrier’s manager had deliberately made himself unavailable to receive any protest about the fee. In that case the carrier and the importers had entered into a contract for the carriage of the goods for a particular fee. When the manager was unsuccessful in his negotiations with the importers to vary the contract to increase the fee, on the day that the goods were scheduled to be transported, the driver of the truck was instructed to refuse to load the goods until the importers paid the increased fee.

No other practical choice 2.33 Lord Scarman in Universe Tankships defined coercion as ‘intentional submission arising from the realisation that there is no other practical choice open’75 whether legal or commercial.76 One commentator noted that there is a line of English cases that have subsequently identified Lord Scarman’s ‘no other practical choice’ or ‘no reasonable alternative’ requirement as an independent element of duress.77 Donaldson MR [page 69] in Hennessey v Craigmyle,78 for example, declared that ‘(e)conomic duress can only provide a basis for avoiding a contract if there is no real alternative’. 2.34 Australian courts have arguably not followed this line of English cases. Isaacs J in Sargood Bros v Commonwealth79 considered that: … if the person paying has an obvious means within reach of avoiding payment without sacrificing any right, then, if he elects to pay instead of adopting the alternative course, he cannot afterwards aver (or claim) coercion into payment.

However, Kitto J in Mason subsequently held that ‘the critical question is not whether there was an alternative. It is whether the choice made between alternatives was made freely or under pressure’.80

Instead, Kitto J went on in Mason to use the lack of a reasonable alternative as an indicator existence of duress: It is true that the plaintiffs in the present case need not have paid their fees. They might have discontinued their business, or, as I have said, they might have ignored the Act, risking the seizure of their vehicles … But the loss to be anticipated from either of these courses was so serious that any prudent person in their position must have felt strongly impelled to choose the lesser evil: to save his business and avoid the recurrent sanctions of the criminal law by paying the government …81

2.35 Similarly, the lack of a reasonable alternative has been taken into account by other Australian courts in determining the presence of coercion. Priestly JA in Hawker Pacific noted that: … the respondent’s need for the helicopter for business purposes that day was so urgent that recourse to legal proceedings for its recovery [of the money] clearly would not have solved the company’s practical problem.82

In Verve, McLure P held that there was no ‘realistic prospect’ of Verve Energy obtaining either an urgent interlocutory mandatory injunction, [page 70] or final declaratory or injunctive relief, prior to its execution of a shortterm contract for the supply of gas.83

Independent advice 2.36 Lord Scarman in Pao On includes the presence of independent advice in his list of indicia of duress. As noted by one commentator, Lord Scarman appears here to have confused duress with the equitable doctrine of undue influence.84 The presence of independent legal advice has been held to be a good defence to an allegation of undue influence.85 The presence of independent advice, however, does not expand the options open to the threatened party.86 Unsurprisingly, there are no Australian cases in which the presence of independent advice has weighed in favour of a finding that a threatened party was not coerced.

Whether took steps to avoid 2.37 If the threatened party does not take steps as soon as reasonably practicable after the duress ceases to be operative, the party may be held to have affirmed the contract irrespective of the pressure applied. See further below under ‘Defences’.

ILLEGITIMATE PRESSURE 2.38 In Barton, Lord Wilberforce and Lord Simon of Glaisdale noted that: … in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate.87

2.39 The types of pressure regarded by the law as being illegitimate ‘are various and indefinite and the categories are not closed’.88 In Universe [page 71] Tankships, Lord Scarman proposed the following two-limbed test in determining the legitimacy pressure: In determining what is legitimate two matters may have to be considered. The first is as to the nature of the pressure. In many cases this will be decisive, though not in every case. And so the second question may have to be considered, namely the nature of the demand which the pressure is applied to support.89

2.40 Taking the first, and often decisive, limb of Lord Scarman’s test, pressure will typically consist of the doing of an act, or the threat to do an act (either expressly or implicitly), that is either unlawful or lawful.90

Unlawful acts 2.41 Pressure that consists of an unlawful act, or a threat to commit an unlawful act, is generally considered to be illegitimate.91 In Universe

Tankships, Lord Scarman considered that ‘(t)he origin of the doctrine of duress in threats to life or limb, or to property, suggests strongly that the law regards the threat of unlawful action as illegitimate, whatever the demand’.92 2.42 An unlawful act is any act that is ‘wrongful by reference by some external legal standard’.93 In other words, an unlawful act is any act which infringes a statutory or common law prohibiton.94 There is no requirement (with the exception of the improper use of legal process) that the party making threats of unlawful action need be aware of the illegality of such conduct for pressure to be illegitimate.95 There, however, has been some debate as to whether the non-performance, or the threat of non-performance, of contractual obligations in the absence of malafides amounts to, or should amount to, illegitimate pressure.96 [page 72] 2.43 The court has deemed pressure to be illegitimate where it has consisted of the following (actual or threatened) unlawful conduct: physical violence or imprisonment;97 unlawful seizure or detention of or damage to property; 98 improper use of legal process;99 non-performance of contractual obligations;100 and demands by public officials.101

Physical violence or imprisonment 2.44 Pressure consisting of threats of physical violence102 or imprisonment103 is known as ‘duress to the person’.104 Duress to the person has been described as ‘a constraining force, which not only takes away the free agency, but may leave no room for appeal to the law for remedy’.105 The principles underpining duress to the person were succintly enunciated by the Privy Council in the seminal case of

Barton.106 The case concerned the execution of a contract which provided, among other things, that Barton would purchase Armstrong’s shares in a company, Landmark Pty Ltd (‘Landmark’). Landmark was engaged in the development of a building estate in Queensland known as Paradise Waters (‘the Paradise Waters Project’). Both Barton and Armstrong held substantial shares in Landmark. Armstrong was the chairman of Landmark and Barton was the company’s managing director. Evidence was given at trial that the business relationship between Barton and Armstrong soured in mid-1966 [page 73] with Barton resenting Armstong’s interference in the day-to-day running of Landmark. The relationship deteriorated further as the financial position of Landmark grew precarious. Barton advised Armstrong that he could not continue to work with him and suggested that Armstrong resign his position. This marked the beginning of a period in which Armstrong made a number of verbal threats, and displayed threatening behaviour, to intimidate Barton. The court heard that Armstrong had said to Barton: ‘The city is not as safe as you may think between office and home. You will see what I can do against you and you will regret the day you decided not to work with me.’107 Other verbal threats issued by Armstrong to Barton included the threat that ‘I am of German origin and Germans fight to the death’108 and, on another occasion, ‘You stink, you stink. I will fix you’.109 Various other means employed by Armstrong to bully Barton included numerous nuisance phone calls and engaging a ‘strong arm man’ to watch Barton’s home. Barton claimed that on the day that he executed the contract Armstrong threatened to have him killed if he did not execute a contract transferring his interest in Landmark to Armstrong. The Privy Council held that Barton executed the contract under duress. Although Barton had a good reason to execute the contract, namely to remove Armstrong’s interference in the company’s business, at the time of execution Barton was in very real fear for his life. Lord Cross, who delievered the majority judgment, held that:

… if A threatens B with death if he does not execute some document and B, who takes A’s threats seriously, executes the document it can be only in the most unusual circumstances that there can be any doubt whether the threats operated to induce him to execute the document.110

2.45 Illegitimate pressure, amounting to duress to the person, extends to threats against relatives111 and employees112 of contracting parties. In the British case of Royal Boskalis Westminster NV v Mountain113 the Court of Appeal held that five Dutch companies were unable to prove that, in executing an agreement to pay money to Iraqi authorities, they had suffered any loss recoverable under their insurance policy because the agreement, having been signed under duress, was unenforceable. [page 74] The Dutch companies had entered into a joint venture with Iraqi authorities to undertake dredging work at an Iraqi port. The United Nations subsequently imposed sanctions on Iraq when that country invaded Kuwait in 1990. The Netherlands, like many other member states, passed domestic legislation to give effect to the UN sanctions. In response, Iraq promulgated a law under which all assets of companies of countries that had passed sanctions legislation were to be seized. In order to secure demobilisation of their dredging fleet and the repatriation of their employees the Dutch companies executed an agreement pursuant to which they paid Iraq large sums of money and waived all further claims under the joint venture. Phillips J held that ‘(t)he threat to use a large number of personnel as human shields was about as cogent and unconscionable a form of duress as one can imagine’.114

Unlawful actual or threatened seizure, detention or interference with goods 2.46 It is settled law that money paid ‘under the pressing necessity’ to avoid the unawlful seizure of, or interference with, goods or to obtain the release of goods unlawfully detained is money paid involuntarily

and recoverable in an action for money had and received.115 It was once the the position under the common law, however, that entry into a contract under the same circumstances was not considered involuntary.116 The courts at that time took a very narrow approach to duress, largely confining it to duress to the person, and considered that ‘the fear that goods may be taken or injured does not deprive anyone of his free agency who possesses that ordinary degree of firmness which the law requires all to exert’.117 2.47 The distinction between the payment of money and entry into a contract (often consisting of a promise to pay money) was criticised by [page 75] later courts and abandoned.118 The actual or threatened seizure, detention or interference with goods, without lawful excuse, is now held by the court to amount to illegitimate pressure that may entitle a contracting party to relief.119 The case most frequently referred to in Australia as authority for this principle is Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd.120 In that case Hawker Pacific Pty Ltd (‘Hawker Pacific’) was engaged by Helicopter Charter Pty Ltd (‘Helicopter Charter’) to repaint a helicopter. After the parties fell into a dispute about defects to the work done Hawker Pacific implicitly refused to release the helicopter until Helicopter Charter signed an agreement releasing Hawker Pacific from liability and agreeing to pay an additional sum of money. Hawker Pacific had no lien over the helicoper and was not lawfully entitled to detain it. However, since the helicopter was urgently needed by Helicopter Charter that day for a charter, Helicopter Charter had no other practical alternative but to accede to Hawker Pacific’s demand. The New South Wales Court of Appeal later upheld a decision setting aside the agreement on the ground that it had been entered into by Helicopter Charter under duress.

Improper use of legal process

2.48 A threat to bring a proceeding, including a prosecution, which is known to be groundless or for an improper purpose (such as in support of a demand for payment) is an illegitimate threat.121 The threat may also amount to a threat to commit the tort of malicious prosecution.122 It [page 76] should also be noted here that an agreement to stifle the prosecution of a crime is contrary to public policy and, on that basis, void.123 2.49 In Re J & S Holdings Pty Ltd v NRMA Insurance Ltd124 a company successfully recovered from NRMA money paid in interest in excess of the amount owed under a loan agreement. The loan agreement was secured by a mortgage and NRMA threatened to not discharge the mortgage until the additional sum had been paid and had also commenced proceedings to wind up the company. The Full Federal Court unanimously held that NRMA’s wrongful refusal to discharge the mortgage entitled the company to recover the additional sum. Although the court was ultimately not required to decide the point, it noted that ‘a threat to present a winding up petition can itself constitute, for relevant purposes, the exercise of compulsion’.125 2.50 A bona fide threat to litigate or prosecute will not, in itself, amount to duress even where the claim is bad.126 In McKay National Australia Bank Ltd127 the bank’s loan to a family company, which ran a real estate and property development business, was secured by a number of properties which included the matrimonial home of the company’s two married directors and a personal guarantee by the directors. The bank subsequently sought to reduce the company’s debt and told the directors that unless some of the secured properties were sold it would exercise its rights as mortgagee. The directors subsequently sold the matrimonial home and the proceeds from the sale were applied to reduce the debt. The bank then sued the directors under their personal guarantees for the outstanding debt. The guarantee was

held to be unenforceable.128 The directors sought recovery of the proceeds of the sale of the matrimonal home arguing that it had been paid involuntarily by reason of the bank’s threat to enforce what ultimately proved to be an unenforcable guarantee. The Victorian Court of Appeal held, among other things, that the mere [page 77] threat by a creditor to commence legal proceedings in order to recover a debt could not amount to duress.129 Winneke P observed that: It was within the power of the parties to the agreement upon whom the demand was made to resist that demand and to test its legitimacy. … [A]lthough the application of the doctrine must be determined according to the peculiar facts of each case, it will usually not be enough if the demand is made by one person in legal relationship with another, of that other, and the threat constituted by that demand is one that does not go beyond the threat of legal proceedings.130

Tadgell JA also observed that: Where the relationship between the parties is that of debtor and creditor, a threat by the creditor to institute legal proceedings or to pursue another legal remedy in order to recover the debt could seldom be wrong in itself. … The proper use of legal process does not constitute duress. Thus, the threat to institute a civil action in good faith cannot constitute duress … A bona fide threat by a secured creditor to exercise rights conferred by the security can scarcely be relevantly different from a bona fide threat to sue.131

2.51 Similarly, in Beerens v Bluescope Distribution Pty Ltd132 the Victorian Court of Appeal held that a director’s personal guarantee to a supplier of goods to the company was not given under duress after the supplier had threatened to support the application of a third party to wind up the company unless the director executed the guarantee. The third party’s application was subsequently found to have been an abuse of process. The court, however, found that there was no reason to infer that the supplier knew that the third party’s application was improper and that, otherwise, it is not illegitimate pressure to threaten recovery proceedings in the bona fide belief to entitlement.133 Nettle JA also considered generally that even if illegitimate pressure had been applied it would not automatically vitiate a transaction and it was open to the

party, subject to such pressure, to willingly enter into a compromise rather than contest the threats.134 [page 78]

Non-performance of contractual obligations 2.52 Pressure consisting of threatened or actual non-performance of contractual obligations is sometimes referred to as ‘economic duress’.135 The threatened or actual non-performance of contractual obligations is unlawful136 and, as such, constitutes illegitimate pressure.137 The law in Australia is not yet settled on the issue of whether malafides is also required for this kind of pressure to be illegitimate. The issue was nost recently considered in Electricity Generation Corporation t/as Verve Energy v Woodside Energy.138 In that case the Western Australian Court of Appeal found that Woodside exerted illegitimate pressure over Verve Energy by Woodside’s actual and threatened failure to perform a contract to supply gas.139 In 2004 Woodside entered into a long-term contract with Verve Energy to supply Verve Energy with gas (‘the GSA’). Under the GSA, Woodside was obliged to provide Verve with a minimum daily quantity of gas for a certain sum. Woodside was also obliged to use reasonable endeavours to supply Verve with any additional gas, above the minimum daily quantity, at Verve’s request for the same price. In June 2008, a fire broke out at the gas processing facility of Woodside’s only other competitor, causing the facility to be shut down. The shutdown of the [page 79] facility caused demand for gas in Western Australia to exceed supply. Verve Energy requested Woodside to supply it with additional gas under the GSA to meet the increased demand. Woodside declined. Instead Woodside offered to supply Verve Energy with gas under a short-term agreement at a price significantly higher than the GSA price.

Verve Energy entered into the short-term agreement under protest. Verve Energy subsequently commenced proceedings against Woodside alleging a breach by Woodside of the GSA and duress. Woodside unsuccessfully argued that its breach or threatened breach of the GSA did not constitute duress because it had only sought to resolve a predicament created by the surge in demand for gas in good faith. Woodside relied on McIntyre v Nemesis DBK Ltd, among other cases, in which the New Zealand Court of Appeal observed: There are no definitive criteria for determining whether pressure is legitimate or illegitimate. The criterion most commonly resorted to is that of ‘lawfulness’. Thus where the pressure consists of an unlawful act or a threat to commit an unlawful act, then prima facie the pressure is illegiimate. … It follows that some instances of unlawful pressure may be legitimate and some instances of lawful pressure may be illegitimate. An example of the former might be a party’s threat to break a contract when a change in circumstances beyond their control has meant they are genuinely unable to perform.140 [empahsis added]

It was ultimately unnecessary for the Western Australian Court of Appeal to determine whether a threatened breach of a contract, per se, constituted illegitimate pressure. The court found that Woodside did not act in good faith but rather sought to exploit a commercial advantage.141 The court did, however, refer with approval142 to a string of cases in which malafides was either held not to be a requirement in finding pressure to be illegitimate143 or was not an element in a finding of duress.144 In particular, the court cited Re Hooper & Grass’ Contract in which Fullager J held:145 What the vendor was doing was not threatening to exercise a legal right unless he were paid a price for not exercising it: he was threatening to

[page 80] withhold that to which the other party was legally entitled unless he were paid a price which he had no right to receive. In such a case I think that the rule of law is that a payment under protest is not a voluntary payment, whatever the position may be where the payment is not made under protest. It makes no difference that the vendor honestly believed that he was legally entitled in any case to the price which he asked. In these cases there is very reasonably said to be a practical compulsion to pay a demand not justified by law. [emphasis added]

The court also referred to the New South Wales Court of Appeal

decision in Spira v Commonwealth Bank of Australia146 in which Handley JA held: ‘There must be a deliberate threat, and the act threatened must be unlawful, but there is no requirement that the defendant should be aware that it is unlawful.’147 Woodside subsequently appealed to the High Court which found that Woodside had breached the GSA. The High Court did not go on to consider whether Woodside’s conduct also amounted to duress. 2.53 It should be noted here that the pre-existing duty doctrine was used as ‘an early but blunt method’148 to set aside contracts, for the modification of an original contract, entered into in circumstances where there was actual or threatened non-performance of the original contract. The doctrine, espoused in Stilk v Myrick,149 asserts that an existing contractual duty cannot be good consideration for the formation of a new legally enforcable contract or variations of the original contract. The doctrine was successfully invoked in T A Sundell & Sons Pty Ltd v Emm Yannaoulatos (Overseas) Pty Ltd.150 In that case Yannaoulatos agreed to supply galvanised iron, imported from France, to Sundell for £109 per ton. Prior to delivery, Yannaoulatos informed Sundell that there had been a sharp rise in the world price for iron and demanded an extra £27 per ton. Yannaoulatos also threatened not to deliver the iron unless Sundell acceded to Yannaoulatos’ demand. Sundell urgently required the iron to meet other commitments and so agreed to pay the price increase under protest. Sundell was later successful in proceedings to recover money paid in excess of the contract price. The court found, inter alia,151 that the agreement to pay the additional sum was not supported by good [page 81] consideration since Yannaoulatos had only agreed to do what it was already contractually bound to do.152 2.54

T A Sundell provides an excellent illustration of the role of

consideration in preventing coercive modifications. As Santow J, however, observed in Musumeci v Winadell Pty Ltd:153 [C]onsideration does not perform that role very well. Its very certainty is bought at the price of inflexibility. This produces a real disincentive to re-negotiate a contract which changed circumstances have made unduly onerous. This is especially if the outcome is likely to be unenforceable by reason of lack of consideration. Even the presence of consideration does not preclude there having been economic duress inducing the contract. Consideration expressed in formalistic terms of one dollar can indeed actually cloak duress rather than expose it.

2.55 The utility of the pre-existing duty doctrine, in preventing coercive modifications, may have ended with the English Court of Appeal decision in Williams v Roffey Brothers & Nicholls (Contractors) Ltd154 which, effectively, overruled Stilk v Myrick.155 In that case Williams, a builder, held the main contract for the refurbishment of a block of flats. The main contract contained a time penalty clause. Williams subcontracted with Roffey Brothers to carry out carpentary work on the flats. Part-way through this carpentary work Roffey Brothers experienced financial difficulties because the agreed price for the work was too low for Roffey Brothers to make a profit. As a consequence, it seemed unlikely that Roffey Brothers could complete the carpentary work on time. To avoid incurring penalties under the head contract, Williams offered to pay Roffey Brothers an additional sum for the completion of the carpentary work for each flat. Roffey Brothers subsequently commenced proceedings to recover this money when Williams failed to pay. The court found in favour of Roffey Brothers at first instance and on appeal. Glidewell LJ set out a new approach to contractual modifications in the following propositions: (i) if A has entered into a contract with B to do work for, or to supply goods or services to, B in return for payment by B and (ii) at some stage before A has completely performed his obligations under the contract B

[page 82] has reason to doubt whether A will, or will be able to, complete his side of the bargain and (iii) B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time and (iv) as a result of giving his promise B obtains in practice a benefit, or obviates a disbenefit, and (v) B’s promise is not given as a result of

economic duress or fraud on the part of A, then (vi) the benefit to B is capable of being consideration for B’s promise, so that the promise will be legally binding.156

2.56 Glidewell LJ’s propositions were broadly adopted in Australia by Santow J in Musumeci with some refinements. Santow J expanded element iv by dividing it into two parts with the second part to read as follows: (a)

…, or

(b) As a result of giving his promise, A suffers in practice a detriment (or obviates a benefit), provided that A is thereby foregoing the opportunity of not performing the original contract in circumstances where such non performance, taking into account B’s likely remedy against A (and allowing for any defences or cross-claim) is being capable of being viewed by A as worth more to A than performing that contract, in the absence of B’s promised payment or concession to A.157

Santow J also reworded element v to read as follows: B’s promise is not given as a result of economic duress or fraud, or undue influence or unconscionable conduct on the part of A nor is it induced otherwise by unfair pressure on the part of A, having regard to the circumstances.158

Demands by public officials and money paid under an invalid law 2.57 The courts approach money paid in response to an unlawful demand by a public official very differently from money paid under a law subsequently found to be invalid (or indeed other forms of illegitimate pressure). In respect of an unlawful demand for money by a public official, the courts will provide relief once the fact of the unlawful demand has been established. Proof of compulsion is not necessary. In respect of money paid under an invalid law the courts require the payee to prove all of the essential elements of duress. 2.58 Demands by public officials Demands by a public official for money (to which the official is not lawfully entitled) to perform a public duty has been described as a demand made under ‘colour of office’ [page 83]

(‘colore officii’).159 Such demands have also been described as ‘extortion,’ or a ‘form of extortion’,160 although malafides is not an essential element in establishing this kind of duress.161 In Morgan v Palmer162 Morgan, a publican, successfully sued to recover a fee paid to Palmer, then mayor of Yarmouth, for a renewal of his licence. The court found that the fee had been taken by Palmer under colour of office despite the fact that Palmer considered that he was entitled to the fee, the fee having been paid for almost 65 years previously by publicans to the mayor. In Steele v Williams163 Steele successfully sued Williams, a parish clerk, for charges with respect to taking extracts from the register book of burials and baptisms although Williams himself did not pocket this money. 2.59 To recover money paid under colour of office, the payee need only prove that the public official made a demand for money, to perform some public duty, to which the official was not lawfully entitled. The courts will always infer that money paid in response to such a demand was paid involunatrily because the parties are not on an ‘equal footing’164 or the ‘same plane’.165 In the High Court decision of Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale Kitto J observed: Where a person or body having power to grant or withhold permission for another to pursue a course which he cannot pursue lawfully without permission has used the power in order to exact a payment which he or it is not authorised to exact, the case is entirely different. The law holds that the involuntariness of the payment is established because the parties were not on equal terms.166

2.60 In Bell Bros the shire demanded that Bell Bros pay a fee to the shire for a licence to quarry calculated at 3d per cubic yard of the total area licenced. Bell Bros paid the fee without protest. Subsequently, the [page 84] by-law which prohibited quarrying without a licence was upheld but the by-law specifying the fee for the licence was not. Bell Bros successfully recovered the fee as being money paid under colour of office.

2.61 Money paid under an invalid law In contrast to the cases cited above, where money is merely demanded pursuant to a law that is subsequently declared invalid (and not under colour of office), relief may not be automatic. In these circumstances the payee must prove that payment was made under compulsion. Money paid voluntarily is irrecoverable.167 Latham CJ in the High Court decision of Werrin v Comonwealth noted that: The general rule … is that money paid voluntarily, that is to say, without compulsion or extortion or undue influence and with a knowledge of all the facts, cannot be recovered although paid without any consideration.168

2.62 The circumstances in which payments made in respect of an invalid law will be held to be involuntary and recoverable were outlined in the High Court decision of Mason v New South Wales.169 In that case Mason and his wife were interstate carriers of goods who paid fees for permits issued under legislation170 later declared by the Privy Council to be unconstitutional.171 The Masons paid the fees under protest because they feared that, if they did not pay, the state might seize their truck which they required to carry on their business. The fees were not described by any member of the High Court as having been paid under colour of office. It should be noted, however, that Dixon CJ expressed some difficulty in reconciling himself to the view that a different approach should be adopted with respect to demands by a de facto governmental authority172 and Menzies J described the fees as having been paid ‘under colour of an Act of Parliament’.173 Windeyer J observed174 that: It cannot be said that here any official extorted or even demanded money by colour of his office. The charges imposed by a statute, which this Court had declared to be valid but which it later transpired was

[page 85] unconstitutional, were simply collected by servants of the Crown in the course of their duty. The plaintiffs when they paid were not ignorant of the position. They knew their rights so far as they could be known before the Privy Council had spoken. They were not deluded or imposed on. They protested throughout that the charges were unlawful. All this is, I think, foreign to the concept of a payment exacted colore officii.175

As Kitto J subsequently explained in the case of Bell Bros: [W]here moneys have been paid to the Crown or to a body such as the respondent, for licences to pursue a course of conduct which is lawful without licence, it is necessary to investigate the case further in order to ascertain whether or not there have been circumstances, eg, of compulsion, or mistake, which give rise to a right of recovery.176

2.63 The High Court held in Mason that, in the circumstances of that case, the fees were paid under duress.177 The threat of proceedings for a pecuniary penalty was held not to make a payment involuntary because such proceedings can be defended.178 Payment made under the threat of an interference with a legal right was, however, held to have been made involuntarily. Dixon CJ observed that money is paid involuntarily where there are: … just and reasonable grounds for apprehending that unless the payment was made, an unlawful an injurious course will be taken in violation of the plaintiff’s rights.179

Similarly, Windeyer J noted that: … it was enough if the payor reasonably believed that if the payment was not made the means taken to enforce payment would subject the payor to serious risk of imprisonment or loss of possessions or other substantial loss.180

2.64 Mason was subsequently applied in Air India. The facts in Air India are outlined above.181 In that case the Court of Appeal held that a number of major international airlines did not pay additional rent under duress because it was not reasonable for the airlines to believe that their leases would be forfeited if payment was not made. [page 86]

Lawful acts 2.65 Pressure that consists of a lawful act, or a threat to commit a lawful act, no longer amounts to illegitimate pressure in the wake of the New South Wales Court of Appeal decision in Australia and New Zealand Banking Group Ltd v Karam.182

The law pre-Karam

2.66 Prior to the decision in Karam, pressure consisting of an act or threat of unlawful conduct could, in some circumstances, amount to duress (lawful-act duress). As outlined above, Lord Scarman, in Universe Tankships, adopted a two-limbed test to determine the legitimacy of pressure: the nature of the pressure and the nature of the demand.183 In Universe Tankships Lord Scarman held: Duress can, of course, exist even if the threat is one of lawful action: whether it does so depends upon the nature of the demand. Blackmail is often a demand supported by a threat to do what is lawful, eg to report criminal conduct to the police.184

In determining whether the nature of the demand amounts to lawfulact duress Steyn LJ, in CTN Cash and Carry Ltd v Gallaher Ltd,185 considered that ‘(i)t is necessary to focus on the distinctive features of … [the] case’.186 Steyn J went on to cite Professor Birks who identified ‘social morality’ or ‘a standard of impropriety’ as being applied by courts in determining the legitimacy of pressure rather than ‘technical unlawfulness’.187 Hugh JA, in Crescendo, declared that ‘(p)ressure will be illegitimate if it … amounts to unconscionable conduct’.188 What Hugh JA meant by ‘unconscionable conduct’ in this context, is unclear. In Westpac Banking Corporation v Cockerill, Kiefel J did not think that Hugh JA was ‘intending in this passage to refer to the equitable doctrine of unconscionable dealing which is recognised as affording an independent ground on which a court exercising equitable jurisdiction can relieve from a contract’.189 2.67 As identified by Lord Scarman in Universe Tankships, examples of successful lawful-act duress cases typically involve threats to report [page 87] criminal conduct or to disclose infidelities.190 As one commentator notes, in these kinds of cases there is ‘a seriously disjunctive relationship between the end that was being sought (the demand) and the means that was being employed to achieve it (the application of ‘lawful’ pressure)’.191 For example, in the famous case of Williams v Bayley192 the House of Lords upheld a decree setting aside a mortgage given by

the respondent, Mr James Bayley, over a colliery owned by him to the appellants, bankers, to secure payment of a number of promissory notes fradulently signed by Mr Bayley’s son. Although no explicit threat was made, the bankers made it clear to Mr Bayley that if he did not pay or provide security for his son’s debts they would prosecute his son for a felony which was punishable by transportation for life. 2.68 Conversely, in Scolio Pty Ltd v Cote,193 the Western Australian Court of Appeal did not find that the respondent, Mr Cote, signed under duress a deed that provided for the repayment, by instalments, of a certain sum of money that he had misappropriated. Although it was found at trial that the auditor for the appellant company had threatened to report Mr Cote’s misappropriation of money to police, there was no evidence (nor was it pleaded by Mr Cote in his claim) that there was an implied agreement not to report the matter to police if he executed the deed. Ipp J noted that: … some other element of impropriety is needed, apart from the threat of prosecution, before there could be said to be duress resulting in the respondent becoming entitled to avoid the deed. The element that is normally sought to be established in cases of this kind is an agreement not to proceed with the prosecution … [T]he existence of such an agreement introduces a quality of impropriety into a transaction induced thereby so as to render it voidable for duress …194

2.69 More controversially, in expanding the doctrine of ‘economic duress’, the courts have held that lawful threats of economic or commercial [page 88] pressure could amount to duress.195 In Universe Tankships, for example, the court held a trade union’s lawful threat to ‘black’196 a ship unless its American owners paid a substantial sum of money to the union’s welfare fund to be duress. Similarly, a threat to call out fellow employees unless the appellant joined a union was found to amount to duress.197 But, as noted by Steyn LJ in CTN Cash, in a ‘purely commercial context’ lawful-act duress cases are rare.198

2.70 The expansion of economic duress, to embrace lawful threats of economic pressure, was criticised by some courts for being too vague. In CTN Cash, Steyn LJ considered that ‘[t]he aim of our commercial law ought to be to encourage fair dealing between parties. But it is a mistake for the law to set its sights too highly when the critical inquiry is not whether the conduct is lawful but whether it is morally or socially acceptable’.199 In Equiticorp Finance Ltd (in liq) v Bank of New Zealand200 Kirby J complained: What precisely the law is prepared to countenance as ‘legitimate’ begs the question which needs to be answered in characterising particular conduct as impermissible economic duress (on the one hand) or the permissible (even necessary) operation of the market economy (on the other).201

Kirby J later reasoned that: The doctrine of economic duress may be better seen as an aspect of the doctrines of undue influence and unconscionability respectively. If relief, beyond statute, is appropriate, courts would be better able to provide such relief in a consistent and principled fashion under the rubric of undue

[page 89] influence and unconscionability rather than by pretending to economic expertise and judgment which they will generally lack.202

Subsequently, the court in Karam also protested: How the doctrine of economic duress fits with the equitable doctrines is unclear. The reference to ‘unlawful’ conduct, read in context of the earlier authorities, was originally a reference to unlawful detention of goods. Concepts of ‘illegitimate pressure’ and ‘unconscionable conduct’, if they do not refer to equitable principles, lack clear meaning, outside, possibly, concepts of illegitimate pressure in the field of industrial relations.203

The law post-Karam 2.71 The court in Karam, following Kirby J in Equiticorp, concluded that duress should be confined to threats or acts of unlawful conduct: The vagueness inherent in the terms ‘economic duress’ and ‘illegitimate pressure’ can be avoided by treating the concept of ‘duress’ as limited to threatened or actual unlawful conduct. The threat or conduct in question need not be directed to the person or property of the victim, narrowly identified, but can be to the legitimate commercial and financial interests of the party.204

The court further held that agreements formed as a consequence of threats or acts of lawful conduct may still be set aside where the weaker party can establish either undue influence or unconscionable conduct. Otherwise, the court in Karam noted, it may be empowered to set aside the agreement under consumer protection legislation.205 2.72 The decision in Karam has been cited with approval in a number of decisions by both state206 and Commonwealth207 courts. It would seem that lawful-act duress in Australia may now cease to exist. The ‘termination’ of lawful-act duress has been the subject of some academic [page 90] criticism as being unwarranted and unnecessary.208 Most recently, Nettle J in the High Court decision of Thorne v Kennedy209 complained: … Karam’s rejection of illegitimate pressure by lawful means was largely based on a view that the concept is too uncertain to be acceptable. Yet it is by no means immediately obvious why it should be considered any more uncertain than the equitable conceptions of unconscionable conduct and undue influence to which Karam held it should be consigned.210

CONSUMER PROTECTION LEGISLATION 2.73 Consumer protection legislation is principally found in the Australian Consumer Law (‘ACL’), contained in Sch 2 to the Competition and Consumer Act 2010 (Cth), and in Pt 2 of the Australian Securities and Investments Commission Act 2001 (Cth) (‘ASIC Act’). In New South Wales protection against unjust contracts is also afforded by the Contracts Review Act 1980 (NSW). 2.74 Conduct amounting to duress may be a matter that a court has regard to in finding unconscionable conduct (in breach of the prohibition in the ACL and ASIC Act)211 or an unjust contract entitling a party to relief (under the Contracts Review Act).212 Both the ACL and

the ASIC Act also prohibit undue harassment or coercion. Section 50(1) of the ACL provides: A person must not use physical force, or undue harassment or coercion, in connection with: (a) the supply or possible supply of goods or services; or (b) the payment for goods or services; or (c) the sale or grant, or the possible sale or grant, of an interest in land; or (d) the payment for an interest in land.

2.75 Section 12DJ of the ASIC Act contains a similarly worded prohibition to s 50 of the ACL with respect to the supply or possible supply of financial services to a consumer or the payment of financial services by a consumer. [page 91] 2.76 The explanantory memorandum outlines the intention of s 50 of the ACL as follows: This provision sets a norm of conduct in which the use of physical force, undue harassment or coercion is deemed unacceptable. Generally, a person will be harassed by another when the former is troubled repeatedly by the latter. Whether such harassment is undue will depend on the reasonableness of the conduct and whether the harassment is warranted or excessive. Coercion indicates the presence of force or compulsion, or threats of force or compulsion, which negates the choice or freedom for a person to act.213

2.77 Section 50 of the ACL replaces ss 53A214 and 60215 of the Trade Practices Act 1974 (Cth) (‘TPA’). Section 50 of the ACL is couched in substantially the same form as ss 53A and 60 of the TPA. The explanatory memorandum makes it clear that ‘the jurisprudence relating to the concepts applicable to sections 60 and 53A of the TP Act is relevant to those concepts as they exist in section 50 of the ACL’.216 2.78 In spite of the eludication in the explanatory memorandum of the terms ‘undue harassment’ and ‘coercion’, cited above, no defintion of these terms is contained in the Acts. In Australian Competition and Consumer Commission v McCaskey217 French J (in respect of s 60 of

the TPA) held that these terms ‘are to be given their ordinary meanings relevant to the context in which they appear’.218 French J considered, in particular, that it was important to have regard to context in applying the section. The section can cover conduct in a wide range of circumstances. For example, the section may cover conduct by a supplier pressuring a consumer to purchase goods or services or conduct by a supplier in seeking to recover an unpaid debt from a consumer. French J recognised that what might consitute harassment or coercion in one set of circumstances might vary in another, different, set of circumstances.219 Following this observation, French J, unsurprisingly, noted that the application of the [page 92] section involves ‘evaluative judgment’220 and that ‘(e)ach case will turn on its own facts’.221 In Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd222 Perram J helpfully noted: Of course, whether any particular conversation is revealed to be unduly harassing or coercive will depend not upon a line-by-line analysis but, rather, on the overall impression.223

2.79 Generally, however, it appears to be settled that there is no requirement that the harassment or coercion must involve a threat of an illegal act (whether criminal, tortious or contractual) and the section does not expressly exclude the insitution of legal proceedings from its ambit.224

Harassment 2.80 It appears to be settled law that ‘harassment’ means ‘persistent disturbance or torment’225 and, as such, involves an element of repetition.226 The section, however, does not apply to mere harassment, only harassment that is ‘undue’.227 As French J observed in McCaskey, ‘(t) he word ‘undue’ adds an extra layer of evaluation’.228 The word suggests that what is done must ‘extend beyond that which society

would regard as being the “normal limits” or what was “acceptable or reasonable” and not “excessive or disproportionate”’.229 The content of the word ‘undue’ will vary with the circumstances.230 In McCaskey, French J considered, for example, that repeated unwelcome approaches by a supplier of goods or services could qualify as harassment with little additional evidence to attract the characterisation of ‘undue harassment’. Conversely, a consumer who owes money to a supplier for goods or services can expect [page 93] repeated unwelcome approaches by that supplier demanding payment.231 If the demands are legitimate and reasonably made, while they may be characterised as ‘harassment’, they cannot be characterised as ‘undue harassment’. French J considered that, in the circumstances of an unpaid debt, harassment will be undue if ‘the frequency, nature or content of the approaches and communications associated with them is such that they are calculated to intimidate or demoralise, tire out or exhaust the debtor’232 or the approach consists of ‘bullying, bluff, misrepresentation or stand-over tactics’.233 2.81 The facts in McCaskey concerned the conduct of McCaskey, an employee of Cash Return Mercantile Pty Ltd (‘Cash Return’) which carried on a debt collection business. In attempting to recover payments from four separate debtors, on behalf of Cash Return, McCaskey engaged in extremely aggressive and intimidating conduct. McCaskey frequently swore at the debtors, threatened to obtain possession of their homes or shops, threatened to have debtors arrested and sought to humiliate debtors or threatened to publicly humiliate them. French J held that most of the incidents fell within the scope of ‘undue coercion’ and that some of these indcidents also constituted ‘undue harassment’.234 2.82 A further example of conduct amounting to ‘undue harassment’ can be found in the more recent case of Australian Competition and

Consumer Commission v Harrison.235 In that case the Commission issued proceedings against a raft of companies and Harrison, who was at all relevant times the controller of each of the companies, alleging that the respondents had engaged in undue harassment of consumers. The companies had provided telephony services to consumers. Harrison adopted a strategy in which he ceased to trade through the companies that became subject to regulatory action and incorporated new companies to carry on the business of the previous company, usually with the same or similar business name. Moshinsky J, however, found that the consumer contracts for telephony services were transferred from one company to [page 94] the next without the consent of the consumer or otherwise without any notification of the transfer to the consumer.236 In spite of this: (a) respondent companies (which in fact had no contractual relationship with the consumer) demanded that the consumer pay certain fees provided for in the contract such as termination fees and cancellation fees; and (b) when consumers refused the respondents’ demands for payment they were subjected to persistent threats of legal action or threats of referral to debt collection agencies or law firms for debt recovery.

2.83 Moshinsky J held that the conduct, described in the preceding paragraph, was ‘undue harassment’ in breach of of s 50 of the ACL. Further, that the conduct amounted to ‘persistent disturbance or torment’ and the conduct was ‘undue’ because the amounts claimed were not owing.237

Coercion 2.84 It is settled law that coercion ‘carries … the connotation of force or compulsion or threats of force or compulsion negating choice or freedom to act’.238 Unlike ‘undue harassment’, coercion does not require repetition of conduct.239 2.85 There is some debate as to whether there is a requirement under

the section for coercion to be ‘undue’. French J in McCasky considered that, like harassment, coercion must be ‘undue’ for the section to apply. French J argued that: The collection of debts may involve coercion in the sense that the debtor is subjected to the pressure of the demand and the legitimate threat of civil process for recovery with the additional cost and damage to credit which that can involve. Such pressure may be thought of as coercion but is entirely legitimate and not ‘undue’.240

French J considered that a demand may consitute undue coercion if it included content which did not serve the legitimate purpose of reminding the debtor of the obligation to pay the debt but was instead calculated [page 95] to ‘intimidate or threaten’ the debtor.241 French J offered the following examples of undue coercion: … the use of personally abusive or obscene language, conveying the demand to uninvolved family members, particulalry children, or conveying the demand through a third party in order to embarrass the debtor when the debtor could reasonably have been the subject of a direct communication.242

2.86 In Australian Competition and Consumer Commission v Maritime Union of Australia243 Hill J criticised French J’s decision in McCasky. Hill J reasoned: It would … be somewhat unusual to qualify the concept of coercion with the word undue. If there is such a qualification it would suggest that the policy behind s 60 accepted that some normal level of coercion or force overbearing choice or will was, having regard to the circumstances in which the conduct occurred, acceptable or reasonable in a civilised society and that it was only where that acceptable level of coercion was exceeded so that the coercion became ‘undue’ that coercion was intended to be prohibited. … But if undue does qualify coercion it would not seem to add much to it, whereas I am of the view that qualitatively the word ‘undue’ adds the quality of unreasonableness, unacceptability or lack of proportionality to the general concept of harassment.244

2.87 While the issue remains to be decided, the preponderance of judicial245 and academic246 thought weighs in support of Hill J’s view. To which the author of this text would add her own thoughts for the same reasons expressed by Hill J. Further, the explanatory

memorandum, cited above, appears to be more consistent with the view of Hill J than French J, in which the proffered definition of coercion is not qualified with the word ‘undue’. The explanatory memorandum (which postdates Hill J’s decision in MUA and reflects similar wording to the wording of the decision) suggests that parliament has turned its mind to the issue and has adopted a position consistent with Hill J’s view. 2.88 In MUA Hill J found that, in any event, the conduct in that case constituted both coercion and undue coercion.247 This conduct involved the formation of a picket line by members of the Martime Union to [page 96] prevent access to a vessel by members of a mooring gang for the purpose of assisting the vessel to leave port. The union formed the picket line in protest at the use of the ship’s crew to clean the vessel rather than union members. Hill J found that picketing union members verbally abused and threatened to physically assault and damage the property of anyone who attempted to cross the picket line. 2.89 A further, and more recent, example of coercion in breach of the section can be found in Australian Competition and Consumer Commission v Excite Mobile Pty Ltd.248 Excite Mobile Pty Ltd (‘Excite Mobile’) provided telephony services. In early 2010 Excite Mobile implemented a policy of debt collection which consisted of sending pro forma letters to debtors. Each of these letters represented that the letter was from an independent debt collector named Jerry Hastings, or his representative, and the the debt owed to Excite Mobile had been referred to him for collection. Hastings, however, was found to be a fictitious character249 and all of the debt recovery communications were made by Excite Mobile. Letters of demand (referred to as the ‘Times are Bad’ letter) were signed by hand and sent by registered post by a director of Excite Mobile, Obie Brown, and his domestic partner, Fiona Smart. The letter stated that, unless the debtor contacted Hastings and

entered into an agreement to pay back the debt, Hastings would commence proceedings to recover the debt which would involve the court making orders requiring: the debtor to pay an additional charge equal to 20 per cent of the outstanding debt; and repossession of all assets of value owned by the debtor including children’s toys. As Mansfield J noted, however, Excite Mobile would not have routinely had an entitlement to repossession of the debtors’ assets (or all assets of value or children’s toys) and would not have been able to obtain a court order for an additional charge to be paid by the debtor.250 Employing strong and threatening language, the letters of demand also [page 97] claimed that Hastings engaged a highly skilled lawyer who was ‘uncaring and unsympathetic’ towards debtors: Believe me there is no way you want to meet my lawyer in court. While she seems like a nice lady she is a killer in front of the judge. One case she even got the judge to order a young mother have her kids game machine repossessed. She has no feelings towards you at all. Her job is to be as mean as possible towards you. She can make your life extremely uncomfortable.251

2.90 The lawyer described in the letters was, like Hastings, a complete fiction. Telephone calls by debtors to Hastings were answered by either Mr Brown or Ms Smart who pretended to be from Hastings office. Mansfield J held that in the circumstances Excite Mobile’s conduct, described above, was coercive (irrespective of whether the view of Hill J or French J was used as the basis of measurement) and in breach of s 60 of the TPA.252 Mansfield J considered that the combination of the independence of the fictional Hastings, the description of his fictional lawyer and the overstated and false consequences of a failure to repay the debt or enter into an agreement to pay ‘was such as to intimidate all but the well informed or well experienced debtor into responding to

them’.253 Mansfield J considered that the greater the knowledge discrepancy between Excite Mobile and debtors the greater the likelihood that Excite Mobile secured an agreement to repay the debt by intimidation.

Defences 2.91 Defences to duress include compromise and affirmation of the agreement. These defences are outlined in Chapter 6.

Remedies 2.92 The remedies traditionally available for duress consist of either rescission of the contract procured by duress or the restitution of money had and received. In addition to these traditional remedies broader remedies may be available under consumer protection legislation. These remedies are outlined in Chapter 6. [page 98]

Remedy and penalty under ACL and ASIC Act 2.93 A wide range of statutory remedies are available in respect of breaches of the ACL and ASIC Act. These remedies are outlined in Chapter 6. In addition to statutory remedies, civil monetary penalties also may apply.254 Conduct amounting to undue harassment and coercion is also a criminal offence255 of strict liability256 for which a conviction may be recorded and a fine imposed.257 The principles relevant to the fixing of monetary penalties and fines by the court are canvassed in Chapter 6, 6.75–6.100.

1.

Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45 per McHugh JA.

2.

(1924) 34 CLR 38.

3.

ibid, at 56.

4.

(1988) 19 NSWLR 40 (‘Crescendo’).

5.

[1983] 1 AC 366 at 384.

6.

Crescendo, at 45 citing Universe Tankships Inc of Monrovia v International Transport Workers’ Federation [1983] 1 AC 366 (‘Universe Tankships’) at 400 per Lord Scarman.

7.

Huyton SA v Peter Cremer GmbH & Co [1999] CLC 230 at 252 per Mance J.

8.

[1976] 1 Lloyds Rep 293 at 336

9.

[1981] 3 All ER 189 at 192.

10.

[1980] AC 614 (‘Pao On’) at 635.

11.

Universe Tankships, at 400.

12.

Crescendo, at 45 per McHugh JA.

13.

(1984) 79 FLR 368 at 378.

14.

Crescendo, at 45–6.

15.

[1975] AC 653 (defendant accused of aiding and abetting murder by IRA of a police officer because he drove the motor car but defendant claimed, in his defence, that he did so unwillingly believing that if he did not he would have been shot).

16.

ibid, at 695.

17.

Crescendo, at 45.

18.

Crescendo, at 46.

19.

Crescendo, at 45. The reasoning of McHugh JA was referred to with approval by Lord Goff in Dimskal Shipping Co SA v International Transport Workers’ Federation (the Evia Luck) [1992] 2 AC 152 at 166: ‘I myself, like McHugh JA, doubt whether it is helpful in this context to speak of the plaintiff’s will as having been coerced.’

20.

ibid.

21.

R Bigwood, ‘Throwing the Baby out with the Bathwater? Four Questions on the Demise of Lawful-act Duress in New South Wales’ (2008) 27(2) University of Queensland Law Journal 41 at 54.

22.

(1924) 34 CLR 38 (‘Charlick’).

23.

Charlick, at 49.

24.

Charlick, at 56.

25.

(2005) 64 NSWLR 149 (‘Karam’).

26.

In executing the acknowledgment, the Karam family were acknowledging that a guarantee and certain mortgages prevously given in favour of the ANZ bank had been given to secure all of the family company’s debt, present and future, to the bank.

27.

Karam, at [95]. See also the Victorian Court of Appeal decision in Doggett v Comonwealth Bank of Australia [2015] VSCA 351 at [74]–[81]. In that case the guarantors of a business loan unsuccessfully argued that they signed a compromise letter under duress because they had understood the bank to have said that it would otherwise call up the facility and and exercise its securities and the guarantors were at that time under severe financial distress.

28.

[2011] WASC 268.

29.

ibid, at [179].

30.

ibid, at [180].

31.

Williams v Bayley (1866) LR 1 HL 200 (father executed a mortgage to a banker who claimed that he could prosecute the son for forgery); Jones v Merionethshire Permanent Benefit Building Society [1892] 1 Ch 173 (a man and his mother undertook to repay the debt of a relative by marriage in circumstaqnces where there was an implied agreement to prosecute the relative for embezzlement); Mutual Finance Ltd v John Wetton & Sons Ltd [1937] 2 KB 389 (guarantee was provided by a man through his company in circumstances where a tacit threat had been made to prosecute his brother for embezzlement at a time when his father was ill and the shock of the prosecution seemed likely to kill him); Re Hooper & Grass’ Contract [1949] VLR 269 at 271 (implied threat by vendor in letter to cancel contract for sale of land unless purchaser paid irrigation charge at settlement); B & S Contracts and Designs Ltd v Victor Green Publications Ltd [1984] ICR 419; Vantage Navigation Corp v Suhail & Saud Bahwan Building Materials LLC (‘The Alev’) [1989] 1 Lloyd’s Rep 138 (implicit threat not to deliver goods to the correct port of discharge unless an additional sum was paid).

32.

(1991) 22 NSWLR 298 (‘Hawker Pacific’).

33.

Hawker Pacific, at 303.

34.

ibid, at 303.

35.

Kesarmal v NKV Valliappa [1954] 1 WLR 380 at 384; Barton v Armstrong [1973] 2 NSWLR 598 at 609 per Jacobs JA; Witham v Commercial Union Capital Ltd [2002] EWCA Civ 1776 at [11] per Laws LJ; Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 (‘Dunwoodie’) at [51] per McColl JA.

36.

[1973] 2 NSWLR 598 (‘Barton’).

37.

See further 2.44 below.

38.

(1924) 34 CLR 38 at 56.

39.

(1988) 48 SASR 565 (‘Magnacrete’).

40.

ibid, at 593.

41.

[2014] NSWCA 24.

42.

Dunwoodie, at [62], [86].

43.

Dunwoodie, at [14].

44.

Dunwoodie, at [52].

45.

Saxon v Saxon [1976] 4 WWR 300 (a Canadian decision concerning threats by husband to murder the couple’s two young children if the wife did not convey her interest in the matrimonal home to him and execute a separation agreement); Byle v Byle [1990] 65 DLR 4th 641 (threats by son to harm his brother unless parents executed a business agreement); Bromley v Norton (1872) 27 LT 478 (woman held by police at hotel for her husband’s debt signed undertaking to pay the debt).

46.

Royal Boskalis Westminster NV v Mountain [1999] QB 674.

47.

Conversely, if there is no causal connection between the pressure applied and entry into the contract there is no duress: Crescendo Management Pty Ltd v Westpac Banking

Corporation (1988) 19 NSWLR 40 (Westpac refused to release part of the proceeds of sale of a family home, which was needed to complete the sale of another property, until the married couple agreed to execute a mortgage in favour of Westpac to secure the debt of a family company). 48.

Kelly v R (1902) 27 VLR 522 at 532 per Hodges J.

49.

Mason v New South Wales (1959) 102 CLR 108 (‘Mason’) at 136 per Menzies J, at 143 per Windeyer J; McKay v National Australia Bank Ltd [1998] 4 VR 677 at 687 per Winneke P.

50.

Mason, at 117, 145; Air India v Commonwealth [1977] 1 NSWLR 449 (‘Air India’) at 455.

51.

Mason, at 117.

52.

Mason, at 145.

53.

Air India, at 455.

54.

Barton, at 634.

55.

See further 2.44 below.

56.

Barton, at 631 per Lord Cross.

57.

[1980] AC 614 (‘Pao On’).

58.

Pao On, at 635 per Lord Scarman who delivered the judgment of the Privy Council.

59.

See, for example, Re Hooper and Grass’ Contract [1949] VLR 269 (water charge paid under protest found to have been involuntary); Deacon v Transport Regulation Board [1958] VR 458 (licence fees paid under protest found to have been involuntary); Mason (licence fees paid under protest found to have been involuntary).

60.

[1949] VLR 269 at 272.

61.

[2011] WASC 268 (‘Verve Energy’) at [185].

62.

See further 2.52 below.

63.

Verve Energy, at [183].

64.

[1998] 4 VR 677 at 680, 688 per Winneke P. The guarantors alleged that they had sold their home and applied the proceeds of the sale to reduce the family company’s debt under duress being the bank’s threat to exercise its rights as mortgagee if the company’s debt was not reduced.

65.

(1958) 102 CLR 108 at 143.

66.

[1976] 1 Lloyd’s Rep 293 at 336.

67.

Universe Tankships, at 635. See also Kolmar Group AG v Traxpo Enterprises Pvt Ltd [2010] EWHC 113 at [92].

68.

(1991) NSWLR 298. This case is also considered further above at 2.13. See also Sargood Brothers v Commonwealth (1910) 11 CLR 258 (no protest but payment found to have been involuntary).

69.

ibid, at 303.

70.

[1915] 3 KB 106 at 126.

71.

See also William Whiteley Ltd v R (1909) 101 LT 741 (payments made under protest held to have been voluntary); Donaldson v Gray [1920] VLR 379 (payments made under protest found to have been made voluntarily); Twyford v Manchester Corporation [1946] Ch 236 (payments made under protest found to have been made voluntarily).

72.

Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 48 per McHugh JA.

73.

See below at 2.91 and Chapter 6, 6.4–6.8.

74.

[1989] QB 833 at 838.

75.

Universe Tankships, at 400.

76.

As M Sindone notes, in ‘The Doctrine of Economic Duress — Part 2’ (1996) 14 Australian Bar Review 114 at 130, Lord Scarman in Pao On cited above refers to an adequate legal remedy as merely one example of the alternatives that may be open to a contracting party.

77.

Elise Bant, ‘An Opportunity Saved: Duress in the High Court of Australia: Verve Energy’, Melbourne Law School, Opinions on High blog, . Bant refers to the following English cases: B & S Contracts and Designs Ltd v Victor Green Publications Ltd [1984] ICR 419; Huyton SA v Peter Cremer GmbH & Co [1999] CLC 230; DNSD Subsea Ltd v Petroleum Geo-Services ASA [2000] BLR 530; Carillion Construction Ltd v Felix (UK) Ltd [2001] BLR 1.

78.

[1986] ICR 461 at 468. In this case an employee, who had been summarily dismissed, had been asked to execute an agreement to not file a complaint with an industrial tribunal in exchange for payment. Donaldson MR held that the employee had not been coerced to execute the agreement because a real alternative was open to the employee to draw on social security and complain to an industrial tribunal.

79.

(1910) 11 CLR 258 at 301; (1910) Vol XVI ALR 483 at 500.

80.

Mason, at 128.

81.

Mason, at 129.

82.

Hawker Pacific, at 303.

83.

Verve Energy, at [183].

84.

Sindone, above note 76, at 132.

85.

See Allcard v Skinner (1887) 36 Ch D 145 at 190 per Bowen LJ and more generally Chapter 3 at 3.72–3.81.

86.

Sindone, above note 76, citing the Canadian case of Ronald Elwyn Lister Ltd v Dunlop Canada Ltd (1978) 19 OR (2d) 380 at 409 per Rutherford J.

87.

[1973] 2 NSWLR 598 at 634.

88.

McKay v National Australia Bank Ltd [1998] 4 VR 677 at 689 per Tadgell JA. See also Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 (‘Crescendo’) at 46.

89.

Universe Tankships, at 401.

90.

Universe Tankships, at 401; Crescendo, at 46.

91.

Universe Tankships, at 401; ‘R’ v Attorney-General for England and Wales [2003] UKPC 22 at [16].

92.

Universe Tankships, at 401.

93.

Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at 159.

94.

Cotterill v Penn [1936] 1 KB 53 at 61; Lyons v Smart (1908) 6 CLR 143 at 155 per Barton J, at 160 per O’Connor J; The Wik Peoples v Queensland (1996) 141 ALR 129 at 158.

95.

Re Hooper & Grass’ Contract [1949] VLR 269 at 272 per Fullager J; Mason v New South Wales (1959) 102 CLR 108 at 141; Spira v Commonwealth Bank of Australia (2003) 57 NSWLR 544 at [73].

96.

McIntyre v Nemesis DBK Ltd (2010) 1 NZLR 463 at [115]; Roger Halson, ‘Opportunism, Economic Duress and Contractual Modifications’ (1991) 107 Law Quaterly Review 649 at 663; Sindone, above note 76, at 127; Rick Bigwood, Exploitative Contracts Oxford University Press, Oxford, 2013, at 333. See further 2.52 below.

97.

See below at 2.44–2.45.

98.

See below at 2.46–2.47.

99.

See below at 2.48–2.51.

100. See below at 2.52–2.56. 101. See below at 2.57–2.64. 102. Barton v Armstrong [1976] AC 104 (death threats); Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 (threats of physical violence and death by a third party but without bank’s knowledge so duress not ultimately found). 103. Bromley v Norton (1872) 27 LT 478 (woman held by police at hotel for her husband’s debt signed undertaking to pay the debt); Friedeberg-Seeley v Klass (1957) 101 Sol Jo 275 (defendants entered plaintiff’s flat and refused to leave until she signed a receipt for a jewel case and its contents. The jewel box was then taken away by defendants who left behind a cheque for a sum of money; McLarnon v McLarnon (1968) 112 Sol Jo 419 (P) (the parents of a 17-year-old girl threatened to send her away to a convent unless she married a man who falsely claimed that she was pregnant with his child). 104. Malcolm Cope, Duress, Undue Influence and Unconscientious Bargains, Law Book Co, Sydney, 1985, at [5]. 105. Skeate v Beale (1840) 113 ER 688 at 690 per Lord Denman CJ. 106. Barton v Armstrong [1973] 2 NSWLR 598. 107. Barton, at 626. 108. Barton, at 627. 109. Barton, at 627. 110. Barton, at 630. 111. Saxon v Saxon [1976] 4 WWR 300 (threats by husband to murder the couple’s two young children if the wife did not convey her interest in the matrimonal home to him and

execute a separation agreement); Byle v Byle [1990] 65 DLR 4th 641 (threats by son to harm his brother unless parents executed a business agreement). 112. Royal Boskalis Westminster NV v Mountain [1999] QB 674. 113. [1999] QB 674. 114. ibid, at 730. 115. Mason v New South Wales (1959) 102 CLR 108 at 144. See also Astley v Reynolds (1731) 93 ER 939; Shaw v Woodcock (1827) 108 ER 652; Hills v Street (1828) 130 ER 973; Close v Phipps (1844) 135 ER 236; Valpy v Manley (1845) 135 ER 673; Great Western Railway Co v Sutton (1869) LR 4 HL 226; Green v Duckett (1883) 11 QBD 275; Maskell v Horner (1915) 3 KB 106; Nixon v Furphy (1925) 25 SR (NSW) 151; White Rose Flour Milling Co Pty Ltd v Australian Wheat Board (1944) 18 ALJ 324; T D Keegan Ltd v Palmer [1961] 2 Lloyd’s Rep 449 (plaintiff purchased a plane and found certain items missing. These items were held by the defendant, a pilot who had been formerly employed by the vendor. The defendant demanded payment before handing over the missing items). 116. Atlee v Backhouse (1838) 150 ER 1298 at 1305; Skeate v Beale (1840) 113 ER 688 at 690. 117. Skeate v Beale Beale (1840) 113 ER 688 at 690 per Lord Denman CJ. 118. Occidential Worldwide Investment Corporation v Skibs A/S Avanti (The Siboen and the Sibotre) [1976] 1 Lloyd’s Rep 293 at 335; North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 at 716–17; Magnacrete Ltd v Douglas-Hill (1988) 48 SASR 565 at 590; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 306. 119. Occidential Worldwide Investment Corporation v Skibs A/S Avanti (The Siboen and the Sibotre) [1976] 1 Lloyd’s Rep 293 (threat to burn down the house or slash a valuable picture); Re J & S Holdings Pty Ltd v NRMA Insurance Ltd [1982] FCA 78 (refusal to discharge a mortgage until additional sum paid); Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 (implicit threat to detain a helicopter until agreement signed). 120. (1991) 22 NSWLR 298 (‘Hawker Pacific’). 121. Beerens v Bluescope Distribution Pty Ltd [2012] VSCA 209 at [46] (referring to threats by creditors to bring proceedings). 122. Don Nuno Alvares Pereira De Mello, Duke of Cadaval v Collins (1836) 4 Ad & E 858 at 1009 (the plaintiff, a foreigner who did not speak English, was arrested shortly after he arrived in the country by the defendant in respect of a debt that the defendant knew was not owed. The parties signed an agreement pursuant to which the plaintiff paid a certain sum of money to the defendant in return for his release. The court found that not only could the plaintiff recover the money in an action for money had and received, the money having been paid involuntarily, but also by way of damages in an action for malicious arrest). 123. Hitchcock v Coker [1853–42] All ER Rep 452; Jones v Merionethshire Permanent Benefit Building Society [1892] 1 Ch 173; Kerridge v Simmonds (1907) 4 CLR 253. 124. (1982) 41 ALR 539. See also Pitt v Coomes (1835) 111 ER 178 (plaintiff successful in

claim for repayment of money paid into court to obtain his liberty after he was wrongfully arrested). 125. ibid, at 556. 126. Ward v Lloyd (1843) 7 Scott NR 499 at 504–5; Flower v Sadler (1882) 10 QBD 572 at 573, 575, 576; Moore v Vestry of Fulham [1894] 1 QB 399 at 401–2; McKay v National Australia Bank Ltd [1998] 4 VR 677 at 685–8 per Winneke P, at 690 per Tadgell JA; Bereens v Bluescope Distribution Pty Ltd [2012] VSCA 209 at [43]. 127. [1998] 4 VR 677. 128. McKay v National Australia Bank Ltd [1998] 1 VR 173. 129. ibid, at 686 per Winneke P, at 690 per Tadgell JA. 130. ibid, at 686. 131. ibid, at 690. 132. [2012] VSCA 209. 133. ibid, at [43], [47]–[49] per Nettle JA, at [151]–[153] per Tate JA. 134. ibid, at [46]. 135. North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 at 719. 136. Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [24]–[26]; Doggett v Commonwealth Bank of Australia [2015] VSCA 351 at [73]. 137. Nixon v Furphy (1925) 25 SR (NSW) 151 at 158–60 (court found that vendor’s threat to cancel contract for sale of land unless purchasers paid certain sum of money in interest consituted duress and this decision was affirmed on appeal in Furphy v Nixon (1925) 37 CLR 161); White Rose Flour Milling Co Pty Ltd v Australian Wheat Board (1944) 18 ALJR 324 at 326–7 (court found that money paid above the contract price for wheat had been paid under duress after board threatened to cease supply unless the extra charge was paid by the flour miller); Re Hooper & Grass’ Contract [1949] VLR 269 at 271 (implied threat by vendor in letter to cancel contract for sale of land unless purchaser paid irrigation charge at settlement); North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 (shipbuilders threatened to not deliver ship unless paid a further sum of money to account for devaluation of US dollar but, while duress found, relief was denied because court found that variation to contract had been affirmed); Pao On v Lau Yiu Long [1980] AC 614 (threat not to proceed with purchase of shares unless purchasers were indemnified by the sellers against any fall in share price found to amount to commercial pressure but no coercion found); Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 (refusal to provide supplemental gas energy under an existing contract found to consitute duress but duress not considered in appeal to High Court in Woodside Energy Ltd v Electricity Generation Corporation (2014) 306 ALR 25 because High Court simply found a breach of the terms of the original contract). 138. [2013] WASCA 36 (‘Verve Energy’). 139. Verve Energy, at [26], [159], [183]. 140. [2010] 1 NZLR 463 at [30] but note that at [31] the court proceeded on the basis that a

threat to breach a contract is unlawful and generally illegitimate. 141. Verve Energy, at [200]. 142. Verve Energy, at [185]–[192]. 143. Re Hooper & Grass’ Contract [1949] VLR 269 at 272 per Fullager J; Spira v Commonwealth Bank of Australia (2003) 57 NSWLR 544 at [73]. 144. Nixon v Furphy (1925) 25 SR (NSW) 151; White Rose Flour Milling Co Pty Ltd v Australian Wheat Board (1944) 18 ALJR 324; North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 (party claiming duress expressly disavowed any allegation of bad faith at 709); Vantage Navigation Corporation v Suhail & Saud Bahwan Building Materials LLC (‘The Alev’) [1989] 1 Lloyd’s Rep 138 (per Hobhouse J at 145: ‘the plaintiffs did make a threat which was illegitimate, and if it be relevant, they knew it to be illegitimate’). 145. [1949] VLR 269 at 272. 146. [2003] 57 NSWLR 544. 147. ibid, at [73] with Beazley and Tobias JJA agreeing. 148. Sindone, above note 76, at 742. 149. (1809) 170 ER 1168 (agreement to pay sailors a higher rate of wages if they continued to work on a ship after the desertion of two crew mates found to be void for want of consideration). 150. (1955) 56 SR (NSW) 323 (‘Sundell’). 151. The court also found, at 328, that payment was made under ‘practical compulsion’. 152. Sundell, at 327. 153. (1994) 34 NSWLR 723 (‘Musumeci’) at 742. 154. [1991] 1 QB 1 (‘Williams’). 155. Although it is important to note that Glidewell LJ expressly held, at 16, that the decision in Williams did not overrule Stilk v Myrick: ‘(i)f it be objected that the propositions above contravene the principle in Stilk v Myrick … I answer that in my view they do not; they refine, and limit the application of that principle, but they leave the principle unscathed’. 156. Williams, at 15–16. 157. Musumeci, at 745. 158. Musumeci, at 744. 159. Mason, at 139 per Windeyer J. 160. Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137 (‘Bell Bros’) at 147 per Windeyer J. 161. Shoppe v Nathan & Co (1892) 1 QB 245 at 252 per Collins J (penalty proceedings against sheriff. No penalty imposed because court found miscalculation of amount owed to be a honest mistake. Distinction made with civil proceedings to recover payment made under colour of office); Mason, at 141. 162. (1824) 107 ER 554 (‘Morgan’).

163. (1853) 155 ER 1502. 164. Morgan, at 556 per Abbott CJ. 165. Melbourne Tramway & Omnibus Company Ltd v Mayor of Melbourne (1903) 28 VLR 647 at 662 per Madden CJ; see also Williams J at 663, Holyrod J at 664 and Hodges J at 666 (local authority demanded, and Melbourne Tramway paid, licence fees with respect to tramcars although no law existed requiring that tramcars be licensed). 166. Bell Bros, at 145. 167. William Whiteley Ltd v R (1909) 101 LT 741 at 745 per Walton J (payment of duties over several years in respect of two employees held to be irrecoverable); Werrin v Commonwealth (1937) 59 CLR 150 (‘Werrin’) at 157 per Latham CJ, at 169 per McTiernan J (sales tax paid on second-hand goods held to be irrecoverable). 168. Werrin, at 157 per Latham CJ. 169. (1959) 102 CLR 108 (‘Mason’). 170. State Transport (Co-ordination) Act 1931 (NSW) s 22. 171. Hughes and Vale Pty Ltd v New South Wales (1954) 93 CLR 1. 172. Mason, at 117. 173. Mason, at 134 after having expressly found that the fees were not paid under colour of office. 174. Note that Fullagar and Taylor JJ broadly adopt Windeyer J’s decision. 175. Mason, at 142. 176. Bell Bros, at 145. 177. McTiernan J dissenting. McTiernan J held that there was nothing unlawful in the demand since the demand was made under an Act of Parliament. 178. Mason, at 144 per Windeyer J. 179. Mason, at 117. 180. Mason, at 145. 181. See 2.23. 182. (2005) 64 NSWLR 149 (‘Karam’). 183. See 2.39. 184. Universe Tankships, at 401. 185. [1994] 4 All ER 714. 186. ibid, at 717. 187. ibid, at 718. 188. Crescendo, at 46. 189. (1998) 152 ALR 267 at 289. 190. Robertson v Robertson [1930] QWN 41 (QSC) (husband’s threat to reveal his wife’s infidelities unless she transferred a property she owned into their names jointly was held to be both duress and undue influence).

191. Bigwood, above note 20, at 60. 192. [1866] LR 1 HL 200, followed in Public Service Employees Credit Union Co-operative Ltd v Campion (1984) 75 FLR 131 at 138 (the defendant had provided a guarantee of repayment of his son’s debt in circumstances where the plaintiff had threatened to notify police that the son had illegally obtained money unless the defenant executed the guarantee). See also Mutual Finance Ltd v John Wetton & Sons Ltd [1937] 2 KB 389 (guarantee was provided by a man through his company in circumstances where a tacit threat had been made to prosecute his brother for embezzlement). 193. (1992) WAR 475. 194. ibid, at 485. 195. Thorne v Motor Trade Association [1937] 3 All ER 157 at 160–1; Occidental Worldwide Investment Corporation v Skibs A/S Avanti [1976] 1 Lloyd’s Rep 293; Pao On v Lau Yin Long [1980] AC 614 at 635–6; Universe Tankships Inc of Monrovia v International Transport Workers’ Federation [1983] 1 AC 366 at 383–4, 401; Magnacrete Ltd v Douglas-Hill (1988) 48 SASR 567 at 591; Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45–6; Shivas v Bank of New Zealand [1990] 2 NZLR 327 at 345; Caratti v Deputy Commissioner of Taxation (1993) 27 ATR 448 at 457; Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 106; CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 (‘CTN Cash’) at 718; Cockerill v Westpac Banking Corporation (1996) 142 ALR 227 at 272. 196. The result of ‘blacking’ was that tug boats would not be available to assist the ship to leave port. 197. Association of Operative Plasterers (NSW) v Sadler 1918 AR (NSW) 159 (NSW Indus Arb Ct). 198. CTN Cash, at 719. 199. ibid. 200. (1993) 32 NSWLR 50 (‘Equiticorp’). 201. Equiticorp, at 106. 202. Equiticorp, at 107. 203. Karam, at [61]. 204. Karam, at [66]. 205. ibid. 206. Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [159]; Commercial Base Pty Ltd v Watson [2013] VSC 334 at [34]–[35] per Almond J; Owners – Strata Plan No 61288 v Brookfield Australian Investments Ltd (2013) 85 NSWLR 479 at [45]; May v Brahmbhatt [2013] NSWCA 309 at [38]; Mitchell v Pacific Dawn Pty Ltd [2007] QCA 074 at [20]–[22], [24] per Chesterman J. 207. Nalbandian v Commonwealth [2017] FCA 45 at [56]; Kennedy and Thorne [2016] FamCAFC 189 at [68]–[71]. 208. Bigwood, above note 20; James Edelman and Elise Bant, Unjust Enrichment, 2nd ed, 2016, Bloomsbury Publishing, London at 211–12.

209. [2017] HCA 49. A summary of this case can be found in Chapter 1, 1.113–1.119. 210. [2017] HCA 49 at [72]. 211. ACL s 22(2)(d) and 22(3)(d) and ASIC Act s 12CB(2)(d). See further Chapter 5, 5.2–5.105. 212. Contracts Review Act (NSW) s 9(2)(j). See further Chapter 5, 5.125–5.152. 213. Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, Explanatory Memorandum, [653]. 214. Section 53A of the TPA prohibited the use of physical force, undue harassment or coercion in connection with the sale or grant, or the possible sale or grant, of an interest in land or the payment for an interest in land. 215. Section 60 of the TPA prohibited the use of physical force, undue harassment or coercion in connection with the sale of goods or services. 216. Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, Explanatory Memorandum, [655]. 217. [2000] FCA 1037 (‘McCaskey’). 218. McCaskey, at [47]. 219. McCaskey, at [48], [51]. 220. McCaskey, at [48]. 221. McCaskey, at [51]. 222. [2012] FCA 1164 (‘ACMS’). 223. ACMS, at [17]. 224. Campbell v Metway Leasing Ltd (1998) ATPR 41-630 per McInerney J; McCaskey, at [53]. 225. Australian Competition and Consumer Commission v Maritime Union of Australia [2001] FCA 1549 (‘MUA’) at [62] per Hill J; see also Australian Competition and Consumer Commission v Harrison [2016] FCA 1543 (‘Harrison’) at [116] per Moshinsky J. 226. McCaskey, at [47]; MUA, at [62]. 227. McCaskey, at [48]; MUA, at [49]; Harrison, at [116]. 228. McCaskey, at [48]. 229. MUA, at [64]. 230. Australian Competition and Consumer Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164 at [14] per Perram J. 231. Indeed Perram J, in Australian Competition and Consumer Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164 at [14], observed: ‘It is not to be expected in such cases that the debt collector must proceed as if at a prayer meeting.’ 232. McCaskey, at [48]. 233. McCaskey, at [51]. 234. McCaskey, at [48].

235. [2016] FCA 1543. 236. Harrison, at [88]–[89]. 237. Harrison, at [133]. 238. MUA, at [63], cited with approval in Australian Competition and Consumer Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164 at [16] per Perram J; Australian Competition and Consumer Commission v Excite Mobile Pty Ltd [2013] FCA 350 (‘Excite Mobile’) at [160] per Mansfield J; Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) [2015] FCA 211 (‘Safety Compliance’) at [147] per Farrell J. 239. MUA, at [63]; Excite Mobile, at [160]; Safety Compliance, at [147]. 240. MUA, at [51]. 241. ibid. 242. ibid. 243. [2001] FCA 1549. 244. MUA, at [64]. 245. ACMS, at [15] per Perram J; Safety Compliance, at [150] per Farrell J. 246. J D Heydon, Trade Practices Law, 2nd ed, Law Book Co, Sydney, 1989, at [13.620]; A Bruce, Consumer Protection Law in Australia, LexisNexis Butterworths, Sydney, 2014, at [9.35]. 247. MUA, at [65]. 248. [2013] FCA 350 (‘Excite Mobile’). See also Australian Competition and Consumer Commission v Davis [2003] FCA 1227 in which Lee J, at [21]–[22], had no difficulty in finding that conduct in relation to the seizure of a motor vehicle (which involved pinning the creditor to the ground) contravened s 60 of the Trade Practices Act 1974 (Cth). 249. Excite Mobile, at [199]. 250. Excite Mobile, at [200]. 251. Excite Mobile, at [43]. 252. Excite Mobile, at [208]–[209]. 253. Excite Mobile, at [210]. 254. ACL s 224(3) item 2 provides for a pecuniary penalty not exceeding $1.1 million for a body corporate and $220,000 for a natural person and ASIC Act s 12GBA(3) item 1 provides for a penalty not exceeding $10,000 for a body corporate and $2,000 for a natural person. 255. ACL s 168 and ASIC Act s 12GB(3). 256. ACL s 168(2) and ASIC Act s 12DJ(2). 257. ACL s 168 provides for a penalty of $1.1 million for a body corporate and $220,000 for a natural person and ASIC Act s 12GB(1) provides for a fine of $10,000 for a body corporate and $2,000 for a natural person.

[page 99]

Chapter 3 Undue Influence DEFINING UNDUE INFLUENCE 3.1 Undue influence is an equitable doctrine that, like the common law doctrine of duress, looks to the quality of consent of the weaker party to the contract. But undue influence, unlike duress, is concerned with influence, not coercion, and the sources of that influence are not confined to pressure that is illegitimate or unlawful.1 This chapter will canvass the doctrine of undue influence and the two main ways in which such influence may be proved: by way of a presumption (arising from a particular kind of relationship) and by way of adducing evidence of undue influence actually having been applied. The chapter will also canvass the application of the doctrine to third parties in what has come to be known as the ‘rule in Yerkey v Jones’. 3.2 As Lindley LJ in Allcard v Skinner2 explained, the ‘Courts of Equity have never set aside gifts on the ground of the folly, impudence, or want of foresight on the part of donors’ but ‘(o)n the other hand, to protect people from being tricked or misled in any way by others in parting with their property is one of the most legitimate objects of all laws’.3 3.3 The doctrine of undue influence was enunciated by Hodges J in Union Bank of Australia Ltd v Whitelaw4 as follows: [E]quity recognises that persons possessed of the usual capacity to contract may, as a

matter of fact, not be free agents, and may enter into obligations under the pressure of what it calls undue influence. ‘Influence’, as I understand the term in this connection, is the ascendancy acquired by one person over another. ‘Undue influence’ is the improper use by the ascendant person of such ascendancy for the benefit of himself or someone else, so that the acts of the person influenced are not, in the fullest sense of the word, his free voluntary acts.

[page 100] 3.4 The absence of undue influence has been described as a ‘free and well-understood act’5 and the ‘free exercise of the respondent’s [weaker party’s] will’.6 3.5 It has been observed that no court has attempted to define undue influence.7 The circumstances in which undue influence may be applied are infinitely various. Lord Scarman in National Westminster Bank plc v Morgan8 provides the following useful warning: A court in the exercise of this equitable jurisdiction is a court of conscience. Definition is a poor instrument when used to determine whether a transaction is or is not unconscionable: this is a question which depends upon the particular facts of the case.

3.6 Undue influence may be established in either one of two ways: it may be proved affirmatively through direct evidence (actual undue influence) or it may be presumed from a relationship of trust or confidence (presumed undue influence).9

Actual undue influence 3.7 As Dixon J observed in Johnson v Buttress,10 the source of a stronger party’s influence may not be derived from a relationship of trust or confidence but ‘in a particular situation, or in a deliberate contrivance of the party’. In these circumstances, undue influence must be proved affirmatively. Dixon J held that ‘facts must be proved showing that the transaction was the outcome of such an actual influence over the mind of the alienor [weaker party] that it cannot be considered his free act’.11.

[page 101] 3.8 In Stivactas v Michaletos (No 2),12 Mahoney JA elaborated on the principles enunciated by Dixon J in Johnson to identify the particular facts that must be proved to show actual undue influence: [T]he evidence is ordinarily directed to establishing three things: that the defendant [stronger party] had influence over the plaintiff [weaker party]; that he exercised that influence so that what was done was, to the relevant extent, the result of influence rather than the will of the plaintiff; and that his position or otherwise the circumstances were such that the influence, and exercise of it, were ‘undue’ to the extent that equity should intervene.13

3.9 Some caution, however, should be exercised in applying Mahoney JA’s checklist strictly, rather than as a general guide, for three reasons. First, as outlined below, the authorities post-Stivactas make it plain that in transactions for value (as distinct from gifts) it is not necessary to establish that the influence was ‘undue’ in the sense that the weaker party incurred a manifest disadvantage. Second, the principles with respect actual undue influence were recently enunciated and applied by the High Court in Thorne v Kennedy.14 In Thorne the High Court was simply concerned with whether the execution of an agreement was a free act in the particular circumstances of that case. Third, as outlined below, undue influence being an equitable doctrine, the court will be concerned to consider all of the circumstances of a particular case. The court will not automatically find undue influence by ticking off items on any checklist.

Not a free act 3.10 The task of defining or identifying acts that are not free was most recently undertaken by the High Court in Thorne v Kennedy.15 In that case the plurality opined: The question whether a person’s act is ‘free’ requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party. It is not necessary for a conclusion that a person’s

[page 102] free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person has become a ‘mere channel through which the will of the defendant operated’. Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be ‘markedly substandard’ as a result of the effect upon the person’s mind of the will of another.16

3.11 In Thorne, Gaudron J emphasised that the ‘gist’ of undue influence is that the will or judgment of the weaker party is affected or impaired to distinguish the doctrine from the doctrine of unconscionable conduct.17 3.12 Even where the weaker party understands and intends to do what he or she did the transaction is not beyond the reach of undue influence. The question is how the intention is produced,18 that is, whether the intention was one formed by the weaker party’s free and independent exercise of will.19 This is a point of difference between the doctrines of duress and undue influence.20 Although, it should be noted, that in practice, the distinction can be more difficult to discern and there are reported cases of actual undue influence to which the doctrine of duress could equally apply.21

Influence was ‘undue’ 3.13 It has never been a requirement of the doctrine that the stronger party (whether the undue influence was actual or presumed) benefit from the transaction22 or otherwise be a party to the transaction.23 But, controversially, at one time it was a requirement in establishing actual undue influence that the influence be shown to have been ‘undue’. As discussed below, this may remain a requirement in establishing presumed undue influence. [page 103] 3.14

The requirement is included in Mahoney JA’s checklist, in

Stivactas. In propounding this checklist, Mahoney JA cites Isaacs J’s decision in Watkins v Combes.24 The facts of that case concerned a woman of 69 years of age, in failing health (both mentally and physically), who transferred her property to the defendants in exchange for their promise to maintain her for the rest of her life. In that case, Isaacs J observed that ‘influence’ might be used in any number of ways including ‘wisely, judicially and helpfully’.25 Accordingly, Isaacs J argued that to warrant the intervention of equity ‘more than mere influence must be proved so as to render influence, in the language of the law, “undue”’.26 Isaacs J considered that for influence to be ‘undue’: It must be established that the person in a position of domination has used that position to obtain unfair advantage for himself, and so cause injury to the person relying on his authority or aid.27

3.15 Isaacs J’s view was informed by the Privy Council’s decision in Poosathurai v Kanappa Chettiar.28 In that case Lord Shaw held that it was essential, in proving that the sale of property was procured by undue influence, to show that the bargain was unconscionable or constituted an advantage unfair to the vendor. 3.16 Isaacs J’s view was not shared with the plurality who instead found: … Mrs Reynold’s mind was entirely under the dominion of the defendants, and that she was therefore, as they well knew, incapable of dealing with them on a footing of equality. A disposition of property by her to either of them, whether voluntary or for valuable consideration, made while this continued and without the benefit of independent advice cannot stand.29 [emphasis added]

3.17 Isaacs J’s view, however, was subsequently adopted by Starke J in Harris v Jenkins.30 3.18 A little over a decade later the High Court considered the principles relevant to undue influence again in Johnson. In that case Latham CJ and McTiernan J did not identify injury or disadvantage on the part [page 104]

of the weaker party as being a requirement of the doctrine.31 Dixon J (with whom Evatt J agreed) did not identify any requirement that the transaction be disadvantageous for the weaker party where actual undue influence has been established. Dixon J, however, went on to hold that where one party assumes a position of ‘ascendancy or influence’ over the other (or conversely where the other party assumes a position of ‘dependence or trust’) then when that party (the stronger party) takes a ‘substantial gift of property … it is incumbent upon him [the stronger party] to show that it cannot be ascribed to the inequality between them’.32 3.19 In England, the House of Lords in National Westminster Bank plc v Morgan33 followed Poosathurai to find that ‘(w)hatever the legal characteristics of the transaction … it must constitute a disadvantage sufficiently serious to require evidence to rebut the presumption that in the circumstances of the relationship between the parties it was procured by the exercise of undue influence’.34 Lord Scarman coined the term ‘manifest disadvantage’ to describe the requirement.35 In the cases that followed Morgan not only was the requirement of manifest disadvantage applied to presumed undue influence but the courts also considered the requirement to apply to actual undue influence.36 In particular, in the case of Bank of Credit and Commerce International SA v Aboody37 Slade LJ applied the requirement to a case where a husband was found to have used actual undue influence to compel his wife to sign a legal charge. Slade LJ held that, although Mrs Aboody’s husband had clearly influenced her, Mrs Aboody was unable to show that the transaction had been manifestly disadvantageous to her.38 [page 105] 3.20 Subsequently the House of Lords, in CIBC Mortgages plc v Pitt,39 held that the Court of Appeal erred in Aboody. The House of Lords found that the requirement of manifest disadvantage was confined to cases of presumed undue influence and did not extend to cases of actual undue influence. Lord Browne-Wilkinson declared:

Whatever the merits of requiring a complainant to show manifest disadvantage in order to raise a class 2 presumption of undue influence, in my judgement there is no logic in imposing such a requirement where actual undue influence has been exercised and proved. Actual undue influence is a species of fraud. Like any other victim of fraud, a person who has been induced by undue influence to carry out a transaction which he did not freely and knowingly enter into is entitled to have that transaction set aside as of right … A man guilty of fraud is no more entitled to argue that the transaction was beneficial to the person defrauded than is a man who has procured a transaction by misrepresentation. The effect of the wrongdoer’s conduct is to prevent the wronged party from bringing a free will and properly informed mind to bear on the proposed transaction which accordingly must be set aside in equity as a matter of justice.40

3.21 It is now settled law, both in England and Australia,41 that in proving actual undue influence there is no requirement to prove that the transaction was manifestly disadvantageous. The law with respect to cases of presumed undue influence is outlined below. 3.22 Although no longer a requirement, the fact that a transaction is manifestly disadvantageous is a matter that the court will have regard to, among others, in determining the existence of actual undue influence.

MATTERS THE COURTS WILL HAVE REGARD TO IN DETERMINING UNDUE INFLUENCE 3.23 A finding of undue influence will only be made by a court after a through interrogation of the facts of, and incidental to, the transaction. The High Court in Jenyns v Public Curator (Qld)42 warned: [page 106] The jurisdiction of a court of equity to set aside a gift, or other disposition of property as, actually or presumptively, resulting from undue influence … is governed by principles the application of which calls for a precise examination of the particular facts, a scrutiny of the exact relations established between the parties and a consideration of the mental capacities, processes and idiosyncrasies of the donor. Such cases do not depend upon legal categories susceptible of clear definition and giving rise to definite issues of fact readily formulated which, when found, automatically determine the validity of the disposition. Indeed no better illustration could be found of Lord Stowell’s generalization concerning

the administration of equity: ‘A court of law works its way to short issues, and confines its views to them. A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case.’43

3.24 In determining whether the weaker party’s act was the result of actual undue influence (or whether an actual relationship of influence existed between the parties44) the matters that the court will have regard to include (but are not confined to): 45 the propriety or the improvidence of the transaction; all of the circumstances surrounding the transaction; and the characteristics of the weaker party and the nature of the relationship between the parties.

Propriety or improvidence of the transaction 3.25 The owners of property are entitled to dispose of that property in any way that they choose (including in an improvident way).46 But the courts will look to the propriety or the improvidence of the transaction as possibly providing some indication of the absence or presence of actual duress. If the transaction is a gift, the courts will have regard to the size of the gift and whether the weaker party (the donor) is left with any property sufficient to live on. If the transaction is for value, then, as Dixon J in Johnson noted, ‘(a)dequacy of consideration becomes a material question. Instead of inquiring how the subordinate party came to confer a benefit, the court examines the propriety of what wears the [page 107] appearance of a business dealing’.47 The courts will also have regard to the reasonableness or otherwise of the terms of any transaction. For example, the plurality in Thorne observed that ‘it can be an indicium of undue influence if a pre-nuptial or post-nuptial agreement is signed despite being known to be grossly unreasonable even for agreements of this nature’.48

3.26 An unusually vivid example of where the reasonableness of the transaction was held by a court to indicate the absence of undue influence can be found in the English Court of Appeal decision of Attorney-General for England and Wales v R49 which was subsequently upheld on appeal to the Privy Council.50 The facts in that case concerned a New Zealand soldier (R) who signed an agreement undertaking not to publish any information relating to his service in the Gulf War with the well-known Bravo Two Zero patrol in the prestigious British Special Air Service (SAS). Some members of the patrol had published books giving an account of the war that the remaining members considered were wrong or unfair. The Director of the Special Forces decided that it would be in the best interests of the SAS, in terms of the morale and effectiveness of those serving, for all serving members to agree to keep their experiences confidential. The agreement was presented to R by his superior officers. R was told that if he did not sign he would be transferred out of the SAS to the less prestigious Parachute Regiment. The Court of Appeal held that R had not been subject to any actual undue influence because, among other things, the director’s request had been made of all members in good faith.51

Circumstances surrounding the transaction 3.27 In respect of the transaction, the courts have had regard to the extent to which the weaker party understood the effect of the transaction. Where the evidence demonstrates that the weaker party did not understand the effect of the transaction the courts have counted this fact, among others, as establishing that the weaker party was subject to undue influence.52 3.28 The court has also counted as relevant, the openness of the transaction. For example, in Stivactas v Michaletos (No 2)53 an elderly, [page 108] sick and mentally impaired aunt with a limited understanding of English

transferred two properties to her nephew in consideration of the sum of $1. Kirby P, as he then was, said ‘(i)t is worth noting that the transfers were kept secret from other members of the family — something unlikely to happen if they were the product of a fully informed mind, sure of its decisions’.54

Characteristics of the weaker party and nature of relationship between the parties 3.29 The courts have had regard to the weaker party’s level of intelligence,55 education, business experience (or lack of),56 age,57 state of mental and physical health58 and strength of character.59 3.30 The courts have also had regard to the nature of the relationship between the weaker party and the stronger party: whether the relationship is familial, the duration and closeness of the relationship and the intricacy of any business relationship between the parties. In Brunker v Perpetual Trustee Co Ltd60 a bachelor of 71 years of age who had suffered from an illness was found to have freely transferred property for nominal consideration to his housekeeper very shortly before his death. The housekeeper had served the man for many years and had attended to him during his last illness. Latham CJ considered that the transfer was ‘the natural act of a generous man who wished to recognise by a substantial gift personal services which had been rendered to him during a long period by a lady for whom he had both respect and affection’.61 Conversely, in Bank of New South Wales v Rogers62 a 64-year-old, intelligent woman with ‘a will of her own’ was found to have been subject to undue influence when she charged virtually all of her property [page 109] in favour of her uncle’s bank as security for his overdraft. The court found that the uncle stood loco parentis to the woman who had lived with her uncle and his family after the death of her parents and followed his business advice without question. In contrast to Rogers, a

financial advisor was held not to have exercised undue influence over his client in respect of a mining venture in Cowen v Piggott.63 The client, a mining engineer, was found to have initiated the proposal for the venture and to have had some experience in the commercial aspects of such ventures. Further, the client had access to legal advice and the advisor ultimately did not provide advice in relation to the particular mining venture the subject of the complaint.64

EXAMPLES OF ACTUAL UNDUE INFLUENCE 3.31 In the case of Farmers Co-operative Executors & Trustees Ltd v Perks65 a wife transferred her interest as a tenant in common in a farm to her husband. The evidence revealed a long history of mental and physical abuse by the husband against his wife that ultimately ended in the husband murdering his wife. The court found that a relationship of control and dominance existed between the husband and his wife that raised the presumption, which was not rebutted, that the transfer was produced as a result of the husband’s undue influence over his wife. The court also held that the evidence of domestic violence established the existence of actual undue influence. 3.32 The facts in Maher v Honeysett & Maher Electricial Contractors Pty Ltd66 concerned two electricians by trade, Maher and Honeysett, who went into partnership trading as electrical contractors. They incorporated their business as Honeysett & Maher Electrical Contractors Pty Ltd (‘HME’). Maher and Honeysett became equal shareholders and the only directors of HME. Honeysett was, by nature, an indecisive man. Honeysett relied on his wife and her brother, a solicitor, to assist him in making business decisions. Maher was aware of Honeysett’s indecisiveness and his inability to withstand pressure.67 Over a decade after incorporating HME, Maher sought to expand the business into the hire and maintenance of cranes. Honeysett resisted Maher’s plans for expansion, preferring the business to remain as it was. Maher then sought to wind up HME and set out on his own. Maher formed his own

[page 110] company for this purpose and proposed terms to Honeysett for winding up HME. When Honeysett would not agree to wind up HME on Maher’s terms, Maher sought to influence Honeysett in three ways. First, Maher told HME’s employee not to attend work. Second, Maher withdrew his guarantee to the bank of HME’s indebtedness which had the effect of freezing HME’s bank accounts. Third, Maher ceased to invoice existing customers. Honeysett subsequently signed two agreements for the winding up of HME on Maher’s terms. The court held that the agreements were unenforceable by reason of actual undue influence and unconscionable conduct. In finding actual undue influence, the court held that Honeysett was unable to ‘judge for himself’ and ‘make objective decisions’ because Maher had ‘manufactured an atmosphere of emergency’.68 3.33 In Thorne the High Court set aside a prenuptial agreement executed by a bride, Thorne, shortly before she was due to marry. It was made clear to Thorne by her intended husband, Kennedy, that unless she signed the prenuptial agreement there would be no wedding. The plurality found that in the circumstances (which included Thorne’s ardent desire to marry Kennedy and have children, the public nature of her marriage, her limited financial means and the fact that her right to reside in Australia was derived from her relationship with Kennedy) Thorne had been subject to both actual undue influence and unconscionable conduct.69

Presumed undue influence 3.34 A presumption of undue influence arises once it has been shown that: (a) a relationship of trust or confidence existed (that is,g a relationship of influence); and (b) the transaction inexplicably conferred a substantial benefit. But note that the second requirement, as outlined below, is controversial and the law to date is unsettled.

3.35 Once the presumption is triggered the onus then shifts to the stronger party to rebut the presumption by proving that the transaction was the result of the weaker party’s free will.70 [page 111] 3.36 The presumption serves the public policy of preventing the exploitation of power in relationships of influence. Collins LJ, in Allcard, explained: … the Court interferes, not on the ground that any wrongful act has in fact been committed by the donee, but on the ground of public policy, and to prevent the relations which existed between the parties and the influence arising therefrom from being abused.71

3.37 Lindley LJ, in Allcard, noted that ‘the influence of one mind over another is very subtle’ and the public policy behind the presumption is ‘to protect persons from the exercise of such influence under circumstances which render proof of it impossible’.72 3.38 Similarly, Dixon J, in Johnson, observed that: [The stronger party] … has chosen to accept a benefit which may well proceed from an abuse of the authority conceded to him, or the confidence reposed in him; and the relations between him and the donor [weaker party] are so close as to make it difficult to disentangle the inducements which led to the transaction. These considerations combine with reasons of policy to supply a firm foundation for the presumption against a voluntary disposition in his favour.73

RELATIONSHIPS OF INFLUENCE 3.39 A relationship of influence may be established in one of two ways: it may be presumed when a certain class of relationship is shown to exist between the parties (presumed relationship of influence) or it may be proven to exist by direct evidence (actual relationship of influence).

Presumed relationships of influence

3.40 The law automatically presumes a relationship of influence in certain classes of relationship. These classes of relationships include: lawyer and client;74 [page 112] physician and patient;75 parent and (unemancipated) child;76 guardian and ward;77 trustee and beneficiary;78 and priest and penitent or relationships of religious influence.79 3.41 There are two characteristics that are common to all of these classes of relationship. First, it is common for the first-named party in each of these relationships to advise and guide the other and act in [page 113] the best interests of the other.80 Second, in none of these relationships is it natural to expect the second-named party to give property to the other.81 3.42 The recognised classes of relationships are not closed82 or immutable. For example, the recognised classes of relationships once included couples who were engaged to be married.83 The High Court in Thorne recently held that, in modern times, it is common experience for people to become engaged in all kinds of circumstances so that it can longer be assumed that one fiancée is dominated by the other.84 Prior to Thorne other courts doubted the applicability of the presumption to engaged women after the mid-20th century. Lord Evershed, with whom Danckwerts LJ agreed, refused to apply the presumption in Zamet v

Hyman, remarking that ‘this is 1961 and what might have been said of the position, independence, and the like, of women in 1848 would have to be seriously qualified today’.85 Similarly, Brennan J, in Louth v Diprose, observed that it ‘may no longer be right to presume that a substantial gift made by a woman to her fiancée as been procured by undue influence’.86 3.43 The function, and mutability, of presumptions was explained by Murphy J in Calverley v Green87 as follows: Presumptions arise from common experience … If common experience is that when one fact exists, another fact also exists, the law sensibly operates on the basis that if the first fact is proved, the second is presumed. It is a process of standardised inference. As standards of behaviour alter, so should presumptions, otherwise the rationale for presumptions is lost, and instead of assisting the evaluation of evidence, they may detract from it. There is no justification for maintaining a presumption that if one fact is proved, then another exists, if common experience is to the contrary.

[page 114] 3.44 Some courts, however, have expressed the view that the recognised classes of relationships merely illustrate the jurisdiction.88

Actual relationships of influence 3.45 The jurisdiction may be invoked whenever facts are proved showing that one party is in a position to exercise dominion over the other.89 The High Court has recognised that ‘(t)he source of power to practice such dominion may be found in no antecedent relation but in a particular situation, or in the deliberate contrivance of the party’.90 3.46 In Stivactas Sheller JA held that ‘(p)roof of actual ascendancy or domination is compelling but not essential. A position of dependence or trust enabling the donee to influence the donor is enough to require the donee to demonstrate that the gift is not the consequence’ 3.47 But, as Dixon CJ, McTiernan and Kitto JJ warned, in Jenyns v Public Curator (Qld):91

… it must not be forgotten that the expression ‘relation of confidence’ does not describe a category possessing fixed and uniform characteristics. The expressions ‘relation of influence’, ‘relation of confidence’ and ‘fiduciary relation’ are often used as interchangeable. They are not, however, necessarily the same or coextensive in their application.92

3.48 Similarly, Lord Scarman, in National Westminster Bank v Morgan, observed ‘the relationships which may develop a dominating influence of one over another are infinitely various. There is no substitute in this branch of the law for a “meticulous examination of the facts”’.93 3.49 A fiducary relationship will not, without more, give rise to a presumption of undue influence.94 In particular, the courts have held that there is no automatic presumption of undue influence in a relationship between an agent and a principal,95 financial advisor and client,96 bank [page 115] and customer97 or creditor and debtor.98 To establish a relationship of influence it must be shown that the weaker party actually trusted and relied on the stronger party.99 3.50 The matters that the court will have regard to in determining the existence of a relationship of influence are the same matters the court will have regard to in determining the existence of actual undue influence. These matters are outlined above at 3.23–3.30.

SUBSTANTIAL BENEFIT 3.51 The existence of a relationship of influence (presumed or actual) alone is not enough for the onus of proof to shift to the stronger party. The transaction being challenged must confer on the stronger party a ‘substantial’100 benefit or a benefit ‘so large as not to be reasonably accounted for on the ground of friendship, relationship, charity, or

other ordinary motives of men’.101 The ‘benefit’ described here is not confined to gifts but extends to transactions generally.102 But, in respect of transactions for value, it has been held, in particular, that the transaction must give the stronger party an ‘unfair advantage’ at the expense of, or injurious to, the weaker party. As outlined above, the ‘manifest disadvantage’ requirement no longer applies in cases of actual undue influence.103 3.52 In Royal Bank of Scotland v Etridge (No 2)104 the House of Lords was invited to abandon the manifest disadvantage requirement, in respect of presumed undue influence, but declined to accept.105 Lord Nicholls declared that presumed undue influence denuded of the manifest disadvantage requirement would be ‘too far-reaching’ and [page 116] ‘open to ridicule’.106 Lord Nicholls envisaged that, without the manifest disadvantage requirement, the presumption could apply to Christmas or birthday gifts from children to their parents. But Lord Nicholls did recognise that the manifest disadvantage ‘label’ could cause difficulty where it was not being applied to straightforward transactions (like a gift or a sale for under-value). The label, Lord Nicholls noted by way of example, cannot be readily applied to a wife’s guarantee of her husband’s debts: on a narrow view she is manifestly disadvantaged but on a wider view her fortunes are tied to the fortunes of her husband. Lord Nicholls considered that the manifest disadvantage label should be discarded in favour of a return to the basic principles of undue influence outlined in earlier cases. — this being that there is a relationship of influence (whether actual or presumed) and the transaction conferred a benefit which is not readily explicable in the context of that relationship. 3.53 In Australia, the manifest disadvantage requirement, or its reformulation by Lord Nicholls, is controversial and the law is not clear. There has been a great deal of academic criticism of the

requirement in Australia and there are Australian decisions which adopt the requirement and others which reject it.

Academic criticism 3.54 In Australia, the requirement for manifest disadvantage has attracted a great deal of academic criticism. Many scholars have argued strongly against the requirement. These scholars include P D Finn, Malcom Cope, Patrick Parkinson, Peter Birks and Chin Nyuk Yin, and Meager, Gummow and Lehane. Birks and Chin highlight some of the difficulties inherent in adopting such a requirement.107 They argue that such a requirement amounts to an ‘assimilation’ of undue influence and unconscionability. By placing greater emphasis on the ‘wicked exploitation’ by the stronger party, over the weaker, the borders between undue influence and unconscionability become blurred. Birks and Chin also point out that the requirement effectively restricts relief for undue influence. The requirement toughens the test for undue influence and Birks and Chin cite, as evidence of this, the case of Aboody. They suggest that ‘the best approach will be to ask whether the transaction is one which an unimpaired adult would have entered in the circumstances’.108 [page 117] Patrick Parkinson109 cites the case of Commercial Bank of Australia Ltd v Amadio110 in support of his argument against the requirement. In Amadio, Deane J held that proof of an inadequacy of consideration is not essential in finding unconscionable conduct but rather what was essential was proof of a transaction that was unfair or unjust in light of a party’s disability.111 Parkinson argues that the rule for unconscionable conduct should not be different from that of undue influence. Fullagar J, in Blomley v Ryan, like Deane J in Amadio, held that loss or detriment on part of the disadvantaged party is not essential in determining unconscionable conduct but may be used as an indicator of such conduct.112 Cope provides further criticism of the requirement.113 He argues that regardless of whether or not adequate consideration was

provided by the stronger party to a ‘special relationship of influence’ the transaction may still be unfair or unreasonable to the weaker party.114 Cope refers to the work of Finn in support of his argument.115 Finn contends that the ‘better view’ of undue influence is that the requirement is not needed in raising the presumption of undue influence but is best used, instead, in rebutting the presumption. Meager, Gummow and Lehane, however, seem to go further than this and assert that the requirement has no place in Australian law.116

Australian law unclear 3.55 It is unclear whether the manifest disadvantage requirement, or a requirement as reformulated in Etridge, forms part of Australian law. There are decisions that adopt the requirement and others that do not. But the weight of authority does appear to tip slightly in favour of a requirement, or prerequisite, that the transaction confer a benefit, that is inexplicable in the context of the parties’ relationship, before the presumption can be triggered. [page 118] 3.56 To date there are two Australian, single-judge decisions which have expressly rejected the manifest disadvantage requirement. In Baburin v Baburin,117 Kelly SPJ held that the manifest disadvantage requirement, as described in Morgan by Lord Scarman, did not represent the law in Australia. This decision was followed by Barrett J in Freeman v Brown.118 The plurality in the High Court decision of Watkins considered that a transaction between parties where there was an actual relationship of influence could be set aside irrespective of whether or not the transaction was for valuable consideration.119 3.57 There are also a number of other decisions in which the court simply focused on the issue of whether there was a relationship of influence between the parties. No consideration is given in these decisions as to whether there was also a requirement that the transaction be manifestly disadvantageous.120

3.58 Against these authorities, are several single-judge decisions that expressly accept that Lord Scarman’s manifest disadvantage requirement is part of Australian law.121 3.59 There are otherwise High Court decisions in which a somewhat different approach has been taken to a disadvantage requirement but essentially with the same outcome.122 In these decisions it has been held that before the presumption can be triggered it must be shown (in addition to a relationship of influence) that the transaction either: (a) confers a ‘substantial benefit to another which cannot be explained by ordinary motives or is not readily explicable by the relationship of the parties’;123 or [page 119] (b) confers an ‘unfair advantage’ on another and, in doing so, causes injury to the weaker party.124 3.60 To be clear, in transactions for value, ‘unfair advantage’ is not confined to inadequate consideration. As McLure J points out in Powell v Powell, ‘the question of disadvantage is not solely a question of inadequacy of consideration … a transaction may not be in a person’s best interest even when the transaction is for full value’.125 3.61 It would seem that once those matters identified by the High Court, as outlined above, are proven to exist then a presumption of undue influence arises and the onus of proof shifts to the stronger party.

REBUTTING THE PRESUMPTION 3.62 To rebut the presumption of undue influence the stronger party must prove that the transaction is the result of the weaker party’s free will.126

3.63 Latham CJ in Johnson explained that it was necessary for the stronger party: … to show affirmatively that the deceased [weaker party] knew what he was doing when he made the transfer, in the sense that he understood its effect and significance in relation to himself, and further to show that the transfer was the result of his own will.127 [emphasis added]

3.64 It is not sufficient to only show that the weaker party understood the transaction. The question is not just whether the weaker party knew what it was doing but how the intention was produced.128 3.65 Whether a stronger party has successfully rebutted a presumption of undue influence is a question of fact.129 The presumption may be rebutted in various ways.130 The courts have required evidence of rebuttal [page 120] to be examined carefully, with ‘a very jealous eye’.131 Where the weaker party has since died, the law requires that the stronger party’s evidence of the transaction should be ‘thoroughly and carefully sifted in a state of suspicion’132 to ascertain whether what is put forward is a ‘probable and credible account’.133 3.66 The evidence required to rebut the presumption will entirely depend upon the characteristics of the parties and the relationship between them and the nature of the transaction.134 The influence which grows out of different relationships ‘varies in kind and degree’.135 For example, a solicitor who has entered into an agreement with a client is unlikely to be required to adduce much evidence to rebut the presumption of undue influence if that client is a corporation136 or a very successful Queen’s Counsel at the height of her powers.137 As Sugerman P observed in Whereat v Duff:138 [T]hese undue influence cases, so far, at least as the rebuttal of the presumption is concerned, do not conform to set patterns or run along predetermined lines but that everything is dependent upon the facts of the particular case.

This point is best illustrated by comparing the Victorian Court of Appeal case of Westmelton (Vic) Pty Ltd v Archer & Shulman139 (‘Westmelton’) with the recent New South Wales Supreme Court decision of Malouf v Constantinou140 (‘Malouf’). The presumption of undue influence was rebutted by the solicitors in Westmelton but not in Malouf. 3.67 Westmelton concerned an agreement between solicitors and a client, a company (Westmelton), to substantially reduce the solicitors’ professional fees in exchange for an interest in a property development. Westmelton was incorporated by two men, one a professional town planner and the other an estate agent, specifically for the purpose of [page 121] developing rural land in Melton, Victoria. This project involved the rezoning of the Melton land as residential, subdividing it for resale in residential allotments and then selling the land at a profit. The solicitors were engaged by Westmelton to advise and assist with the project. After the local council approved the rezoning of land, but many months before land could be sold, the solicitors rendered a bill of costs to Westmelton for their professional services in the amount of $25,000. Westmelton couldn’t afford to pay the solicitors’ bill at that time. Westmelton offered to give the solicitors a 7.5 per cent share of the pretax profit generated by the project if the solicitors reduced their bill by $10,000. The solicitors accepted Westmelton’s offer. In finding that the solicitors had rebutted the presumption of undue influence the Full Court pointed to a number of important findings of fact141 which relevantly included that: the solicitors gave ‘what amounted to a full disclosure’ to Westmelton and had dealt with Westmelton ‘openly and fairly’;142 the directors of Westmelton were able and experienced businessmen; the directors of Westmelton did not depend on the solicitors in any

way to tell them about the value of the share that Westmelton was passing onto the solicitors; the directors of Westmelton discussed the terms of the agreement in the absence of the solicitors; the terms of the agreement originated from Westmelton; there was nothing in the terms of the agreement that suggested that the solicitors were taking advantage of Westmelton; and the sum of $10,000 represented a substantial part of the cash resources of Westmelton at the time. 3.68 The facts in Malouf contrast sharply with the facts in Westmelton. Malouf concerned the validity and enforceability of a solicitor’s charge on various properties to secure the solicitor’s professional fees in acting for his client, Constantinou, in family law proceedings. These proceedings involved disputes over the division of matrimonial property and Constantinou’s lack of access to the children. Constantinou gave the solicitor a charge over his interest in two properties, one being the matrimonial home and the other a property he was living in that he owned with his parents. Constantinou’s parents guaranteed payment of the solicitor’s professional fees and gave the solicitor a charge over their interest in two properties (one of which included the parents’ matrimonial [page 122] home). The solicitor’s costs agreement stated that payment of the solicitor’s fees would be deferred until the conclusion of the proceedings. But regular bills were sent to Constantinou for his information. Tensions arose between the solicitor and Constantinou about the lack of progress in the family law proceeding and the level of costs which had been billed. At about this time the solicitor lodged caveats on each of the properties over which he held a charge. The solicitor later brought proceedings to extend the caveats. Constantinou and his parents initially sought to resist the application but finally

settled with the solicitor on terms that included acknowledging the validity of the charge on all of the properties save the parents’ matrimonial home. Parker J, however, was not persuaded that there was a proper legal and factual basis for the making of a declaration, sought by consent, that the charge was valid. Parker J considered that the solicitor had failed to rebut the presumption of undue influence noting, among other things, that: the solicitor did not explain to Constantinou and his parents the terms of the charge and, importantly, the exceptions provided in the charge to the deferred payment of fees (such as a breach by Constantinou of the solicitor’s terms of retainer) because the primary motivation for Constantinou (who was both unemployed and in debt) in executing the charge was the deferred payment of fees; the solicitor offered Constantinou and his parents the opportunity to seek independent legal advice but did not recommend that such advice be sought or explain why it might be necessary; Constantinou and his parents had only a short amount of time in which to seek independent advice (just four days); Constantinou was an ‘unsophisticated man of limited education with no apparent experience in legal matters’;143 and Constantinou, and to a lesser extent his parents, were in a desperate position at the time that they gave the charge. 3.69 Parker J observed: The break-up of his marriage and the loss of his relationship with his children have left him in a pitiable state. Without meaning any disrespect, it is quite apparent from the evidence he gave before me, as well as from the way he conducted the case when appearing for himself, that he was quite incapable of protecting his own interests. That would have been apparent to the Solicitor (sic) from the outset.144

[page 123] 3.70 A comparison between Westmelton and Malouf vividly makes

the point that a presumption of undue influence is more easily rebutted in circumstances where the weaker party has the necessary information and capacity to understand the transaction and safeguard its own interests. The comparison also reveals that the presumption is more easily rebuttable where the transaction does not, on its face, appear to be exploitative. As Latham CJ in Johnson observed: In the case of an illiterate or weak-minded person it will be more difficult for the donee [stronger party] to discharge the prescribed onus of proof than in other cases. The burden will still be heavier upon the donee [stronger party] where the donor [weaker party] has given him all or practically all of his property.145

A further illustration of this point can be found in the recent Victorian Court of Appeal case of Daunt v Daunt146 (‘Daunt’). 3.71 Daunt concerned the transfer of an interest in property by a mother to her son, Daunt. Daunt was the primary carer for both of his elderly parents, Mrs Daunt and Mr Daunt senior, who were in failing health. Mrs Daunt and Mr Daunt senior were joint registered proprietors of a property in Wandong, Victoria. While Daunt was caring for his parents, Mrs Daunt (with the consent of Mr Daunt senior) transferred her interest in the Wandong property to him. On the death of Mr Daunt senior, Daunt succeeded to sole proprietorship of the Wandong property by right of survivorship. Daunt’s brother subsequently sought to set aside Mrs Daunt’s transfer on the grounds of both undue influence and unconscionable conduct. Daunt’s brother was unsuccessful both at first instance and on appeal. Daunt successfully rebutted the presumption of undue influence (which arose by virtue of his relationship as carer) by leading evidence which proved that the transfer ‘was a spontaneous act of Mrs Daunt in exercise of an independent and informed will’.147 This evidence included evidence from medical practitioners Mrs Daunt consulted shortly before and after she executed the transfer to avoid the suggestion that she did not know what she was doing. Letters penned by Mrs Daunt were put into evidence and evidence was also given by Mrs Daunt herself. This evidence revealed that Mrs Daunt had acted on the advice of a government department (Centrelink) to divest herself of the Wandong property in order to be entitled to a much-needed, assets-tested pension.

By transferring the Wandong property to Daunt, Mrs Daunt ensured that she could still have access to the property. [page 124] 3.72 There is no rule of law which requires that a weaker party must have independent advice to rebut a presumption of undue influence.148 But, in many decisions, like Daunt and Malouf, the presence or absence of independent advice is a relevant consideration taken into account by a court in determining whether the weaker party has entered into the transaction free of any influence.149 3.73 The significance of independent advice, in determining whether the presumption has been rebutted, depends greatly upon the particular circumstances of each case. As Isaacs J observed in Linderstam v Barnett:150 The possession of independent advice, or the absence of it, is a fact to be taken into consideration and well weighed on a review of the whole circumstances relevant to the issue whether the grantor thoroughly comprehended, and deliberately and of her own free will carried out, the transaction. If she did, the issue is solved and the transaction upheld; but if upon a review of the facts — which include the nature of the thing done and the training and habit of mind of the grantor, as well as the proximate circumstances affecting the execution — if the conclusion is reached that the obtaining of independent advice would not really have made any difference in the result, then the deed ought to stand.

3.74 A review of the authorities suggests that there are broadly three matters that may be relevant in determining the need for independent advice to rebut the presumption. The first matter is the personal characteristics of the weaker party. In Westmelton the Full Court did not find that independent legal advice, or a recommendation by the solicitors to obtain such advice, was required to rebut the presumption.151 The Full Court explained: … once the Court is satisfied, as the learned Judge was, that the solicitors dealt fairly and honestly and openly with a sophisticated and well-informed corporate client, and that the client in fact was in no way relying upon any confidence or expectation of legal advice of that character or

[page 125] of any character, then the Court is entitled to conclude that there was no duty to advise further.152

3.75 Conversely, in Malouf, and other cases in which the weaker party lacked business experience153 or the mental capacity154 to understand the transaction, the absence of independent advice was a key consideration in finding that the presumption had not been rebutted. 3.76 The second matter is the size155 and complexity156 of the transaction. In Union Fidelity Trustee Co of Australia Ltd v Gibson, Gillard J observed that the mortgagee was ‘a mature woman of education and business experience’ but that the mortgage she had discharged (which secured a debt owed by her long-time property advisor) was not a simple transaction and may have even given rise to certain legal liabilities.157 For this reason Gillard J viewed the absence of legal advice, among other things, as significant in concluding that the discharge was not the mortgagee’s spontaneous and well-understood act.158 3.77 The third matter is the kind of influence applied. The presumption will be more difficult to rebut where the influence is spiritual or religious. In Allcard Lindley LJ described religious influence as being ‘of all influences … the most dangerous and the most powerful’.159 Lindley LJ went on to note that the courts have gone very far to counteract such influence. Similarly, Bryson J, in Hartigan v International Society for Krishna Consciousness Inc,160 noted ‘(t)he court’s approach, in cases of gifts influenced by religious advisers or religious beliefs, is more exacting than ordinary community standards and goes well beyond overcoming deliberate exploitation’. 3.78 Where advice is given, the circumstances of the transaction are relevant in determining the content, and mode of delivery, sufficient [page 126]

to rebut the presumption. The purpose of the advice is to protect the weaker party from the stronger party’s influence.161 The advice, whatever the content or delivery, must be effective in dispelling the stronger party’s influence in the circumstances of the particular case. A review of the authorities suggests that, generally, such advice should: be given by an advisor162 who is: –

independent;163 and

–

informed of all of the material facts and has the opportunity of making further inquiries;164

be given in the absence of the stronger party;165 explain the nature and effect of the transaction;166 be directed to whether the transaction is in the weaker party’s best interests or the reasonableness or propriety of the transaction;167 [page 127] identify the alternatives (if any) open to the weaker party and the comparative advantages of those options;168 and explain that the weaker party has a choice and is not obliged to enter into the transaction.169 3.79 The bare minimum legal advice required to rebut the presumption was described by Sugerman J in Whereat v Duff as being nothing ‘beyond explanation to advice, warning, prudent counsel etc’.170 But in that case the donor was found to have been of ‘sound judgment and independent character’ who was well aware of what she was doing and the income she retained was not only greater than what she gave away but was also more than ample for her to live on.171 3.80 It is settled law that independent advice by a lawyer cannot be limited to merely explaining the nature and effect of the transaction but

must extend to the propriety or reasonableness of the transaction. As Brereton J observed in Riz v Perpetual Trustee Australia Ltd:172 [A]lthough the duty normally owed by a solicitor to a client only extends to legal advice, it is often difficult in a given situation to disentangle legal and business or practical advice, and a solicitor who is carrying out a transaction for a client is not justified in expressing no opinion when it is plain that the client is rushing into an unwise, not to say disastrous adventure. The cases that state that it is not the function of a lawyer to give financial advice173 mean that a lawyer is not expected to bring to his or her task the knowledge and expertise of a stockbroker or an accountant or a financial planner. But a lawyer giving independent advice is required to address the fairness or reasonableness of a proposed transaction, so that the client can appreciate its disadvantages; if this involves matters beyond the lawyer’s expertise, then the lawyer should seek specialist assistance.

[page 128] 3.81 It is important to note, however, that independent advice ‘is not a panacea. The result does not depend mechanically on the presence or absence of legal advice’.174 Where independent advice has been received but that advice was wrong or misunderstood, the presumption of undue influence may still be rebutted by evidence which demonstrates that the transaction was, in any event, the free act of the weaker party.175 Similarly, where independent advice has been received, but not acted on, it does not automatically follow that the presumption has not or cannot be rebutted.176 It may be demonstrated by direct evidence that the weaker party freely chose to ignore the advice and enter into the transaction. Conversely, it may be demonstrated by direct evidence that the weaker party was unable to act on the advice because she was under the influence of the stronger party.177 One of the most effective ways for a stronger party to overcome an allegation of unconscionable conduct is to require the weaker party to produce a declaration or certificate that he or she has received advice. The stronger party may then be entitled to assume that the weaker party has received competent advice.178

Examples of presumed undue influence 3.82 One of the most cited cases of presumed undue influence is Johnson v Buttress.179 The facts in that case involved a man of 67

years, Buttress, who transferred his land and cottage to his late wife’s relative, Johnson, three years before his own death. Buttress’s son, being the administrator of his father’s estate, subsequently sought to have the [page 129] transaction between his father and Johnson set aside. Evidence was given that Buttress was illiterate, ignorant of the world and did not understand that he had transferred the property to Johnson irrevocably. Johnson had known Buttress for over 20 years and had given assistance to both Buttress and his wife before she died. Johnson had persuaded Buttress to transfer his property to her and took him to her solicitor for this purpose. The property was all the property that Buttress owned and provided Buttress with his only means of living. After the property was transferred to her, Johnson moved Buttress from the property to a small property she owned in the country. Buttress lived on this small country property until his death. The court set aside the transaction finding that undue influence could be presumed from the nature of the relationship between Buttress and Johnson. Starke J, however, held that it was justly open to the trial judge on the evidence to conclude that the transfer was ‘not the result of the free and deliberate judgment of the deceased’.180 3.83 In Khan v Khan,181 Mohammed Shikander Khan (Shikander) and his wife unsuccessfully sought specific performance of an agreement to sell a vacant house and the property on which it stood. The vendors, and defendants, were Mohammed Rizwan Khan (Rizwan) and his mother Roshanara Begum Sadiq. Although the purchasers and the vendors bore the same surname they were not related. Shikandar and Rizwan negotiated the sale of the property for the sum of $480,000. Shikandar told Rizwan that he and his wife would have to sell their existing home to raise the money to purchase the property. Rizwan agreed to wait until Shikandar had sold his existing home. The parties further agreed that, in the meantime, Shikandar would move into the vacant property and pay rent. At this time no written contract of sale had been executed by the parties. After moving into the property Shikandar became aware that certain parts of the house, and a pathway

in the surrounding grounds, had not been finished off properly. Shikandar subsequently sought a $15,000 reduction of the purchase price. The parties, however, finally agreed that Rizwan would undertake to complete the work and waive payment of one month’s rent. At about this time Mrs Sadiq sent Shikandar council and water rates for payment. Shikandar returned the council rates to Mrs Sadiq but paid the water rates. Shikandar also demanded that Mrs Sadiq reimburse him $35 for the water rates, having calculated that this water had been consumed prior to his occupation of the property. Mrs Sadiq formed the view that Shikandar’s complaints about the unfinished work on the property and the council and water rates was [page 130] petty and unfair. She resolved not to sell the property to Shikandar and refused to sign a written contract of sale. Two meetings were subequently held between the parties in an attempt to resolve the matter. At the second meeting, Mrs Sadiq’s other son, Bilal, was also in attendance together with the mufti of the local mosque at Rizwan’s request. All of the parties were Muslim. Rizwan, a devout Muslim, considered that he was honour bound to complete the sale of the property. Both Rizwan and Bilal tried to persuade their mother to sell the property to Shikandar. Shikandar offered to increase the purchase price to $495,000. The mufti told Mrs Sadiq: ‘You have to take $495,000 which is all they can afford and you will be rewarded in the afterlife’182 and ‘lucky you are not in any other country, if you had been in a Moslem country it would be a different story’.183 On hearing these words, Mrs Sadiq became scared and signed one part of a formal contract of sale that had been prepared. Shikandar also insisted that Mrs Sadiq sign a letter confirming the agreement at the meeting. The trial judge, Barrett J, considered that although Mrs Sadiq was an ‘astute and intelligent’ woman, she had signed the contract and letter under the undue influence of the mufti.184 At trial Mrs Sadiq gave evidence that she would not have signed anything without the mufti whom she respected and considered to be ‘closer to God’.185 Shikandar had notice

of the mufti’s undue influence because he was present when the mufti told Mrs Sadiq where her religious duty lay.186 3.84 In the English decision of Lloyds Bank Ltd v Bundy187 a farmer was held to have executed a guarantee and provided a charge over his farm under the undue influence of the bank’s officers. Mr Bundy had only one son. Both Mr Bundy and his son had been customers of the bank for many years. When the son’s company ran into financial difficulties Mr Bundy agreed to guarantee the company’s bank overdraft and provide a charge over his farm. Some eight months later the bank’s assistant manager, Mr Bennett, went to see Mr Bundy, with the son, and suggested that Mr Bundy provide a further guarantee and charge. Mr Bundy provided the guarantee and charge some time later after seeking advice from his solicitor. In the six months that followed, the company’s finances went from bad to worse. The bank’s new assistant manager, Mr Head, told the son that the company’s account was unsatisfactory and that the company might have to cease operations. The son told Mr Head that the company’s [page 131] difficulties were only temporary and that his father would provide further money if necessary. The son took Mr Head to see Mr Bundy. Mr Head told Mr Bundy that the bank would allow the company to continue to trade on two conditions; first, that the company pay a portion of its revenue into a separate account to reduce its debt and, second, that Mr Bundy provide a further guarantee and charge over his farm. The total charge was of an amount that would sweep up the entire farm. Mr Bundy asked Mr Head for his opinion on what the company was doing wrong and Mr Head gave his opinion on the company’s affairs. Mr Bundy then executed the guarantee and charge that Mr Head had already prepared and brought with him to the meeting. Sir Eric Sachs (with whom Cairns LJ agreed) considered that Mr Bundy’s meeting with Mr Head: …has to be assessed in the light of the general background of the existence of the longstanding relations between the Bundy family and the bank. It not infrequently occurs in

provincial and country branches of great banks that a relationship is built up over the years, and in due course the senior officials may become trusted counsellors of customers of whose affairs they have an intimate knowledge. Confidential trust is placed in them because of a combination of status, goodwill and knowledge. Mr Head was the last of a relevant chain of those who over the years had earned or inherited, such trust whilst becoming familiar with the finance and the business of the Bundys and the relevant company; he had taken over the accounts from Mr Bennett (a former assistant manager at Salisbury) of whom [Mr Bundy] said: ‘I always trusted him.’188

The court found that there was a relationship of trust and confidence between the bank and Mr Bundy and that the bank should not have obtained the further guarantee and security without providing Mr Bundy with the opportunity to obtain independent legal advice.

Third parties 3.85 A transaction may have been procured by the undue influence of a party who is not a party to the transaction. In these circumstances, the transaction, with this third party (the party who did not engage in the undue influence) may be set aside where:189 the third party is a volunteer; the third party had notice of the undue influence or the circumstances giving rise to the undue influence; [page 132] it was the third party’s agent who engaged in the undue influence; or the principles in Yerkey v Jones apply. 3.86 Where the transaction may be set aside, on any of the grounds listed above, it will fall to the third party to show that the transaction was freely entered into.190

Volunteer 3.87 Where the third party is a volunteer the court will set aside the impugned transaction.191 In Huguenin v Baseley,192 Lord Chancellor Eldon noted that it is settled law that transactions with third parties can

be set aside, citing the following observations of Lord Chief Justice Wilmot: There is no pretence, that Green’s brother, or his wife [the third parties], was party to any imposition, or had any due or undue influence over the Plaintiff [weaker party]: but does it follow from thence, that they must keep the money? No: whoever receives it must take it tainted and infected with the undue influence and imposition of the person, procuring the gift: his partitioning and cantoning it out amongst his relations and friends will not purify the gift, and protect it against the Equity of the person imposed upon. Let the hand receiving it be ever so chaste, yet, if it comes through a polluted channel, the obligation of restitution will follow it.193

3.88 The case of Quek v Beggs provides an Australian example of an impugned transaction with a volunteer. In that case Quek transferred three properties to her pastor and his wife. The transfer was found to have been vitiated by the presumed undue influence of the pastor. McLelland J did not consider that the fact that the wife was a joint recipient of the properties to be of any consequence in setting aside the transactions because the wife was a volunteer. Additionally, McLelland J found that the wife had notice of the relationship between Quek and the pastor which gave rise to the presumed undue influence.

Notice 3.89 A transaction with a third party (which has been procured by the undue influence of another) may be set aside where the third party has either actual or constructive notice of the undue influence or the [page 133] circumstances giving rise to the undue influence.194 As Fry LJ pointed out, in Bainbrigge v Browne, the principles of undue influence operate ‘against the person who is able to exercise the influence … (and) against every volunteer who claimed under him with notice of the equity thereby created, or with notice of the circumstances from which the court infers the equity’. 3.90

As to constructive notice, McTiernan J, in the High Court

decision of Bank of New South Wales v Rogers, noted that: Without saying that in every case a creditor is bound to inquire under what circumstances his debtor has obtained the concurrence of a surety, it may be safely stated that if the dealings are such as to fairly lead a reasonable man to believe that fraud must have been used in order to obtain such concurrence, he is bound to make inquiry, and cannot shelter himself under the plea that he was not called on to ask, and did not ask, any questions on the subject. In some cases wilful ignorance is not to be distinguished in its equitable consequences from knowledge.195

3.91 What knowledge is required to fix the third party with constructive notice of the undue influence of another depends on whether such influence is actual or presumed. In the case of actual undue influence, the third party must have knowledge of the facts or circumstances of the influence exercised.196 In the case of presumed undue influence, the third party must have knowledge of the relationship between the parties that gave rise to the presumption.197 3.92 The sort of circumstances identified by the courts as putting third parties on inquiry include where: the third party knows that the weaker party is accustomed to place implicit trust in the stronger party;198 and/or [page 134] the transaction is so ‘extravagantly improvident’ that it is difficult to explain in the absence of some impropriety.199 3.93 Rogers provides an illustration of a third party’s constructive notice of presumed undue influence. The facts in Rogers concerned a mature woman, Rogers, who provided a security over virtually all of her property in favour of her uncle’s bank to secure payment of his overdraft. Rogers’ uncle, Gardiner, was hopelessly in debt and Rogers’ property was likely to be lost. Rogers was an intelligent woman but she had lived with her uncle since being orphaned, and relied on him in all matters of business. The High Court had no difficulty in finding that the relationship between the parties gave rise to a presumption of undue

influence. Although the bank did not actually know of the relationship between the parties, the High Court found that the bank’s manager had been put on inquiry as to whether the security had been freely given by Rogers by reason of his awareness of a number of matters.200 These matters included the fact that Rogers and Gardiner lived at the same address, that Gardiner took all of the documents to Rogers to be executed, and witnessed their execution, and it was not prudent for Rogers to give the security.

Agency 3.94 There is a line of authority that where the third party entrusts the stronger party with the task of obtaining the weaker party’s execution of the transaction then the stronger party will be taken to be acting as the third party’s agent.201 The acts of the agent are ordinarily imputed to the principal. The relationship of influence enjoyed by the stronger party is also the relationship enjoyed by the third party. In Burke v State Bank of New South Wales, Santow J considered that ‘(t)he essential element which affects the creditor [third party] with the wrongdoing of another is the leaving to that other the task of procuring the guarantor’s [weaker party’s] signature. In such circumstances, the creditor ought to be in no better position than he who procures the signature’.202 [page 135] 3.95 This device of agency was used in cases where the husband procured the wife’s execution of a guarantee to secure his debts. The development of the principle in Yerkey v Jones would seem to make this line of authority redundant.

Principle in Yerkey v Jones 3.96 The principle in Yerkey v Jones is a variant of the doctrine of undue influence. The principle was historically, and controversially,203 applied to situations in which wives guaranteed the debts of their husbands. The principle continues to be typically applied in these

situations but is increasingly being sought to be applied in other domestic relationships.204 3.97 The principle in Yerkey v Jones is an echo205 of Cussen J’s decision in Bank of Victoria Ltd v Mueller.206 In that case Cussen J set aside a guarantee given by the wife to the bank over her husband’s debts. Cussen J found that at the time the wife gave the guarantee she mistakenly believed that the debt was not payable until the death of her husband and that the debt was otherwise secured by certain life insurance policies. Cussen J enunciated the following principle which he applied in setting aside the guarantee: Where to the knowledge of the creditor a husband is pressed to find money and is indebted to the creditor in a large amount, and is required to give security to cover such indebtedness either with or without further advances and the creditor suggests or concurs in the suggestion of the husband that the security shall take the form of a guarantee by his wife, the consent to which is to be procured by the husband; and it appears that the husband in procuring and pressing for such consent misrepresents in a material respect what is proposed to be the nature of her liability as a guarantor, and that, by reason of such misrepresentation, the wife, in respect of such matter does not understand the true nature of her liability

[page 136] as expressed in the form of a guarantee signed by her and it further appears that she had no independent advice and that the creditor with whom she came into personal communication gave her no explanation or only a partial explanation not covering the material matter in respect of which she was misled and that there are no circumstances beyond the partial explanation (if any) and there mere signing of the document justifying the creditor in thinking that she in all material respects understood it — then in such a case the wife is entitled as against the creditor to equitable relief.207

3.98 In Yerkey v Jones, Dixon J considered that, while not a presumed relationship of influence,208 the relationship between husbands and wives ‘has never been divested completely of what might be called equitable presumptions of an invalidating tendency’.209 In respect of third parties, Dixon J identified two kinds of case in which guarantees given by the wife will be set aside. First, the guarantee may be set aside where it has been procured by the undue influence of the husband.210 Second, the guarantee may be set aside where the wife did not

understand the effect of the guarantee and the third party creditor, or independent advisor, did not explain, or adequately explain, the guarantee to her or otherwise satisfy themselves that she understood. With respect to the latter case, Dixon J, drawing on Mueller, enunciated the following principle: [I]f a married woman’s consent to become a surety for her husband’s debt is procured by the husband and without understanding its effect in essential respects she executes an instrument of suretyship which the creditor accepts without dealing directly with her personally, she has a prima-facie right to have it set aside.211

3.99 These principles were subsequently endorsed by the High Court in Garcia v National Australia Bank Ltd.212 The facts in Garcia concerned four guarantees given by the wife to secure the debts of a company through which the husband ran a business buying and selling gold. The wife was a director and shareholder of the company but in name only. The company was the husband’s creation and he was in complete control of it. The wife was found to have signed the guarantees at the request of the husband and after the husband had told her that the transaction was effectively risk-free because the company owned gold. The majority held [page 137] that the principles enunciated by Dixon J in Yerkey v Jones were ‘simply particular applications of accepted equitable principles which have as much application today as they did then’.213 The majority went on to restate these principles as follows: Yerkey v Jones begins with the recognition that the surety is a volunteer: a person who obtained no financial benefit from the transaction, performance of the obligations of which she agreed to guarantee. It holds, in what we have called the first kind of case, that to enforce that voluntary transaction against her when in fact she did not bring a free will to its execution would be unconscionable. It holds further, in the second kind of case, that to enforce it against her if it later emerges that she did not understand the purport and effect of the transaction of suretyship would be unconscionable (even though she is a willing party to it) if the lender took no steps itself to explain its purport or effect to her or did not reasonably believe its purport or effect had been explained to her by a competent and disinterested stranger.214

3.100 It is important to emphasise, to avoid confusion, that the second kind of case does not depend on either a presumption of undue influence by the husband over the wife or on identifying the husband as acting as agent for the third party creditor.215 3.101 In State Bank of New South Wales v Chia216 Einstein J helpfully identifies, and expands on, the four requirements to establish the second kind of case described in Garcia.217 These requirements include: the wife did not understand the purport and effect of the guarantee; the wife was a volunteer; the third party creditor knew that the wife was married to the debtor; and neither the third party creditor nor an independent third party ensured that the wife understood the purport and effect of the guarantee. 3.102 The wife bears the onus of proving the first three requirements.218 It is important to note that all of these three requirements must be met. It is not enough for the wife to simply establish that she was a volunteer [page 138] and that the third party creditor knew that she was married to the debtor. Crucially, the wife must also show that she did not understand the guarantee.219 3.103 The wife did not understand the purport and effect of the guarantee The wife must not have understood the ‘general nature and effect’220 or the ‘purport and effect’221 of the guarantee. This understanding includes an understanding of the fact and general scope of liability and possible consequences of default.222 The wife: … need not have a sophisticated understanding, she need only have an adequate

understanding of the elements which constitute the nature and purport of the transaction, material to the liability claimed by the Bank [third party creditor].223

3.104 The wife’s misapprehension will be insufficient to trigger relief if that misapprehension: is merely a failure to understand or appreciate the degree of risk involved;224 or is not in relation to a matter that is material to the liability the third party creditor wishes to impose on the wife.225 3.105 Ultimately, the question of whether the wife understood the guarantee is a question of fact.226 3.106 The wife was a volunteer As Muir J noted in Dubois v Ong227 ‘the question of whether a guarantor is a volunteer is not necessarily, determined conclusively by the examination of legal rights and interests’. The consideration that the wife receives for the guarantee must be of ‘real benefit’ to the wife.228 [page 139] 3.107 The wife will be taken to be a volunteer if the consideration or benefit the wife received for her guarantee was: only adequate in terms of the law of contract;229 accrued, indirectly, by virtue of being a member of the debtor’s family;230 and by virtue of her shareholding or position as an officer in a company in which she has no real involvement.231 3.108 Conversely, the wife is unlikely to be a volunteer if the consideration consisted of: funds to purchase an asset in which both the husband and wife hold equal shares;232 or

a benefit from the company where she ‘has an active and substantial interest in the conduct of, and the fortunes of, the business run by her husband’.233 3.109 Third party creditor knew that the wife was married to the debtor The third party creditor must know that the wife is married to the debtor but this requirement may be extended to other relationships.234 3.110 Third party creditor/independent third party did not ensure that the wife understood If the wife makes out the first three requirements of the Yerkey v Jones principle, as outlined above, the onus then shifts to the third party creditor to show that the wife understood the transaction or received independent advice. The extent of the independent advice depends on the ‘nature of the transaction, the degree of risk involved, [page 140] the sophistication of the wife and the nature of the relationship she enjoys with her husband’.235 3.111 Extension to other relationships The majority in Garcia expressly stated that the Yerkey v Jones principle may be applicable to other relationships beyond married heterosexual couples, like de facto relationships and homosexual relationships.236 But the majority did not confine the principle to just these intimate domestic relationships because the majority held that the principle: … depends upon the surety being a volunteer mistaken about the purport and effect of the transaction, and the creditor being taken to have appreciated that because of the trust and confidence between surety and debtor the surety may well receive from the debtor no sufficient explanation of the transaction’s purport and effect.237

3.112 Recent cases have held that the Yerkey v Jones principle may apply to relationships such as those between parents and their children,238 friends,239 and in-laws.240

1.

As to the boundaries between undue influence and duress and between undue influence and unconscionable conduct, see Chapter 1, 1.108–1.119.

2.

(1887) 36 Ch D 145 (‘Allcard’).

3.

ibid, at 183.

4.

[1906] VLR 711 at 720.

5.

Bank of New South Wales v Rogers (1941) 65 CLR 42 (‘Rogers’) at 61 per McTiernan J.

6.

Rogers, at 85 per Williams J.

7.

Allcard, at 183 per Lindley and Thorne v Kennedy [2017] HCA 49 at [30] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ.

8.

(1985) 17 HLR 360 (‘Morgan’) at 709.

9.

Allcard v Skinner (1887) 36 Ch D 145 at 171 per Cotton LJ, at 181 per Lindley LJ; Johnson v Buttress (1936) 56 CLR 113 at 119 per Latham CJ, at 134 per Dixon J (with whom Evatt J agreed); Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923 at 953; Thorne v Kennedy [2017] HCA 49 at [34] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. See also Barclays Bank plc v O’Brien [1994] 1 AC 180 in which Lord Browne-Wilkinson, at 189–90, set out a classification system for the various ways in which undue influence may be established: actual undue influence being ‘class 1’ undue influence and presumed undue influence being ‘class 2’ undue influence. Class 2 undue influence is broken down further into ‘class 2A’ and ‘class 2B’ undue influence being presumed relationships of influence and actual relationships of influence, respectively.

10.

(1936) 56 CLR 113 at 134.

11.

ibid.

12.

(1993) Aust Contract R 90-031.

13.

ibid. Note that the English Court of Appeal assembled a similar list of facts to be proved in Bank of Credit and Commercial International SA v Aboody [1990] 1 QB 923 at 967 (cited with approval in Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2007] NSWSC 12 at [134]): ‘[A] person relying on a plea of actual undue influence must show that (a) the party to the transaction (or someone who induced the transaction for his own benefit) had the capacity to influence the complainant; (b) the influence was exercised; (c) its exercise was undue; (d) its exercise brought about the transaction.’

14.

[2017] HCA 49.

15.

ibid.

16.

ibid, at [32].

17.

Thorne, at [92]; and see further Chapter 1, 1.113–1.119.

18.

Huguenin v Basely (1807) 14 Vesey Jnr 273 at 299–300 per Lord Eldon; Bank of New South Wales v Rogers (1941) 65 CLR 42 (‘Rogers’) at 85 per Williams J; Bridgewater v Leahy (1998) 194 CLR 457 at [118] per Guadron, Gummow and Kirby JJ; Thorne, at [91] per Gordon J.

19.

Darmanin v Cowan [2010] NSWSC 1118 at [343].

20.

See Chapter 1, 1.108–1.119.

21.

See, for example, Farmers Co-operative Executors & Trustees Ltd v Perks (1989) 52 SASR 399 (wife subject to brutal domestic violence transferred interest to husband).

22.

See Allcard (property given to sisterhood and not to the lady superior of the sisterhood personally).

23.

Bainbrigge v Browne (1881) 18 Ch D 188 at 197; Bank of New South Wales v Rogers (1941) 65 CLR 42; Bullock v Lloyds Bank Ltd [1955] Ch 317; Lloyds Bank Ltd v Bundy [1975] QB 326; Khan v Khan (2004) 62 NSWLR 229; Verduci v Golotta [2010] NSWSC 506.

24.

(1922) 30 CLR 180 (‘Watkins’).

25.

Watkins, at 194.

26.

ibid.

27.

ibid.

28.

(1919) LR 47 Ind App 1.

29.

Watkins, at 188 per Knox CJ, Gavan Duffy and Starke JJ.

30.

(1922) 31 CLR 341 at 368.

31.

Johnson, at 123 per Latham CJ, at 143 per McTiernan J. Both judges focused on the relationship between the parties and held that the transaction should not stand unless it could be proven to have been freely entered into.

32.

Johnson, at 134–5.

33.

(1985) 17 HLR 360.

34.

ibid, at 372 per Lord Scarman (Lords Keith, Roskill, Bridge and Brandon agreeing).

35.

ibid, at 367, 368, 370, 372 per Lord Scarman.

36.

See Coldunell Ltd v Gallon [1986] QB 1184 at 1194; Goldsworthy v Bricknell [1987] Ch 378 at 405; Midland Bank plc v Shepherd [1988] 3 All ER 17 at 22. See also Catherine Callaghan, ‘Manifest Disadvantage in Undue Influence: An Analysis of its Role and Necessity’ (1995) 25(3) Victoria University of Wellington Law Review 289 at 298; Mark Pawlowski, ‘Undue Influence: Manifest Disadvantage and Independent Legal Advice’ (2000) 144 Solicitors Journal 376.

37.

[1990] 1 QB 923.

38.

Similarly at this time in Australia manifest disadvantage was identified as a requirement in proving actual undue influence: see, for example, Farmers Co-operative Executors & Trustees Ltd v Perks (1989) 52 SASR 399.

39.

[1994] 1 AC 200.

40.

ibid, at 209.

41.

See Thorne in which the unreasonableness of the agreement was an indicium of actual undue influence but not a requirement.

42.

(1952) 90 CLR 113 at 118–19 per Dixon CJ, McTiernan and Kitto JJ. A similar warning was given by Lord Scarman in Morgan at 374: ‘A court in the exercise of this equitable jurisdiction is a court of conscience. Definition is a poor instrument when used to

determine whether a transaction is or is not unconscionable: this is a question which depends upon the particular facts of the case.’ See also Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555 at 579 per Latham CJ: ‘(s)uspicion cannot be substituted for evidence’. 43.

The Juliana (1822) 2 Dods 504 at 522.

44.

See below at 3.45–3.50.

45.

Clark v Malpas (1862) 45 ER 1238; Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573 (‘Union Fidelity Trustee Co’) at 577 per Gillard J; Re Brocklehurst’s Estate [1978] Ch 14 at 39–40.

46.

Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810 at [28] per Bryson J.

47.

Johnson, at 136.

48.

Thorne, at [56].

49.

[2002] 2 NZLR 91 (‘R Court of Appeal’).

50.

[2003] UKPC 22 (‘R Privy Council’).

51.

R Court of Appeal, at [65]–[66], [77] per Tipping J. The Privy Council assumed that there was a relationship of influence but held that there was no unfair exploitation of that relationship: R Privy Council, at [24].

52.

See Johnson and Union Fidelity Trustee Co.

53.

(1993) Aust Contract R 90-031 (‘Stivactas’).

54.

Stivactas. See also Spong v Spong (1914) 18 CLR 544.

55.

Clark v Malpas (1862) 45 ER 1238 (‘Clark’) (concerned sale of property with three cottages for undervalue by a vendor who was old, sick and illiterate and whose only income was in letting out two of the cottages and living in the third); Johnson, at 136 per Dixon J.

56.

Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30.

57.

See generally F Burns, ‘Undue Influence Inter Vivos and the Elderly’ (2002) 26(3) Melbourne University Law Review 499.

58.

Stivactas v Michaletos (No 2) (1993) Aust Contract R 90-031.

59.

Johnson, at 136 per Dixon J; Maher v Honeysett & Maher Electricial Contractors Pty Ltd [2007] NSWSC 12.

60.

(1937) 57 CLR 555.

61.

ibid, at 578. But note that there was no allegation of undue influence in the pleadings and Dixon J (Rich J agreeing) considered that while the circumstances of the transaction made ‘its propriety very doubtful’ it was unnecessary for him to decide the issue because he had concluded that there had been no effective gift.

62.

(1941) 65 CLR 42 (‘Rogers’) at 52.

63.

[1989] 1 Qd R 41.

64.

ibid, at 42–3 per Connolly J.

65.

(1989) 52 SASR 399.

66.

[2007] NSWSC 12 (‘Maher’).

67.

Maher, at [113]–[114].

68.

ibid, at [142].

69.

A more detailed outline of Thorne is in Chapter 1, 1.113–1.119.

70.

Johnson, at 123 per Latham CJ; Spong v Spong (1914) 18 CLR 544 at 549 per Griffith CJ; Tranchita v Retravision (WA) Pty Ltd [2001] WASCA 265 at [52] per Owen J; Thorne, at [34] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ.

71.

Allcard, at 171. See also Rogers, at 85 per Williams J.

72.

Allcard, at 183.

73.

Johnson, at 135.

74.

Wood v Downes (1811) 18 Ves 120 at 127 per Lord Nottingham: ‘[N]o attorney can take anything for his own benefit from his client pending the suit, save his demand; and I add, that as a guardian cannot take anything from his ward pending the guardianship, or at the close of it, or at any period, until his influence has ceased to exist, the obligation upon an attorney to take an extraordinary benefit is at least as strong.’ See Barron v Willis [1902] AC 271 (deed conferring benefit on son of solicitor); Dowsett v Reid (1912) 15 CLR 695 at 707 per Barton J; Johnson, at 134 per Dixon J; Rogers, at 51 per Starke J; Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305 (solicitor agreed to reduce bill for professional services in exchange for a share of the client’s profits in a property development); Multi-span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd [2001] NSWSC 696; Talbot & Olivier v Shann [2005] WASCA 34 at [3]–[4] per Templeman J; Verduci v Golotta [2010] NSWSC 506 (solicitor brokered a mortgage between his father and his clients); M J Leonard Pty Ltd v Bristrol Custodians Ltd (in liq) [2013] NSWSC 1734 (solicitors’ costs agreement included equitable charges); Malouf v Constantinou [2017] NSWSC 923 (client and his parents gave solicitor a charge over various properties as security for fees in acting in family court proceedings).

75.

Mitchell v Homfray (1881) 8 QBD 587; Radcliff v Price (1902) 18 TLR 466 (elderly woman gave £8,000 to her doctor); Williams v Johnson [1937] 4 All ER 34 (transfer of land by 82-year-old woman to her doctor); Johnson, at 134 per Dixon J; Rogers, at 51 per Starke J; Bar-Mordecai v Hillston [2004] NSWCA 65 (72-year-old woman commenced romantic relationship with her doctor during which she made various gifts to him of money and property).

76.

Rogers, at 51 per Starke J; West v Public Trustee (SA) [1942] SASR 109 at 119 per Mayo J: ‘Where there is a gift from a child to a parent, the burden of proving that the gift was not due to parental influence rests on the parent, unless the child has previously become emancipated from parental dominion’ (35-year-old woman transferred sums of money into her mother’s bank account); Phillips v Hutchinson [1946] VLR 270 at 273 per Gavan Duffy J: ‘[T]here appears to be no doubt that a child may be treated as being still unemancipated from a parent’s influence, though she is of mature or even advanced age and married’ (35-year-old woman transferred property to her father). Where presumption held not to apply because the child was emancipated from the parent, see Lamotte v Lamotte (1942) 42 SR (NSW) 99.

77.

Hatch v Hatch (1804) 9 Ves Jun 292 at 297 per Lord Eldon LC (near-deaf ward transferred property to guardian shortly before coming of age); Rogers, at 51 per Starke

J. 78.

Rogers, at 51 per Starke J.

79.

Huguenin v Baseley (1807) 14 Ves 273; Allcard (woman gives almost all of her property to the sisterhood after joining the order); Rogers, at 51 per Starke J; Quek v Beggs (1990) 5 BPR 97,405 (gifts to pastor and his wife of large sums of money and real estate being virtually all of the donor’s estate); Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810 (woman with young family gives almost all of her property to the Krishna Consciousness Movement). See also P Ridge, ‘The Equitable Doctrine of Undue Influence Considered in the Context of Spiritual Influence and Religious Faith: Allcard v Skinner Revisited in Australia’ (2003) 26(1) UNSW Law Journal 66.

80.

Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573 (‘Union Fidelity Trustee Co’), at 577 per Gillard J.

81.

Union Fidelity Trustee Co, at 578 per Gillard J.

82.

Johnson, at 119 per Latham CJ, at 134 per Dixon J; Daunt v Daunt [2015] VSCA 58 at [52] per Redlich, Santamaria and Kyrou JJA citing Christodoulou v Christodoulou [2009] VSC 583 at [70] per Kaye J.

83.

Page v Horne (1848) 11 Beav 227 at 235 per Lord Langdale MR; Johnson, at 134 per Dixon J; Yerkey v Jones (1939) 63 CLR 649 at 675 per Dixon J.

84.

Thorne, at [36] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ.

85.

[1961] 1 WLR 1442 at 1446.

86.

(1992) 175 CLR 621 at 630.

87.

(1984) 155 CLR 242 at 264.

88.

Allcard, at 182 per Lindley LJ.

89.

Haskew v Equity Trustees Executors and Agency Co Ltd (1919) 27 CLR 231 at 235 per Rich J; Johnson, at 119 per Latham CJ, at 134 per Dixon J; Tufton v Sperni (1952) 2 TLR 516 at 522 per Sir Raymond Evershed MR; Rogers, at 51 per Starke J.

90.

Johnson, at 134 per Dixon J.

91.

(1953) 90 CLR 113 (‘Jenyns’).

92.

ibid, at 132.

93.

Morgan, at 363.

94.

Jenyns, at 132 per Dixon CJ, McTiernan and Kitto JJ; Cowen v Piggott [1989] 1 Qd R 41 at 44 per Connolly J.

95.

Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 574 at 576 per Gillard J.

96.

Cowen v Piggott [1989] 1 Qd R 41 at 44 per Connolly J.

97.

Morgan, at 372 per Lord Scarman; James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 389 per Taylor J. But see Lloyds Bank Ltd v Bundy [1975] QB 326 at [15] per Lord Nicolls (Lords Bingham and Clyde concurring) where undue influence of the bank over the customer was held to have been proved.

98.

Wardley Australia Ltd v McPharlin (1984) 3 BPR 9500.

99.

See, for example, Lloyds Bank Ltd v Bundy [1975] QB 326.The facts in this case are outlined below at 3.84.

100. Johnson, at 135 per Dixon J. 101. Allcard, at 185 per Lindley LJ. See also Thorne, at [34] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. 102. National Westminster Bank plc v Morgan (1985) 17 HLR 360 at 369 per Lord Scarman. 103. See 3.21. 104. [2002] 2 AC 773 (‘Etridge’). 105. Etridge, at 798 per Lord Nicholls. Note that the judgment of Lord Nicholls was described as having the ‘unqualified support’ of all members of the House: at 794 per Lord Bingham. 106. Etridge, at 798. 107. Peter Birks & Chin Nyuk Yin, ‘On the Nature of Undue Influence’ in Jack Beatson & Daniel Friedmann (eds), Good Faith and Fault in Contract Law, Clarendon Press, Oxford, 1995, at 57. 108. ibid, at 83. 109. Patrick Parkinson, The Principles of Equity, 2nd ed, LawBook Co, Sydney, 2003. 110. (1983) 151 CLR 447 (‘Amadio’). 111. Amadio, at 475. 112. (1956) 99 CLR 362 at 405. 113. Malcolm Cope, ‘Undue Influence and Alleged Manifestly Disadvantageous Transactions: National Westminster Bank plc v Morgan’ (1986) 60 Australian Law Journal 87; Malcolm Cope, Duress, Undue Influence and Unconscientious Bargains, Law Book Co, Sydney, 1985, at 103. 114. Cope, ‘Undue Influence and Alleged Manifestly Disadvantageous Transactions: National Westminster Bank plc v Morgan’, above note 113, at 97. 115. Chris Finn, Fiduciary Obligations, Law Book Co, Sydney, 1977. 116. R P Meagher, W M C Gummow & J R F Lehane, Equity: Doctrines and Remedies, 3rd ed, Butterworths, Sydney, 1992, at [1524]. 117. [1990] 2 Qd R 101 at 109. Kelly SPJ did not find any evidence of actual undue influence and also found that if there was any presumption of undue influence it had been rebutted. His Honour did find unconscionable conduct but held that the claim ultimately failed by reason of laches. The decision was upheld on appeal: Baburin v Baburin (No 2) [1991] 2 Qd R 240. But the Court of Appeal made no comment on Kelly SPJ’s assertion that the manifest disadvantage requirement did not form part of Australian law. 118. [2001] NSWSC 1028 at [72]. 119. Watkins, at 188 per Knox CJ, Gavan Duffy and Starke JJ. The facts in Watkins are outlined above at 3.14. 120. Johnson, at 123 per Latham CJ, at 143 per McTiernan J. The facts in Johnson are outlined below at 3.82.

121. See James v ANZ Banking Group Ltd (1986) 64 ALR 347 at 389 per Toohey J; Farmers Co-operative Executors & Trustees Ltd v Perks (1989) 52 SASR 399 at 404 per Duggan J; Powell v Powell [2002] WASC 105 (Powell) at [125] per McLure J. 122. As observed by McLure J in Powell, at [127]. 123. Thorne, at [34] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ; and see Johnson, at 134 per Dixon J. 124. Watkins, at 194 per Isaacs J; Harris v Jenkins (1922) 31 CLR 341 at 368 per Starke J. 125. Powell, at [129]. 126. Spong v Spong (1914) 56 CLR 544 at 549 per Griffith CJ; Watkins v Combes (1922) 30 CLR 180 at 194 per Isaacs J; Johnson, at 123 per Latham CJ; Thorne, at [34] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. 127. Johnson, at 123. See also West v Public Trustee [1942] SASR 109 at 119 per Mayo J; Quek v Beggs (1990) 5 BPR 97,405 at 11,765 per McLelland J; Nattrass v Nattrass [1999] WASC 77 at [104] per Buss QC. 128. Huguenin v Baseley (1807) 14 Ves Jnr 273 at 289; Rogers, at 85 per Williams J. 129. Inche Noriah v Shaik Allie Bin Omar [1929] AC 127; Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 303 (‘Westmelton’) at 155 per Full Court. 130. Union Fidelity Trustee Co, at 578 per Gillard J; Westmelton, at 313, 315. 131. Whereat v Duff [1972] 2 NSWLR 147 at 173 per Asprey JA. 132. Union Fidelity Trustee Co, at 579 per Gillard J. 133. Whereat v Duff [1972] 2 NSWLR 147 at 173 per Asprey JA. 134. Johnson, at 134 per Dixon J; Whereat v Duff [1972] 2 NSWLR 147 at 160 per Sugerman P; Westmelton, at 313, 315; Quek v Beggs (1990) 5 BPR 97,405 at 11,765 per McLelland J; Nattrass v Nattrass [1999] WASC 77 at [104] per Buss QC. 135. Johnson, at 134 per Dixon J. 136. M J Leonard Pty Ltd v Bristrol Custodians Ltd (in liq) [2013] NSWSC 1734 at [51] per Windeyer AJ. See, for example, Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305; Multi-span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd [2001] NSWSC 696; Talbot & Olivier v Shann [2005] WASCA 34. 137. Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305 at 313 per Full Court. 138. [1972] 2 NSWLR 147 at 160. 139. [1982] VR 305. 140. [2017] NSWSC 923. 141. Westmelton, at 318–19. 142. Westmelton, at 318. 143. Malouf, at [126]. 144. Malouf, at [126]. 145. Johnson, at 120. 146. [2015] VSCA 58.

147. ibid, at [77]. 148. Haskew v Equity Trustees Executors & Agency Co Ltd (1919) 27 CLR 231 at 234–5 per Isaacs J; Johnson, at 119–20 per Latham CJ; Union Fidelity Trustee Co, at 578 per Gillard J; Whereat v Duff [1972] 2 NSWLR 147 at 159 per Sugerman P; Tranchita v Retravision (WA) Pty Ltd [2001] WASCA 265 at [58] per Owen J. 149. See above and see also Inche Noriah v Shaik Allie Bin Omar [1929] AC 127; Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 at 35 per Street J; Whereat v Duff [1972] 2 NSWLR 147 at 160 per Sugerman P; Union Fidelity Trustee Co, at 580 per Gillard J; Stivactas v Michaletos (No 2) (1993) Aust Contract R 90-031. 150. (1915) 19 CLR 528 at 531 citing Kali Bakhsh Singh v Ram Gopal Singh (1913) 30 TLR 138 at 139 per Lord Shaw. 151. Westmelton, at 319. 152. ibid. 153. Rogers, at 73–4 per McTiernan J, at 87 per Williams J. 154. Spong v Spong (1914) 56 CLR 544 at 549 per Griffith CJ. 155. Rhodes v Bate (1866) 1 Ch App 252 at 256; Allcard (weaker party gave away all although she was not reduced to poverty by virtue of the fact that she had a life interest in other property); Haskew v Equity Trustees Executors & Agency Co Ltd (1919) 27 CLR 231 at 235; Johnson, at 120 per Latham CJ; Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810 at [37] per Bryson J (mother with young children signed over virtually all of her property to the Krishna Consciousness Movement such that she had no other property to house or support her family). 156. Rogers, at 87 per Williams J; Union Fidelity Trustee Co, at 580–1 per Gillard J. 157. Union Fidelity Trustee Co, at 579–80 per Gillard J. 158. Union Fidelity Trustee Co, at 581 per Gillard J. 159. Allcard, at 183. 160. [2002] NSWSC 810 at [28]. 161. Credit Lyonnais Bank Nederland NV v Burch (1996) 29 HLR 513 at 524 per Millett LJ; Ritz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 at [122] per Brereton J. 162. Usually a lawyer but could also be ‘some independent and qualified person’: Inche Noriah v Shaik Allie Bin Omar [1929] AC 127 at 135 per Lord Hailsham. 163. Powell v Powell [1900] 1 Ch 243 at 246–7 per Farwell J; Cavendish v Strutt (1903) 19 TLR 483 (Ch) at 487 per Byrne J; Re Coomber [1911] 1 Ch 723 at 730 per Fletcher Moulton LJ (the advisor must be ‘free from any taint of the relationship’); Johnson, at 121 per Latham CJ (Johnson took Buttress to her own solicitor); Bullock v Lloyds Bank Ltd [1955] Ch 317 at 324 per Vaisey J; Watkins v Combes (1922) 30 CLR 180 at 188 per Knox CJ, Gavan Duffy and Starke JJ, at 197 per Isaacs J; Adenan v Buise [1984] WAR 61 at 68 per Burt CJ and Kennedy J; Stivactas v Michaletos (No 2) (1993) Aust Contract R 90-031; Micarone v Perpetual Trustees Australia Ltd (unreported, Supreme Court of South Australia, Duggan J, 19 November 1997) at 90–2. In relation to a guarantee, the advisor might need to be independent of both the financier and borrower: McNamara v Commonwealth Trading Bank of Australia Ltd (1984) 37 SASR 232. But

see Royal Bank of Scotland v Etridge [2001] 3 WLR 1021 per Lord Nicholls at 74. Lord Nicholls considered that ‘[t]he advantages attendant upon the employment of a solicitor acting solely for the wife do not justify the additional expense that this would involve for the husband. When accepting instructions to advise the wife the solicitor assumes responsibilities directly to her, both at law and professionally’. 164. Brusewitz v Brown [1923] NZLR 1106 at 1116–17 per Salmond J; Perpetual Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501 at 507–8 per Harvey CJ; Adenan v Buise [1984] WAR 61 at 68 per Burt CJ and Kennedy J; Royal Bank of Scotland v Etridge (No 2) [2001] 3 WLR 1021 at 1043 per Lord Nicholls; Stivactas v Michaletos (No 2) (1993) Aust Contract R 90-031 per Sheller JA at 89,677; Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 at [127] per Brereton J. In Brusewitz, for example, Salmond J considered that the advisor should have inquired as to the weaker party’s state of health, prospects of life and financial standing. 165. Rogers, at 73 per McTiernan J; Spong v Spong (1914) 56 CLR 544 at 549 per Griffith CJ; Nolan v Westpac Banking Corporation Ltd (1989) ASC 55-930. 166. Stivactas v Michaletos (No 2) (1993) Aust Contract R 90-031. 167. Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 at 35; McNamara v Commonwealth Trading Bank of Australia Ltd (1984) 37 SASR 232 at 241; Nattrass v Nattrass [1999] WASC 77 at [132] per Buss QC; Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153. 168. Perpetual Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501 at 507–8 per Harvey CJ; Stivactas v Michaletos (No 2) (1993) Aust Contract R 90-031; Royal Bank of Scotland v Etridge (No 2) [2001] 3 WLR 1021 at [65] per Lord Nicholls; Chandran v Narayan [2006] NSWSC 104 at [49] per Young CJ; Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 at [127] per Brereton J. 169. Royal Bank of Scotland v Etridge (No 2) [2001] 3 WLR 1021 at [65] per Lord Nicholls; Chandran v Narayan [2006] NSWSC 104 at [49] per Young CJ. 170. Whereat v Duff [1972] 2 NSWLR 147 at 160 per Sugerman P. 171. ibid. 172. [2007] NSWSC 1153 at [128]. 173. See, for example, Citicorp Australia Ltd v O’Brien (1996) 40 NSWLR 398 at 418 per Sheller JA. 174. Credit Lyonnais Bank Nederland NV v Burch (1996) 29 HLR 513 at 524 per Millett LJ. 175. Union Fidelity Trustee Co at 579–80 per Gillard J; Jenyns v Public Curator (Qld) (1953) 90 CLR 113 at 135 per Dixon CJ, McTiernan and Kitto JJ (donor had legal advice but was found not to have understood the transaction in respect of ‘general reasoning and business wisdom and acumen’ but this found not to be enough to invalidate gift where freely made). See also Adenan v Buise [1984] WAR 61 where the Full Court of the Supreme Court of Western Australia held (at 68): ‘But the critical question is not whether the deceased understood the nature of the document. It is whether he executed it as the result of the free exercise of his independent will.’ 176. Re Coomber [1911] 1 Ch 723 at 730 per Fletcher Moulton LJ: ‘It is for adult persons of competent mind to decide whether they will do an act, and I do not think that

independent competent advice means independent and competent approval.’ 177. See, for example, Thorne and Perks outlined above at 3.33 and 3.31, respectively. In these cases both women obtained, but did not follow, independent legal advice. Both women were found to have been subject to undue influence. See also Allcard, at 172–3 per Cotton LJ (advice from donor’s brother before she entered the sisterhood not sufficient to dispel the influence) and Quek v Beggs (1990) 5 BPR 97,405 (even if sufficient advice obtained McLelland J considered it unlikely it would have freed donor from influence). 178. See Micarone v Perpetual Trustees Australia Ltd [1999] 95 SASC 265 at [655]. 179. (1936) 56 CLR 113. 180. Johnson, at 126. 181. (2004) 62 NSWLR 229 (‘Khan’). 182. Khan, at 232. 183. Khan, at 238. 184. Khan, at 242. 185. Khan, at 241. 186. Khan, at 242. 187. [1975] QB 326. 188. Bundy, at 344. 189. See generally N Y Chin, ‘Undue Influence and Third Parties’ (1992) 5 Journal of Contract Law 108; B Fehlberg, Sexually Transmitted Debt: Surety Experience and English Law, Clarendon Press, Oxford, 1997. 190. Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 at 36; and Micarone v Perpetual Trustees [1999] SASC 265 at [279] per Olsson, Debelle and Wicks JJ. 191. Huguenin v Baseley (1807) 14 Ves Jnr 273 at 289–90 per Eldon LC; Bainbrigge v Browne (1881) 18 Ch D 188 at 196–7 per Fry J; Quek v Beggs (1990) 5 BPR 97,405. 192. (1807) 14 Ves Jnr 273 at 289. 193. Bridgeman v Green (1755) 2 Ves Sen 627 at 64. 194. See Bank of Victoria Ltd v Mueller [1925] VLR 642 at 656 per Cussen J; Yerkey v Jones (1939) 63 CLR 649 at 677 per Dixon J; Rogers, at 60–1 per McTiernan J; Barclay’s Bank plc v O’Brien [1994] 1 AC 180 (Barclay’s Bank); Royal Bank of Scotland v Etridge (No 2) [1998] 4 All ER 705; Wilkinson v ASB Bank Ltd [1998] 1 NZLR 674; Khan v Khan (2004) 62 NSWLR 229 at 234–5 per Barrett J. 195. Rogers, at 60 per McTiernan J citing Owen & Gutch v Homan (1853) 4 HL Cas 997 at 1034 per Lord Chancellor Cranworth. 196. Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923. 197. Yerkey v Jones (1939) 63 CLR 649 at 677 per Dixon J; Rogers. 198. Avon Finance Co Ltd v Bridger [1985] 2 All ER 281; Barclays Bank plc v O’Brien [1993] 4 All ER 417 at 431; Royal Bank of Scotland v Etridge (No 2) [1998] 4 All ER 705 at 719 per Stuart-Smith LJ; Credit Lyonnais Bank Nederland NV v Burch (1996) 29

HLR 513; Micarone v Perpetual Trustees [1999] SASC 265 at [283] per Olsson, Debelle and Wicks JJ. 199. Royal Bank of Scotland v Etridge (No 2) [1998] 4 All ER 705 at 719 per Stuart-Smith LJ; Credit Lyonnais Bank Nederland NV v Burch (1996) 29 HLR 513; Micarone v Perpetual Trustees [1999] SASC 265 at [283] per Olsson, Debelle and Wicks JJ. 200. Rogers, at 54–5 per Starke J, at 71 per McTiernan J, at 85–6 per Williams J. 201. See Avon Finance Co Ltd v Bridger [1985] 2 All ER 281; Kingsnorth Trust Ltd v Bell [1986] 1 All ER 423; Alderton v Prudential Assurance Company Ltd (1993) 41 FCR 435 at 446–7; Burke v State Bank of New South Wales (1994) 37 NSWLR 53 (‘Burke’) at 76. See also Chin, above note 189, at 110–23. 202. Burke, at 76. 203. See, for instance, Barclays Bank plc v O’Brien [1993] 4 All ER 417 in which the House of Lords considered that there was ‘no basis in principle for affording special protection to a limited class in relation to one type of transaction only’; European Asian of Australia v Kurland (1985) 8 NSWLR 192 in which Rogers J, at 200, considered the Yerkey v Jones principle to be a ‘badge of shame’; Commonwealth Bank of Australia v Cohen (1988) ASC 55-681 in which Cole J expressed ‘the difficulty in 1988 of attaching a quality of special disadvantage to a married woman’; Warburton v Whiteley (1989) NSW ConvR 55-453 in which Kirby P described the principle as being anachronistic given the changed status of women in modern Australian society; Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at [66] in which Kirby J considered that the High Court should not endorse a principle limited to one class of citizens only. 204. See below at 3.111–3.112. 205. Yerkey v Jones (1938) 63 CLR 649 at 680, 683 per Dixon J. 206. [1925] VLR 642 (‘Mueller’). 207. Mueller, at 648. 208. See above at 3.39–3.44. 209. Yerkey, at 675. 210. Yerkey, at 676. 211. Yerkey, at 683. 212. (1998) 194 CLR 395 (‘Garcia’), Kirby J dissenting with respect to an endorsement of Yerkey. 213. Garcia, at 403 per Gaudron, McHugh, Gummow and Hayne JJ. 214. Garcia, at 406–9 per Gaudron, McHugh, Gummow and Hayne JJ. 215. Garcia, at 409 per Gaudron, McHugh, Gummow and Hayne JJ. 216. [2000] NSWSC 552 (‘Chia’). 217. Chia, at [169]. 218. Chia, at [170] per Einstein J; Groves v Groves [2013] QSC 277 at [198] per Martin J; Twenty Ninth Macorp Nominees Pty Ltd v George [2017] VSC 136 at [180] per Almond J.

219. An inability to satisfy this requirement seems common. See, for example, Yerkey, at 689 per Dixon J; Chia, at [208] per Einstein J; Groves v Groves [2013] QSC 277 at [199] per Martin J; Twenty Ninth Macorp Nominees Pty Ltd v George [2017] VSC 136 at [182] per Almond J. 220. Yerkey, at 689 per Dixon J. 221. Garcia, at 408 per Gaudron, McHugh, Gummow and Hayne JJ. 222. Yerkey, at 689 per Dixon J; Chia, at [169] per Einstein J; and see also Liptak v Commonwealth Bank of Australia [1998] SASC 6887 at [58] per Doyle CJ. 223. Chia, at [208] per Einstein J. 224. Yerkey, at 686 per Dixon J; Chia, at [169] per Einstein J. 225. Mueller, at 648 per Cussen J; Chia, at [169] per Einstein J. 226. Chia, at [169] per Einstein J. 227. [2004] QCA 185 at [56]. 228. Garcia, at [43] per Gaudron, McHugh, Gummow and Hayne JJ. 229. Mueller, J at 649 per Cussen J. 230. Garcia, at [43] per Gaudron, McHugh, Gummow and Hayne JJ; Armstrong v Commonwealth Bank of Australia [1999] NSWSC 588 at [28], [33] per Hamilton J; Cranfield Pty Ltd v Commonwealth Bank of Australia [1998] VSC 140 at [104] per Mandie J; Chia, at [169] per Einstein J; Commonwealth Bank of Australia v Hoskings [2000] VSCA 244; Bylander International Consortium (Australia) Pty Ltd v Multilink Investments Pty Ltd [2001] NSWCA 53; Brueckner v Satellite Group (Ultimo) Pty Ltd [2002] NSWSC 378. 231. Garcia, at [43] per Gaudron, McHugh, Gummow and Hayne JJ; Commonwealth Bank of Australia v Khouri [1998] VSC 128 at [65] per Harper J; Chia, at [169] per Einstein J; Armstrong v Commonwealth Bank of Australia [1999] NSWSC 588 at [53] per Hamilton J; Dubois v Ong [2004] QCA 185 at [56] per Muir J. 232. Commonwealth Bank of Australia v Khouri [1998] VSC 128 at [70] per Harper J; Chia, at [169] per Einstein J. 233. Chia, at [169] per Einstein J; Radin v Commonwealth Bank of Australia [1998] FCA 1361; Armstrong v Commonwealth Bank of Australia [1999] NSWSC 588 at [53] per Hamilton J. 234. See below at 3.111–3.112. 235. Chia, at [169] per Einstein J; Yerkey, at 685 per Dixon J. See further above at 3.78–3.81. 236. Garcia, at [22] per Gaudron, McHugh, Gummow and Hayne JJ. Lord Nicholls puts it more firmly in Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 773 at [47]. 237. Garcia, at [33] per Gaudron, McHugh, Gummow and Hayne JJ. 238. State Bank of New South Wales Ltd v Layoun [2001] ANZ ConvR 487; Andrews v Racken Pty Ltd [2007] NSWSC 1010. 239. Blackshaw Services Pty Ltd v Cureton [2001] NSWSC 548, Appeal [2002] NSWCA 187 (succeeded on a minor point of compound interest); ANZ Banking Group Ltd v Alirezai [2004] QCA 6; Barbaro v Millington [2007] ACTCA 1.

240. Kranz v National Australia Bank Ltd [2003] VSCA 92.

[page 141]

Chapter 4 Unconscionable Conduct 4.1 The equitable doctrine of unconscionable conduct, like the doctrine of undue influence, is concerned to protect weaker parties from conduct that is often described by the courts to be exploitative. But, unlike undue influence, the doctrine of unconscionable conduct focusses on the conduct of the stronger party rather than the quality of the weaker party’s assent.1 This chapter outlines the history and rationale of the doctrine of unconscionable conduct and sets out the twin elements of the doctrine. The chapter also describes the transmogrification of the equitable doctrine in consumer protection legislation such as the Australian Consumer Law.

HISTORICAL ORIGIN AND RATIONALE 4.2 It is thought that the doctrine of unconscionable conduct grew out of the jurisdiction developed by the Court of Chancery to protect heirs or expectants from ‘catching bargains’.2 The term ‘catching bargains’ was used to describe agreements made by heirs in which they sold off their expectancy to a moneylender for undervalue.3 Such agreements typically [page 142] exploited the heir’s youth and impecuniosity.4 Lord Hardwicke LC, in

Earl of Chesterfield v Janssen, identified these agreements as constituting a species of fraud for which equity would provide relief.5 Lord Hardwicke LC also identified conduct, caught by the doctrine of unconscionable conduct,6 as a species of equitable fraud. He said: A 3d [third] kind of fraud … which may be presumed from the circumstances and condition of the parties contracting … it is wisely established in this court to prevent taking surreptitious advantage of the weakness or necessity of another: which knowingly to do is equally against the conscience as to take advantage of his ignorance: a person equally unable to judge for himself [or herself] in one as the other.7

4.3 The purpose of the doctrine of unconscionable conduct is not to save the weaker party from the consequences of their own foolishness8 or to provide relief from a hard or unfair bargain.9 The courts uphold ‘values of privacy and autonomy’ and respect the right of parties to enter into transactions that others might consider foolish.10 As the plurality in Kakavas v Crown Melbourne Ltd noted, a party ‘who voluntarily engages in risky business has never been able to call upon equitable principles to be redeemed from the coming home of risks inherent in the business’.11 Similarly, in Tanwar Enterprises Pty Ltd v Cauchi,12 Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ observed that: [It is wrong] to speak of ‘unconscionable conduct’ [as suggesting] that sufficient foundation for the existence of the necessary ‘equity’ to interfere in relationships established by … the law of contract, is supplied by an element of hardship or unfairness in the terms of the transaction in question, or in the manner of its performance.13

[page 143] 4.4 Instead, the doctrine looks to the stronger party’s conduct14 and exists to prevent the stronger party from victimising his or her weaker counterpart.15 In Cauchi, Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ considered that ‘the governing equitable principle in this field is concerned with the production by malign means of an intention to act’.16 In Kakavas, the High Court referred to ‘proof of a predatory state of mind’17 and held that the ‘abiding rationale’ of the doctrine is

to ‘ensure that it is fair, just and reasonable for the stronger party to retain the benefit of the impugned transaction’.18 4.5 In Berbatis, Kirby J remarked that the ‘touchstone’ of equity’s intervention ‘is the protection of the assumptions and conditions necessary to make effective the freedom of contract of the parties’.19 But against this, as Kirby J notes in a different case, ‘courts should be careful to conserve relief so that they do not, in commercial matters, substitute lawyerly conscience for the hard-headed decisions of business people’.20 4.6 The doctrine does not provide a means by which courts can import their own personal notions of fairness.21 Such an approach would not provide for a coherent body of law and would undermine the certainty of contracts.22 The doctrine is a narrow one consisting of specific elements that must be satisfied before it can successfully be invoked. The authorities have also ‘emphasised the need to descend from a high level of abstraction in the application of principles such as that of unconscionability to the detail of the circumstances of the case alleged to attract the principle’.23 [page 144]

TWIN ELEMENTS OF UNCONSCIONABLE CONDUCT 4.7 It is settled law24 that relief under the doctrine of unconscionable conduct requires: (i)

one party to a transaction to be under a ‘special disability’ in dealing with the other party ‘which seriously affects the ability of the innocent party to make a judgement as to his [or her] own best interest’;25 and

(ii) the other party to unconscientiously take advantage of that special disability.

Special disability 4.8 The circumstances which may amount to a special disability are infinite (and open26) and cannot be definitively catalogued.27 In Blomley, Fullagar J identified some examples of a special disability to include ‘poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance and explanation is necessary’.28 A common characteristic of these examples is that they place one party at a serious disadvantage relative to the other.29 But the ‘essence of the relevant weakness’ is the ‘inability of a party to judge his or her own best interests’.30 4.9 Sometimes an assumption is made that simply because the weaker party is in an inferior bargaining position, or has some other weakness identified by Fullagar J in Blomley, that this, without more, constitutes a special disability. The courts, as outlined below, have made it plain that this assumption is false [page 145]

Inequality of bargaining power 4.10 An inequality of bargaining power is not, in itself, a special disability. In Commercial Bank of Australia Ltd v Amadio, Mason J said: I qualify the word ‘disadvantage’ with the word ‘special’ in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests …31

Gleeson CJ recognised in Berbatis that ‘(m)any, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages or neglect their own interests’.32

4.11 The High Court decision in Berbatis and the Full Federal Court in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd33 are much-cited examples of a disparity of bargaining power falling short of a special disability. The facts in Samton involved the purchase of a lunch bar for a substantial sum of money. Mr and Mrs Ranaldi borrowed heavily to buy, and operate, the business through their family company, Executive Bloodstock Pty Ltd. The lunch bar business was run from leased premises. The lease expired shortly after the business was purchased. The lease contained an option to renew for a further seven years but Executive Bloodstock failed to exercise the option within the time required and the landlords initially refused to extend time. The landlords eventually did agree to extend time but only on the condition that they were paid an additional sum of $70,000. This payment, if made directly to the landlords, would have breached a legislative prohibition on tenants paying ‘key-money’.34 To sidestep this prohibition, the landlords granted a lease to a company under their control, Samton Holdings, which in turn granted the lease to Bloodstock for rent which included the $70,000 payment. The Full Court said: [I]t is difficult to see how it would be correct to characterise the case as one of ‘special disadvantage’ in the relevant sense. The disadvantage under which the Ranaldis and Executive Bloodstock laboured had arisen from a combination of considered commercial judgment (the decision to borrow

[page 146] heavily in order to purchase the business) and Mr Ranaldi’s oversight in neglecting to exercise the option in good time. These factors did not impair the Ranaldis’ ability to make a decision about the best course of action in the circumstances. At least in the case of an experienced business person there must, in our opinion, be something more than commercial vulnerability (however extreme) to elevate disadvantage into special disadvantage.35

The Full Court considered that a disadvantage which is ‘special’ indicates that ‘some special conduct or care’36 is required from the stronger party to avoid acting unconscionably. But, as the Full Court noted, the landlords could not have catered for Bloodstock’s

disadvantage other than to grant its request to extend time (which it was not obliged to do).37 4.12 Berbatis was a case that also concerned the renewal of a retail lease. Mr and Mrs Roberts ran a fish and chip shop from premises in a shopping centre. Along with a number of other tenants in the shopping centre, the Roberts commenced proceedings in the Commercial Tenancy Tribunal against the landlords for breaches of the relevant commercial tenancy act. The Roberts’ daughter subsequently fell seriously ill and required expensive medical treatment. The Roberts tried to sell their fish and chip business but their ability to sell their business as a going concern depended on the continuance of their lease. The landlords refused to renew the lease unless the Roberts released the landlords from their Tribunal claim. After an initial attempt to sell the business failed the landlords seemed to drop their demand for a release. The Roberts made a second, successful, attempt to sell their business. The contract of sale was made subject to the assignment of the shop lease to the purchaser. After the execution of the contract and the purchaser had begun to move into the shop premises, the landlords presented the Roberts with documents to assign the lease to the new purchaser that included, without warning, the release. The Roberts reluctantly signed the release to preserve the sale of their business. The High Court,38 like the Full Federal Court in Samton before it, did not consider that the Roberts were labouring under any special disability. Gleeson CJ held: They [the Roberts] were at a distinct disadvantage, but there was nothing ‘special’ about it. They had two forms of financial interest at stake: their claims and the sale of their business. The second was large; as things turned out, the first was shown to be relatively small. They had the benefit

[page 147] of legal advice. They made a rational decision, and took the course of preferring the second interest. They suffered from no lack of ability to judge or protect their financial interests. What they lacked was the commercial ability to pursue them both at the same time.39

Gleeson CJ went on to note that the Roberts’ ‘lack of ability to get their own way’ was ‘a disability that affects people in many

circumstances in commerce, and in life. It is not one against which the law ordinarily provides relief’.40

Inequality of information 4.13 Similarly, an inequality of information will not, alone, amount to a special disability. In Turner v Windever41 Mrs Lett, an elderly widow, mortgaged her home to her son-in-law, Mr Blackburn. It was agreed between Mrs Lett and Mr Blackburn that simple interest of 10 per cent would be payable on the loan but that the loan, and interest, would not be payable until she sold her home or, otherwise, would be paid by her estate on her death. Unfortunately, the written mortgage executed by Mrs Lett, incorrectly, provided for interest compounding daily and for the loan to be repayable on demand. Mrs Lett became distressed about the compounding of interest and was concerned that Mr Blackburn would foreclose under the mortgage. Mrs Lett subsequently transferred ownership of her home to her daughter and another son-in-law: Mrs and Mr Windever. Mrs Lett’s ignorance of her legal right to apply for a court order to rectify the written mortgage was held by the New South Wales Court of Appeal to not constitute a special disadvantage.42 Giles JA held that ‘(m)ere unawareness of a matter material to the interests of a party to a transaction is not a special disadvantage’ and described such ignorance as ‘commonplace … [in] … commercial and other negotiations’.43 Similarly, the New South Wales Court of Appeal, in Wu v Ling,44 held that being duped by someone, other than the other party to a transaction, did not constitute a special disability. Although Fullagar J in Blomley identified a lack of assistance or advice as being an example of a special disability, Giles JA pointed out: The key words in Fullagar J’s reference to lack of assistance or explanation are the rider, ‘where assistance or explanation is necessary’. Assistance or explanation may be necessary because the party is of reduced cognitive

[page 148] capacity, or because the matter is entirely beyond the party’s experience and unassisted comprehension. There can thereby be a condition or circumstance falling within the general principle founded on a seriously weakened ability to make a judgment as to one’s

own best interests. But there must be a need for assistance or explanation, and even then when assistance and explanation have been provided the courts should be slow to spread the consequences of bad advice from the adviser to the other party to the transaction, if the assistance and explanation are thought wanting, on the basis that the party was under a special disadvantage.45

Inability to read or comprehend English 4.14 An inability to read or comprehend English well will not, in itself, amount to a special disability. For example, in Luong v Du46 Emerton J held that the inability of the transferor of a property to read or comprehend English well was not, in the circumstances, a special disability. The case concerned the transfer of a residential property from one sibling to another in a large Vietnamese family. Emerton J accepted that the transferor had poor English language skills but did not consider this to be a relevant disability in circumstances where the transferor could have sought legal advice about the transfer documents from his solicitor.47

Age and physical frailty 4.15 Neither old age48 nor physical frailty49 are, on their own, a special disability. For example in Davey v Challenger Managed Investments Ltd50 the New South Wales Court of Appeal held that two guarantors (who had also offered up their homes as security for their children’s business loan) were not suffering from a special disability simply by reason of the fact that they were elderly widowed pensioners.51 The guarantors had received legal advice before entering into the transaction and were plainly motivated by a desire to help their children set themselves up in business. [page 149]

Special disability may be ‘constitutional’ or ‘situational’ 4.16 A special disability may be ‘constitutional’ or ‘situational’.52 A ‘constitutional’ special disability may derive from age, illness, poverty, inexperience or a lack of education. An example of such a disability can

be readily found in the seminal case of Amadio. Mr and Mrs Amadio were Italian migrants of advanced years (aged 76 and 71 respectively) and had a limited command of written English and no business experience53 when they executed a guarantee and mortgage in favour of the bank to secure their son’s business debts. Conversely, a ‘situational’ special disability derives from ‘particular features of a relationship between actors in the transaction such as the emotional dependence of one on another’.54 The cases of Louth and Bridgewater v Leahy55 exemplify this kind of disability. In Louth, Mr Diprose was infatuated with and emotionally dependent on Ms Louth, who had manufactured a false ‘atmosphere of crisis’ about her ability to remain in rental accommodation, when he gave her money56 to buy a house.57 Similarly, in Bridgewater, Mr York, an elderly grazier wanting to keep his large rural interests intact, transferred his property for undervalue to his nephew whom he trusted and had enormous affection for and otherwise treated like a son.58 But note that mere affection or infatuation is not enough to constitute a special disability. In Mackintosh v Johnson59 the Victorian Court of Appeal held that Mr Johnson, a 73-year-old divorced and wealthy man, was not suffering from a special disability by reason of his infatuation with a 45-year-old woman. Mr Johnson lavished a total of $655,000 on his paramour in the hope of kindling a lasting relationship [page 150] with her. The court held that ‘(s)omething more than mere infatuation and consequent foolish action based on clouded judgment was required to establish … a special disability or disadvantage’.60 4.17 Importantly, as the examples outlined above illustrate, the relevant special disability must be one that exists in dealing with the other party and puts that person at a special disadvantage in dealing with that other party. In Wu, the New South Wales Court of Appeal held that being duped by a fraudster did not constitute a special disadvantage in respect of several loan agreements with a party

unconnected to the fraudster.61 In Kakavas, the High Court considered that Mr Kakavas’ enthusiasm for gambling did not constitute a special disability relative to Crown Melbourne Ltd. In the long run, Mr Kakavas was more or less likely to win than any other gambler.62 Similarly in Guy v Crown Melbourne Ltd (No 2)63 Mortimer J considered that Ms Guy, and other ‘Vulnerable Players’, failed to establish the existence of a special disability for the same reasons identified in Kakavas.64 4.18 Since equity ‘calls for the precise examination of the particular facts’,65 the circumstances of the transaction must be studied closely to determine the existence of a special disability.66 In Kakavas, the High Court carefully considered all of the circumstances surrounding Mr Kakavas’ gambling with Crown before concluding that he did not suffer from a special disability. The High Court found that although medical evidence showed that Mr Kakavas suffered from a pathological gambling condition there was also evidence that he was able to choose to refrain from gambling with Crown.67 Mr Kakavas had in the past sought and obtained a self-exclusion order from Crown, chosen not to gamble with Crown for considerable periods of time, negotiated with Crown about the terms on which he would gamble at its venue and, when he did gamble with Crown, frequently left with credits.68 Conversely, in Thorne, the High Court found that Ms Thorne was [page 151] labouring under a special disability after carefully reviewing the primary judge’s findings as to the circumstances in which Ms Thorne executed two prenuptial agreements.69 These circumstances included Ms Thorne lacking financial equality with Mr Kennedy, lacking permanent status in Australia, relying on Mr Kennedy in all things, being emotionally connected to her relationship with Mr Kennedy and yearning to be a mother, her emotional preparation for marriage and the ‘publicness’ of her upcoming marriage (which was within days of her being presented with the prenuptial agreement).70

4.19 The High Court, in both Kakavas and Thorne, noted that ‘proof of the interplay of a dominant and subordinate position in a personal relationship depends, ‘in large part, on inferences drawn from other facts and on an assessment of the character of each of the parties’.71 In a case of unconscionable conduct, the trial judge’s advantage ‘of seeing the parties and estimating their characters and capacities is immeasurable’.72 It follows that the ‘formidable obstacles’ an appellant must surmount to attack a trial judge’s findings of fact ‘may be enhanced where issues of undue influence and unconscionability are involved’.73

Unconscientiously take advantage 4.20 As Deane J observed in Louth, ‘(t)he intervention of equity is not merely to relieve the plaintiff [weaker party] from the consequences of his [or her] own foolishness. It is to prevent his [or her] victimisation’.74 It is not enough that the weaker party labored under a special disability, the stronger party must be shown to have unconscientiously taken advantage of75 or exploited76 the weaker party.77 To prove that the stronger party [page 152] exploited the weaker party’s special disability it must be shown that the stronger party: (a) knew of the weaker party’s special disability;78 and (b) did nothing to administer to, or ameliorate or neutralise, the special disability prior to the transaction for the purpose of exploiting the weaker party.79

Knowledge of weaker party’s special disability 4.21 Unconscionable conduct requires conscious conduct. As Finn J observed in Australian Competition and Consumer Commission v Radio Rentals Ltd:80

For a dominant party’s conduct to be characterised as unconscionable — and to be stigmatised as wrongful — that party necessarily must actually have, or must properly be able to be regarded as if he or she did have, knowledge of the other’s position of special disadvantage.81

4.22 Similarly, the High Court in Kakavas noted that ‘the extent of the knowledge of the disability of the plaintiff [weaker party] which must be possessed by the defendant [stronger party] is an aspect of the question of whether the plaintiff has been victimised by the defendant’.82 4.23 Knowledge is determined objectively by the courts.83 The degree of knowledge required to make a stronger party’s conduct unconscionable had been a matter of some debate. In Amadio, Mason J said: [I]f A [the stronger party] having actual knowledge that B [the weaker party] occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interests, takes unfair advantage of his (A’s) superior bargaining power or position entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that the situation may exist or

[page 153] is aware of the facts that would raise that possibility in the mind of a reasonable person, the result will be the same.84

4.24 Also in Amadio, Deane J said:85 [Was the] disability … sufficiently evident to the stronger party to make it prima facie unfair or ‘unconscientious’ that he procure, or accept, the weaker party’s assent to the impugned transaction in the circumstances in which he procured or accepted it.

4.25 Amadio, in particular Mason J’s decision, was construed by some courts86 to extend to both actual and constructive knowledge. As the High Court in Kakavas observed, the concept of constructive knowledge is typically applied in disputes about the priority of interests in property. In this context, a party: … is deemed to have constructive notice of all matters of which he or she would have

received notice if he or she had made the investigations usually made in similar transactions, and of which he or she would have received notice had he or she investigated a relevant fact which has come to his or her notice and into which a reasonable person ought to have inquired.87

4.26 The High Court in Kakavas noted a general reluctance by courts to import the concept of constructive notice to commercial transactions.88 The High Court considered that Mason J in Amadio ‘could not be taken’ to have sought to import the concept into the doctrine of unconscionable conduct and concluded that, instead, Mason J was referring to wilful ignorance.89 Wilful ignorance being, in equity, no different from actual knowledge.90 4.27 In Kakavas, the High Court held that even if Mr Kakavas had suffered from a special disability that disability was not evident to Crown to make Crown’s conduct unconscionable. The High Court [page 154] concluded that Mr Kakavas ‘did not present as a target for victimisation by Crown’91 because the trial judge formed the view that Mr Kakavas ‘presented the world with a charming and confident fa?e’.92 Similarly, French J, in Australian Competition and Consumer Commission v Radio Rentals Ltd, found that Radio Rentals did not engage in unconscionable conduct93 because it was unaware that Mr Groth lived solely on a disability pension and suffered from a mild intellectual disability. French J did not ‘consider that he [Mr Groth] obviously presented as being mentally retarded by virtue of his appearance, speech or manner of communication’.94 4.28 Conversely, in Thorne the High Court found that Mr Kennedy was well aware of Ms Thorne’s special disability because he had manipulated it.95 Mr Thorne had removed Ms Thorne from her home to Australia and presented her with the prenuptial agreement just days before their wedding was to take place. In Amadio, it was ‘inconceivable that the possibility did not occur to Mr Virgo [the bank

manager] that the respondent’s entry into the transaction was due to their inability to make a judgment as to what was in their best interests’.96 Mr Virgo was aware that the Amadios were elderly Italian migrants with a poor command of English. Mr Virgo was also aware that the debtor was the Amadios’ son and that it was vital to the debtor’s business that his parents guarantee his debt. Mr Virgo would have known that the transaction was an improvident one for the Amadios and he had no reason to think that the Amadios received advice from anyone but their son. As the plurality in Garcia v National Australia Bank Ltd observed, ‘it was unconscionable for the bank to enforce it [the guarantee] because [page 155] the bank’s employee [Mr Virgo] had shut his eyes to the vulnerability of the respondents [Amadios] and the misconduct of their son’.97

Exploitation 4.29 Knowledge of a special disability is not enough, there must also be exploitation of that disability. The High Court in Kakavas held: Equitable intervention to deprive a party of the benefit of its bargain on the basis that it was procured by unfair exploitation of the weakness of the other party requires proof of a predatory state of mind. Heedlessness of, or indifference to, the best interests of the other party is not sufficient for this purpose. The principle is not engaged by mere inadvertence, or even indifference, to circumstances of the other party to an arm’s length commercial transaction. Inadvertence, or indifference, falls short of the victimisation or exploitation with which the principle is concerned.98 [emphasis added]

4.30 The stronger party’s entry into a transaction with knowledge of the weaker party’s disability, but without administering to, or ameliorating, that disability, raises the inference that the stronger party has exploited the weaker party’s position. In Amadio99 and Louth100 Deane J said that ‘an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable’. Drawing on this line of authority, Giles JA in Turner held: [Once the] ingredients … are established, and the improvidence of the transaction is

shown, the plaintiff’s task is made easier by an equitable presumption to the effect that the improvident transaction was a consequence of the special disadvantage, and that the defendant [stronger party] has unconscientiously taken advantage of the opportunity presented by the disadvantage. 101

4.31 The ‘onus’ or an ‘equitable presumption’, described in the authorities, however, operates more like a ‘permissible inference’ than a [page 156] genuine presumption.102 The burden of proving that the transaction was procured or acquired by the stronger party’s exploitation of the weaker party remains with the claimant. As Brennan J observed in Louth: Once it is proved that substantial property has been given by a donor [weaker party] to a donee [stronger party] after the donee has exploited the donor’s known position of special disadvantage, an inference may be drawn that the gift is the product of exploitation. Such an inference must arise, however, from the facts of the case; it is not a presumption which arises by operation of law. The inference may be drawn unless the donee can rely on countervailing evidence to show that the donee’s exploitative conduct was not the cause of the gift. At the end of the day, however, it is for the party impeaching the gift to show that it is the product of the donee’s exploitative conduct. This is the final and necessary link in the chain of proof of unconscionable conduct leading to a decree setting aside the gift.103

4.32 Beyond the inference, there are five further matters that should be borne in mind when determining whether conduct is exploitative. 4.33 (i) There must be a relationship between identified parties There must be a real, as opposed to a hypothetical, relationship between an identified weak party and a strong party. The High Court in Kakavas observed that ‘(t)he invocation of the conscience of equity requires “a scrutiny of the exact relations established between the parties” to determine “the real justice of the case”’.104 For example, in Guy105 Mortimer J found that neither Crown Melbourne Ltd, nor gaming machine manufacturer Aristocrat, had engaged in unconscionable conduct because, among other things, there was no evidence of any relationship between an identified ‘Vulnerable Player’ and Crown or Aristocrat.106 Evidence was given at trial by several witnesses, who

suffered from a gambling addiction, that they frequently played a particular machine manufactured by Aristocrat. But there was little evidence from any of these witnesses of having regularly played the machine in Crown’s casino. Similarly, the Australian Securities and Investments Commission failed in its unconscionable conduct claim against Westpac in respect of parties with whom Westpac had no relationship.107 [page 157] 4.34 (ii) Improvidence is an indicator of unconscionability but not a requirement Although the improvidence of the transaction may be important in tending to show exploitation of a special disability,108 it can never be either a requirement of,109 or the sole basis for,110 a finding of unconscionable conduct. Equity is concerned with procedural fairness rather than substantive fairness. Further, there may be instances of unconscionable conduct where the stronger party has given adequate consideration. As Deane J in Amadio noted, one obvious example is where the stronger party pays the valuable consideration to a third party rather than the weaker party.111 4.35 (iii) Exploitation conduct may be active or passive Exploitation may be either active or passive.112 The stronger party may have been the architect of the transaction and may have even manipulated the circumstances which gave rise to the weaker party’s special disability. Examples of active exploitation include Louth and Thorne. In these cases, the stronger party pursued the transaction and created the special disadvantage under which the weaker party laboured. But exploitation may also consist of the passive acceptance of a benefit in unconscionable circumstances. As the full court in Jedda Investments Pty Ltd v Krambousanos113 observed: [A conclusion of unconscionability] … does not require a finding of positive inducement by the action of the stronger party. It will be available where it must have occurred to the mind of a reasonable person that there was some real possibility that the other party’s entry into the transaction was due to an inability to make a judgment as to what was in that party’s best interests.

[page 158] 4.36 Examples of passive exploitation include Amadio and Lopwell. In these cases, the bank did not pursue the transaction or create the circumstances going to the weaker party’s disability. Instead, the bank accepted the guarantees while wilfully shutting its eyes to the weaker party’s special disability. 4.37 There may even be exploitation where the weaker party is a willing participant. The question is not whether the weaker party intended to enter into the transaction but how that intention was produced.114 As Barrett J observed in Smith v Smith115 ‘(t)he real point is that equity will … [not] allow advantage to be taken of a person labouring under a disability. These forces may be at work even though the person affected becomes a willing participant in a transaction which on its face shows no real sign of unfairness’. For example, in Bridgewater, Mr York wanted his nephew, who he thought of as a son, to have his large rural property. Mr York did not want the property to be broken up and did not think his wife or married daughters were fit to run the property. In spite of this the court found that it was unconscionable for the nephew to assert Mr York’s forgiveness of debt116 because the nephew was aware of Mr York’s emotional dependence on him. 4.38 (iv) Exploitation does not require immoral or dishonest motives As the case of Bridgewater aptly demonstrates, the absence of immoral or dishonest motives is not sufficient to preclude a finding of unconscionable conduct.117 A further illustration of this principle can be found in Johnson v Smith. In that case, Mrs Johnson drew cheques in favor of her son and her husband, before the latter’s death, for virtually all of her life savings (a total of $540,000). At the time that she drew the cheques, Mrs Johnson was elderly and suffered from ‘dementia– Alzheimers’.118 The son, Mr Johnson, claimed that the money was a gift to him with only a moral obligation to look after his mother.119 The court heard evidence that the family, concerned about the deterioration of Mrs Johnson’s mental condition, planned to

[page 159] transfer Mrs Johnson’s savings to an account under the family’s control before any competency hearing. The family wished to avoid being at the mercy of a guardian who would have control of Mrs Johnson’s funds. Allsop P observed: As to unconscionable dealing or conduct, it can be accepted that neither the appellant nor his father acted with any dishonesty. Nevertheless, it is the attempt to retain the benefit obtained from the special disadvantage of his mother that is the issue. In many cases (though not this one) this is accompanied by conduct that is capable of clear moral or ethical criticism — cheating, trickery, extortion or plain dishonesty. Nevertheless, what lies at the heart of the doctrine is that advantage is taken of the special disadvantage. This may occur because of the unconscientious use of power arising or existing in the circumstances or (as here) the unconscientious attempt to retain the benefit obtained from the person with the special disadvantage. If the transaction is not fair, just and reasonable, the onus being on the beneficiary of the transaction to show that, the transaction will be set aside.120

4.39 Conversely, in Ling v Wu the New South Wales Court of Appeal held that it was not unconscionable for Mr Ling to seek to enforce the terms of four separate loan agreements with Ms Wu who was, at the time, the victim of an elaborate fraud. Ms Wu had been intimately involved with Mr Ling (who was 30 years her senior) but after their relationship ended they eventually lost touch with each other. Both Mr Ling and Ms Wu were highly successful in business. Ms Wu set up a very successful aged care business, after becoming a registered nurse, and purchased a number of investment properties in Sydney. Ms Wu was ‘an experienced and astute businesswoman of considerable wealth’.121 In 2005, Ms Wu sought romantic companionship on the internet. In Ms Wu’s search for companionship she became acquainted with a man who claimed to be a United States citizen working in the Nigerian oil industry. This man persuaded Ms Wu to invest over $5 million in an oil trading company. Ms Wu trusted this man and it was some time before she came to realise that she had been the victim of an elaborate fraud. The money invested by Ms Wu included money borrowed from Mr Ling under five separate loan agreements. The first loan took place in February 2009. Ms Wu telephoned Mr Ling seeking

to borrow money. Ms Wu told Mr Ling that she was working with a partner in an oil deal which she expected [page 160] would make $16 million net. Mr Ling queried whether Ms Wu could trust her partner. Ms Wu replied: ‘He is my fiancé. We have been going out for the last 3 years. I know him well and I can trust him. He has very good connections in Nigeria.’122 Mr Ling eventually agreed to loan Ms Wu the sum of $350,000, secured by one of Ms Wu’s investment properties in Mortdale (Mortdale Property), at an interest rate of 9 per cent per annum. The parties agreed that the interest rate would increase to 11 per cent, and would be compounded, if the loan was not paid within 12 months. The loan agreement was drawn up by Mr Ling’s solicitor. The solicitor suggested to Ms Wu that she obtain independent legal advice but Ms Wu did not act on that suggestion. Ms Wu signed a written acknowledgment that, prior to signing the loan agreement, she had the opportunity to obtain independent financial and legal advice. In May 2010, Ms Wu sought a further loan of $50,000 from Mr Ling to invest in the oil deal. Ms Wu told Mr Ling that the ‘deal is done’ but she needed more money for a ‘very short time’ to pay ‘some duty’.123 Mr Ling agreed to loan Ms Wu the money at an interest rate of 5 per cent per month. The parties agreed that the loan would be secured by an investment property in Croydon owned by Ms Wu’s company (Croydon Property). The loan agreement, drawn up by a solicitor, recorded that the parties had been afforded, but chose to waive, the right to independent financial and legal advice. In August 2010 Ms Wu telephoned Mr Ling seeking a loan of $65,000 ‘very urgently’ to pay for ‘customs duty’.124 Ms Wu told Mr Ling that she would pay him back within one month. Mr Ling agreed to loan Ms Wu the money at an interest rate of 10 per cent per month. Ms Wu informed Mr Ling that she didn’t have time to see a solicitor to draw up the loan and security agreement. Instead, Ms Wu gave Mr Ling a document in which she had recorded the details of their agreement, signed in front of Mr Ling and her accountant, and the title deeds to the Croydon Property. Ms Wu

telephoned Mr Ling again the following month (September 2010) seeking another very urgent loan of $115,000 to cover ‘customs duty’.125 Mr Ling agreed to loan Ms Wu the money with an interest rate of 10 per cent per month. Again, Ms Wu detailed the terms of agreement in a written document which she then signed in front of Mr Ling and her accountant. A month later (October 2010), Ms Wu called Mr Ling again seeking a loan of $90,000 for the ‘customs people’.126 Mr Ling said to Ms Wu: ‘This sounds very strange. Do you know what you are doing? Are you being cheated?’ Ms Wu replied: [page 161] ‘I have done business with my fiancé before. I can completely trust him. If he tells me Customs need more money I believe him. I don’t understand why it happens like this and I don’t understand their problems. But I trust my fiancé. I have already invested millions of dollars in this deal. I can’t let it go now.’ Mr Ling agreed to loan Ms Wu the money, again at an interest rate of 10 per cent per month secured by the Mortdale Property and Croydon Property. Again, the agreement was recorded in an agreement signed by Ms Wu and witnessed by Ms Wu’s accountant. Ms Wu made only two repayments, totalling almost $34,000, before Mr Ling issued proceedings against Ms Wu for repayment of the loans with interest. 4.40 As Leeming JA helpfully, and relevantly, observed ‘one should not expect to find a bright line separating circumstances which place an impugned transaction inside or outside the reach of equitable principle’.127 Indeed, at first instance, the trial judge held that the doctrine of unconscionable conduct did apply and Ms Wu was entitled to equitable relief. Button J considered that, at the time Ms Wu sought the loans from Mr Ling, Ms Wu was in a position of special disadvantage, that being ‘her complete inability to see that she was in the process of being defrauded in a very damaging way’.128 Button J held that Mr Ling knew that this was occurring and took advantage of Ms Wu’s ‘debilitated position’ by charging exorbitant rates of

interest.129 But the Court of Appeal took a very different view. The court held that Ms Wu was not labouring under a special disability when she urged Mr Ling to loan her money. Bergin CJ noted that there was nothing in Ms Wu’s constitution that was wanting or that could be described as a disadvantage, much less a ‘special’ disadvantage. Instead, Ms Wu’s difficulty was a situation in which Ms Wu had, voluntarily, placed herself by choosing to engage in a risky overseas investment.130 And being duped by her chosen business partner did not constitute a special disadvantage.131 Even if being cheated by a fraudster did amount to a special disability, the court of appeal did not consider that Mr Ling’s conduct was exploitative for essentially four, overlapping, reasons. First, there was no active or passive acceptance of a benefit by Mr Ling. Instead, Mr Ling counselled Ms Wu against, and [page 162] Ms Wu begged Mr Ling to provide, the loans.132 Second, it was Ms Wu’s choice to obtain the loans from Mr Ling. As Leeming JA observed: Some weight must be given to her choice. Many entrepreneurs are prepared to take large risks to achieve large rewards. The fact that many such ventures will fail does not make lending to them unconscionable. Nor does the fact that the lender more correctly appreciated the riskiness of the venture than the borrower.133

Third, Ms Wu was a commercially sophisticated woman and had access to independent advice both legal and financial.134 Fourth, the interest rates in respect of the loans were high because the term was short and there had been no repayments. In these circumstances the high interest did not support a conclusion of unconscionable conduct.135 4.41 (v) Unconscionable conduct extends to both the receipt and the retention of a benefit In Amadio, Deane J held: Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so.136 [emphasis added]

4.42 As Allsop P observed in Aboody v Ryan,137 ‘[e]quity does not fix upon the instant of a transaction and ignore what later arises’. In that case, the transferees, the Aboodys, sought to retain a property even after they became aware that the transferor had not received independent and adequate legal advice prior to executing the transfer.138

REBUTTING THE PRESUMPTION 4.43 The stronger party may rebut the presumption or inference that advantage was taken of the weaker party’s special disability, in two ways. First, the stronger party may show that the bargain was fair, just and reasonable. This usually involves showing that the consideration for the transfer was fair or reasonable. But caution needs to be exercised here. Since the focus of the doctrine is on procedural [page 163] rather than substantive unconscionability, it does not automatically follow that a fair transaction will not be found to be unconscionable. See above at 4.30. 4.44 Second, the stronger party may be able to show that the adverse effects of the weaker party’s special disability were neutralised prior to that party’s entry into the transaction. Typically, the effects of a special disability are shown to have been neutralised through legal, or other, advice. As what amounts to adequate advice see further Chapter 2 at 3.78–3.81. But, in essence, the purpose of the advice is to enable the weaker party to make a judgment as to what is in his or her own best interests with respect to the transaction. In this regard, the function of advice in cases of unconscionable conduct is different from the function of advice in cases of undue influence.139 The function of advice in undue influence is to free the weaker party from the influence of the stronger party. For this reason, to successfully rebut a presumption of undue influence, it is imperative that such advice be entirely independent of the stronger party. Conversely, it has been suggested

that advice in unconscionable conduct may not need to be independent.140 4.45 But Allsop P in Aboody141 explained that the relevance of advice, in cases of unconscionable conduct, is in assessing the reasonableness of the stronger party’s conduct.142 Allsop P says that this advice can be viewed in two ways. First, the fact that advice was provided is counted in an assessment of the stronger party’s conduct and the adequacy or independence of that advice is of no real consequence.143 Second, if all the circumstances of a transaction are such that it remains prima facie unconscionable for the stronger party to accept or retain a benefit, then the adequacy and independence of the advice will be relevant in examining the reasonableness of the stronger party’s conduct.144 4.46 Aboody provides a useful illustration of Allsop P’s observation. In that case an elderly widower, Mr Ryan, transferred the home in which he resided (and his only asset) to one of his three children and her spouse (Mrs and Mr Aboody respectively). Mr Ryan and the Aboodys enjoyed a close relationship. The Aboodys regularly visited Mr Ryan. They assisted Mr Ryan by taking him to medical appointments and undertaking [page 164] domestic tasks that Mr Ryan could not do for himself. Mr Ryan later came to develop an irrational fear that if the Australian Labor Party won the 2007 federal election, he would lose both his pension and his home. Driven by this fear Mr Ryan transferred the title to his home to the Aboodys. The transfer was prepared by a solicitor engaged by the Aboodys. Prior to executing the transfer, the solicitor provided Mr Ryan with advice. After two years Mr Ryan demanded the return of the property but the Aboodys refused. The transaction was prima facie unconscionable. As Allsop P observed, it was for the Aboodys ‘to demonstrate that the transaction was fair, just and reasonable. Proof of independent and adequate legal advice was part of their onus’.145 But

the legal advice was neither independent nor adequate. Among other things, the legal advice was procured by Mrs Aboody and no mention was made of Mr Ryan’s fear of a federal Labor government and no inquiry was made of Mr Ryan’s financial position.

REMEDIES 4.47 The remedy for unconscionable conduct typically includes setting aside the transaction either in whole or in part and/or equitable damages. These remedies are outlined in Chapter 6. A broader range of remedies may be available under consumer protection legislation. The relevant legislation is outlined below at 4.58–4.75.

EXAMPLES OF UNCONSCIONABLE CONDUCT 4.48 Although each finding of unconscionable conduct turns on its own facts the following three cases may help to further illuminate the principles underlying the doctrine. 4.49 In Lopwell Pty Ltd v Clarke the New South Wales Court of Appeal upheld the trial judge’s finding that a financier, Lopwell, had engaged in unconscionable conduct in accepting a guarantee from the Clarkes. The Clarkes operated a dairy farm through a family company. For close to 20 years, Mr Unicomb had been the Clarkes’ accountant and had acquired a detailed knowledge of their financial affairs. When the Clarkes encountered problems with their cash flow they sought advice from Mr Unicomb. Mr Unicomb advised the Clarkes to make their property available as security rather than selling it. Mr Unicomb organised two transactions. The first transaction involved the Clarkes providing security over various properties for a loan of $700,000. [page 165] Unknown to the Clarkes, this money was deposited into Mr Unicomb’s

bank account after payment of various transaction fees and expenses. The Clarkes understood that in exchange for providing their properties as security for this loan they would receive $35,000 monthly for animal feed. The second transaction involved the Clarkes agreeing to mortgage properties for a loan by Lopwell to a businessman, Mr Freeman, in connection with a proposed purchase of a failed resort in South Australia. The loan agreement, signed by Lopwell, Mr Freeman and the Clarkes, provided that the loan amount was to be $1.47 million, the period of the loan was for three months and the rate of interest was 18 per cent per month. The Clarkes received nothing in exchange for their entry into the transaction. Freeman did not repay the loan. The Clarkes brought proceedings to set aside the guarantees and mortgages given by them and Lopwell cross-claimed for payment of the loan and interest. The trial judge found that although the Clarkes ‘must have possessed business skills of a particular sort’ by reason of their operation of a dairy farm ‘they were trusting to an unworldly extent’.146 The Court of Appeal upheld the trial judge’s finding that the Clarkes’ reliance on Mr Unicomb amounted to a special disability. The Court of Appeal considered that the Clarkes’ ‘(c)omplete dependence upon a trusted adviser for financial advice’ was just as much of a special disability as emotional dependence of the kind described in Louth and Bridgewater.147 The Court of Appeal also upheld the trial judge’s finding that the Clarkes’ special disability was sufficiently evident to Lopwell.148 The hastiness of the transaction and exorbitant interest rate would have put a reasonable person in Lopwell’s position on notice that the Clarkes were either unaware of the terms of the transaction or disabled from looking after their own interests.149 4.50 In Australian Competition and Consumer Commission v Zanok Technologies Pty Ltd150 Edmonds J found that Zanok had engaged in unconscionable conduct by requiring customers to pay a fee for information and technology training. Zanok, both directly and through an agent, published website advertisements offering employment opportunities for Information Technology graduates. Zanok knew that most of those who responded to the advertisement were migrants who required a year of skilled work experience in Australia before being

eligible to apply for permanent residency. During ‘interviews’ with prospective employees, Zanok told the applicant that a period of [page 166] training was required to prepare him or her for a guaranteed position with Zanok. The cost of the training, of up to $4,700, was at the applicant’s own expense. In fact, the training was disorganised and of no assistance or value to the applicants. Indeed, a period of the ‘training’ involved the applicant assisting Zanok to market its business. At the conclusion of the training, contrary to Zanok’s representations at the interview, no employment opportunities were available with Zanok. Edmonds J found that: Zanok was aware that, at the time of paying the training fee, the trainees were at a special disadvantage, namely, concerned to obtain permanent residency by obtaining one year of skilled work experience in Australia within a relatively short period of time. The trainees were not seeking training but paid employment which Zanok promised them in return for payment of the training fee.151

4.51 Edmonds J observed that it is not necessary, in finding unconscionable conduct, for the stronger party to have created the special disability which forms the basis of the unconscionability claim.152 Edmonds J considered that Zanok’s conduct ‘constituted more than simply taking advantage of a superior bargaining position but involved an unconscientious exploitation of another’s inability or diminished ability to conserve his or her own interests’.153 4.52 In Permanent Mortgages Pty Ltd v Vandenbergh154 Murphy J held that an elderly woman, Ms Vandenbergh, was labouring under a special disability when she executed, at the urging of her son, a mortgage over a unit in a seniors village in which she resided (Unit) in favour of Permanent Mortgages Pty Ltd (Permanent Mortgages). Ms Vandenbergh and her son were joint registered proprietors of the Unit. The son was registered on title simply because the bank, National Australia Bank (NAB), required the son to guarantee the loan which provided Ms Vandenbergh with the funds that, together with an

inheritance, allowed her to purchase the Unit (NAB Unit Loan). Some years later, Ms Vandenbergh was at risk of losing the Unit when, unknown to her, the son sank into debt. 4.53 The son separated from his wife and an acrimonious property dispute ensued. The son carried on a practice as a veterinary surgeon, based in a property he owned. The son also owned a farm with his wife which was their matrimonial home. Both properties were mortgaged to the NAB to secure the practice’s overdraft. The practice had incurred [page 167] substantial debts, all of which were personally guaranteed by the son. One of these debts was a large debt owed to a veterinary drug supplier. The drug supplier had obtained judgment against the son and had served a bankruptcy notice on him. By this time, the son was also in default of the NAB mortgage over the property from which he ran his practice. This caused the NAB to issue a default under the NAB Unit Loan. 4.54 To avoid bankruptcy, the son was advised to restructure his debts and settle his property dispute with his wife by taking out a further loan from Permanent Mortgages. This plan included paying off the existing mortgage over the Unit and using the Unit as security for the new loan from Permanent Mortgages. The plan was that the wife would raise $95,000, by either mortgaging the matrimonial home or selling it, and this money would be used to pay off the debt to the drug supplier. But the plan quickly became unstuck when the wife was unable to raise $95,000 and the drug supplier proceeded to bankrupt the son. Permanent Mortgages then sought to enforce the security. 4.55 The loan and mortgage had been entered into by Permanent Mortgages’ agent, La Trobe Homes Loans of Australia (La Trobe). The loan and mortgage documents were prepared and lodged with La Trobe by a mortgage broker, Finance Analysis Services of Australia Pty Ltd (FASA). Mr Curia was a representative of FASA and personally dealt

with Ms Vandenbergh and the son. As the mortgage broker, Murphy J held that FASA acted as the agent of La Trobe and, accordingly, Mr Curia’s knowledge could be imputed to La Trobe.155 Murphy J also held that Mr Curia knew, or willfully shut his eyes to the fact, that Ms Vandenbergh was under a special disability at the time she executed the mortgage documents.156 4.56 Murphy considered that Ms Vandenbergh was under a special disability by reason of five matters.157 First, Ms Vandenbergh did not have a proper understanding of the nature and effect of the mortgage. She simply thought that ‘mortgage’ was another word for a loan. She did not understand that she might be liable for the loan and did not consider that there was any risk to her in executing the mortgage.158 The son had misled Ms Vandenbergh, telling her that he required the loan to settle the property dispute with his wife. The son had concealed from his mother the fact that [page 168] he had debts, arising from his practice, which he was desperate to pay. Second, Ms Vandenbergh did not know that the son’s default under his mortgage with the NAB caused a default under the NAB Unit Loan. Third, Ms Vandenbergh had no capacity to repay the Permanent Mortgages loan. She was completely reliant on the son to service the loan and did not know that his capacity to do so was doubtful. Fourth, she had no independent advice prior to executing the mortgage. Fifth, Ms Vandenbergh ‘was particularly susceptible to the son’s duplicity’.159 She was an elderly widower with no close friends. As a consequence, her relationship with her son was ‘important to her and characterised by trust’.160 4.57 Permanent Mortgages knew that Ms Vandenbergh was under a special disability because it knew (either from its own paperwork or through Mr Curia) that: Ms Vandenbergh was elderly and single and resided in the Unit;

she had acquired the Unit using all but $46,000 of her own funds and the son had no equity at all in the Unit; the Unit was her only asset; she was taking on a 20-year loan which increased her debt from $42,000 to $192,000; she could not afford to service the loan; she had not received any independent advice; her son was using the loan money to pay his creditors and was desperate to meet those debts; there existed a familial relationship between mother and son; and she executed the mortgage at the behest of her son.

CONSUMER PROTECTION LEGISLATION 4.58 The equitable doctrine of unconscionable conduct has been incorporated into the Australian Consumer Law161 (ACL) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). Both the ACL and the ASIC Act contain mirror provisions (ss 20162 [page 169] and 12CA respectively) prohibiting unconscionable conduct. Section 20 of the ACL provides: A person must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of the unwritten law from time to time.

4.59 As outlined below the law is unsettled on whether ss 20 and 12CA extend, beyond the doctrine described in this chapter above, to include other equitable doctrines ‘under the rubric of unconscionable conduct’.163

4.60 The stated purpose of s 20 (and by analogy s 12CA) is threefold.164 First, s 20 gives litigants access to the panoply of remedies available under the ACL. Second, s 20 allows the regulator, the Australian Competition and Consumer Commission, to pursue representative proceedings. Third, s 20 has an ‘educative and deterrent effect’.165

Legislative boundaries 4.61 There are several legislative ‘boundaries’ to be navigated in any proposed proceeding under either s 20 or s 12CA.

ACL does not apply to financial products or services 4.62 Section 20 does not apply to transactions for financial products or services.166 A financial product is a facility through which the consumer makes a financial investment, manages financial risk or makes cash payments.167 A person provides a financial service if that person provides or deals in or makes a market for a financial product or otherwise engages in any of the activities described in s 12BAB of the ASIC Act.168 The regulation of financial goods and services is, with one exception, carved out of the ACL and dealt with under the ASIC Act. The one [page 170] exception to the carve-out is ‘linked credit contracts’.169 Linked credit contracts are contracts for the provision of credit to consumers in relation to the supply of goods and services, including by way of lease or hire-purchase.170

Requirement that person ‘engage in conduct’ 4.63 Sections 20 and 12CA only apply where a person has engaged, or is engaging in, conduct. The term ‘engaging in conduct’ is defined as being ‘a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or an

arrangement, the arriving at, or the giving effect to a provision of, an understanding or the engaging in of a concerted practice’.171

Requirement that conduct be ‘in trade or commerce’ 4.64 Sections 20 and 12CA only apply to conduct ‘in trade or commerce’. The term ‘trade or commerce’ is defined as being trade or commerce either within Australia or between Australia and places overseas.172 The definition of ‘trade or commerce’ in the ACL expressly extends to include any business or professional activity whether or not the activity is carried on for profit. 4.65 In Concrete Constructions (NSW) Pty Ltd v Nelson173 Mason CJ, Deane, Dawson and Gaudron JJ construed the term ‘in trade or commerce’ as ‘referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character’.174 Their Honours went on to observe that: So construed, to borrow and adapt words used by Dixon J in a different context in Bank of NSW v Commonwealth,175 the words ‘in trade or commerce’ refer to ‘the central conception’ of trade or commerce and not to the ‘immense field of activities’ in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.176

4.66 It follows that where parties engage in one-off transactions, that do not form part of their business, those transactions will fall outside the [page 171] scope of the legislation. See, for example, Smolonogov v O’Brien.177 In that case the court was required to determine whether false or misleading representations were made ‘in trade or commerce’ in advertisements for the sale of land. The court held that the representations were not made in trade or commerce because they were not made by the vendor in carrying on some business in the sale of property.

4.67 Further, the exercise of a statutory duty is not an activity in trade or commerce. See, for example, Markan v Bar Association of Queensland178 in which the court struck out Mr Markan’s claim of unconscionable conduct in respect of the Association’s handling of his complaint about two barristers.

Meaning of ‘unconscionable’ in ss 20 and 12CA179 4.68 The term ‘unconscionable’ is not defined in either the ACL or the ASIC Act. There is conflicting authority on whether ss 20 and 12CA should be construed narrowly, to include only the doctrine of unconscionable conduct outlined above in this chapter, or broadly, to embrace all doctrines which require a finding of unconscionability.180 4.69 In the Explanatory Memorandum accompanying the amending legislation that inserted s 51AA into the Trade Practices Act 1974 (Cth) (the predecessor to s 20 in the ACL) it was written that ‘(t)he provision embodies the equitable concept of unconscionable conduct as recognised by the High Court in Blomley v Ryan … and Commercial Bank of Australia v Amadio’.181 The Explanatory Memorandum further noted that: The phrase ‘the unwritten law, from time to time, of the States and Territories’ denotes the non-statutory law (ie the law which is not contained in statutes, instruments under statutes or prerogative instruments) as developed by the courts of common law and equity.182

[page 172] 4.70 In the second reading speech the responsible minister said that: Unconscionability is a well understood equitable doctrine, the meaning of which has been discussed by the High Court in recent times. It involves a party who suffers from some special disability or is placed in some special situation of disadvantage and an ‘unconscionable’ taking advantage of that disability or disadvantage by another.183

4.71 In Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd184 French J was required to determine, as a preliminary issue, the constitutional validity of s 51AA. In construing the section, French J favoured a broad approach noting that:

The concept of unconscionability is arguably to be found at two levels in the unwritten law. There is the generic level which informs the fundamental principle according to which equity acts. There is the specific level at which the usage of ‘unconscionability’ is limited to particular categories of case. The explanatory memorandum suggests that it is the latter sense that was intended — defined by reference to Blomley v Ryan and Commercial Bank of Australia v Amadio. The reference to these two cases, however, does not map out the full extent of the second ‘limited’ application of unconscionability. For even in that ‘limited’ sense it may be applied not only to the disposition of property and the assumption of contractual obligations but also to equitable estoppel and the harsh and oppressive exercise of right attracting relief from penalties and forfeitures.185

4.72 Subsequently, in GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd186 Gyles J argued for a narrow construction of s 12CA. Gyles J noted the explanatory memorandum, referred to above, and contended that: The argument to the contrary of my conclusion must involve the proposition that there is an overarching or general doctrine of unconscionability recognised by equity which encompasses all circumstances in which behaviour which can be described as unconscionable plays a part in the entitlement to relief. No authority has been cited to support that proposition …187

4.73 But the Full Federal Court in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd188 considered that a broad approach to s 51AA was to be preferred. The court observed that [page 173] the language of the section required the identification of conduct that was unconscionable within the meaning of the unwritten law from time to time.189 This law was not limited to Blomley and Amadio.190 The court noted that under the ‘rubric of unconscionable conduct’ equity will:191 (i)

Set aside a contract or disposition resulting from the knowing exploitation by one party of the special disadvantage of another. The special disadvantage may be constitutional, deriving from age, illness, poverty, inexperience or lack of education — Commercial Bank of Australia Ltd v Amadio.192 Or it may be situational, deriving from particular features of a relationship between actors in the transaction such as the emotional dependence of one on another193 — Louth v Diprose;194 Bridgewater v Leahy195 …

(ii) Set aside as against third parties a transaction entered into as a result of the defective

comprehension by a party to the transaction, the influence of another and the want of any independent explanation to the complaining party196 — Garcia v National Australia Bank Ltd197 … (iii) Prevent a party from exercising a legal right in a way that involves unconscionable departure from a representation relied on by another to his or her detriment — Waltons Stores (Interstate) Ltd v Maher;198 Commonwealth v Verwayen.199 (iv) Relieve against forfeiture and penalty — Legione v Hateley;200 Stern v McArthur.201 (v) Rescind contracts entered into under the influence of unilateral mistake …

4.74 The High Court, in Berbatis, noted the competing differences in approach to s 51AA but left the matter open.202 Subsequent cases have [page 174] tended to adopt the broad approach laid out in Samton.203 But the narrow approach still has it supporters.204 Notably Edelman J, in Hampton v BHP Billiton Minerals Pty Ltd (No 2)205 advocated for a narrow approach when still a Justice of the Federal Court. Edelman J argued: Apart from the second reading speech and explanatory memorandum there are further obstacles to the broad construction of s 51AA [or s 20]. The broad approach to s 51AA could incorporate any doctrine in which concerns of conscience featured explicitly in judicial reasoning. This would bring within the Trade Practices Act (and now the Australian Consumer Law) a vast amount of private law doctrine from both equity and common law. As Gummow J has explained, it has been observed that ‘most of the traditional doctrines of equity’ operate to ‘prevent a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct’.206 To that can be added all those doctrines of the common law and equity which form part of the law of unjust enrichment which are also said to be motivated by the same concerns of conscience.207

4.75 Now a Justice of the High Court, it remains to be seen if Edelman J’s view will hold sway if the issue were to come before the High Court.

1.

As to the boundaries between undue influence and duress and between undue influence and unconscionable conduct see Chapter 1, 1.108–1.119.

2.

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 (‘Amadio’) at 474 per Deane J; M Cope, Duress, Undue Influence and Unconscientious Bargains, The Law Book Company, Sydney, 1985, at [224]–[227]; F Burns, ‘The Equitable Doctrine of Unconscionable Dealing and the Elderly in Australia’ (2003) 29(2) Monash University Law Review 336 at 345–6. But there is some conflict over whether, in fact, the jurisdiction to protect heirs grew out of a general jurisdiction to protect vulnerable people: K L Fletcher, ‘Review of Unconscionable Transactions’ (1973) 8 University of Queensland Law Journal 45 at 48; Malcolm Cope, ‘The Review of Unconscionable Bargains in Equity’ (1983) 57 Australian Law Journal 279 at 279.

3.

Earl of Chesterfield v Janssen (1751) 28 ER 82 (‘Earl of Chesterfield’) at 101 per Lord Hardwicke.

4.

See, for example, Miller v Cook (1870) LR 10 Eq 641; Earl of Aylesford v Morris (1873) LR 8 Ch App 484; Fry v Lane (1888) 40 Ch D 312; Permanent Trustee Co of New South Wales Ltd v Bridgewater [1936] 3 All ER 501.

5.

Earl of Chesterfield, at 101.

6.

Blomley v Ryan (1956) 99 CLR 362 (‘Blomley’) at 392 per McTiernan J; Amadio, at 476–7 per Deane J; Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 (‘Berbatis’) at [68](2) per Kirby J; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 (‘Kakavas’) at [17].

7.

Earl of Chesterfield, at 100.

8.

Louth v Diprose (1992) 175 CLR 621 (‘Louth’) at 638 per Deane J. On Louth see further Lisa Sarmas, ‘Storytelling and the Law: A Case Study of Louth v Diprose’ (1994) 19(3) Melbourne University Law Review 701; and Lisa Sarmas, ‘A Response to Justice Peter Heerey’ (1998) 3(1) Newcastle Law Review 82.

9.

Hart v O’Connor [1985] 1 NZLR 159 (‘Hart’) at 171 per Lord Brightman; Kakavas, at [20].

10.

Kakavas, at [28] per plurality; Wu v Ling [2016] NSWCA 322 at [16] per Leeming JA.

11.

Kakavas, at [20].

12.

(2003) 217 CLR 315 (‘Cauchi’).

13.

Cauchi, at [26] and cited with approval in Kakavas, at [19].

14.

Amadio, at 474 per Deane J; Thorne, at [109] per Gordon J.

15.

Louth, at 638 per Deane J.

16.

Cauchi, at [23].

17.

Kakavas, at [161].

18.

Kakavas, at [118] and cited with approval in Thorne v Kennedy (2017) 350 ALR 1 (‘Thorne’) at [109] per Gordon J.

19.

Berbatis, at [98].

20.

Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582 at 585.

21.

For example, Micarone v Perpetual Trustees [1999] SASC 265 at [648] per Debelle and Wicks JJ: ‘[T]he concept is not one which is open-ended, to be applied according to the subjective whim of the Judge’; Permanent Mortgages Pty Ltd v Vandenbergh [2010]

WASC 10 at [228] per Murphy J: ‘[T]he courts are not armed with a general power to set aside transactions which in the eyes of the judges appear unfair, harsh or unconscionable.’ 22.

See further Chapter 1, 1.101–1.107.

23.

Lopwell Pty Ltd v Clarke [2009] NSWCA 165 (‘Lopwell’) at [39] per Macfarlan JA (Ipp and Campbell JJA agreeing). See also Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at [75] per Gummow, Hayne, Crennan and Kiefel JJ; Visnic v Sywak [2009] NSWCA 173 at [35] per Spigelman CJ.

24.

Wilton v Farnsworth (1948) 76 CLR 646 (‘Wilton’) at 655 per Rich J (Dixon and McTiernan JJ agreeing); Blomley, at 385 per McTiernan J, at 405 per Fullagar J, at 428 per Kitto J; Amadio, at 461 per Mason J, at 474 per Deane J; Louth v Diprose (1992) 175 CLR 621 at 637 per Deane J; Garcia v National Australia Bank Ltd (1998) 194 CLR 395 (‘Garcia’) at [26] per Gaudron, McHigh, Gummow and Hayne JJ; Bridgewater v Leahy (1998) 194 CLR 457 (‘Bridgewater’) at [75] per Gaudron, Gummow and Kirby JJ; Berbatis, at [68] per Kirby J; Kakavas, at [117]–[118] per Full Court; Thorne, at [38] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ, at [110] per Gordon J.

25.

Amadio, at 462 per Mason J.

26.

Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301 (‘Samton’) at [64] per Full Court; Berbatis, at [99] per Kirby J.

27.

As Fullagar J remarked in Blomley, at 406 and also Deane J in Amadio, at 474–5 and Louth, at 637.

28.

Blomley, at 405.

29.

As Fullagar J observed in Blomley, at 406 and also Gleeson CJ in Berbatis, at [8].

30.

Also Gleeson CJ in Berbatis, at [12]. The same observation was made by McTiernan J in Blomley, at 392, Deane J in Amadio, at 476–7 and Gleeson CJ and Callinan J in Bridgewater, at [39].

31.

Amadio, at 462. See also Hart, at 166 per Lord Brightman: ‘Equity will not relieve a party from a contract on the ground only that there is contractual imbalance not amounting to unconscionable dealing.’

32.

Berbatis, at [11]. Kirby J at [99] also observed ‘the mere presence of disadvantage is not sufficient to obtain relief’.

33.

[2002] FCA 62 (‘Samton’).

34.

Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA) ss 3 and 9.

35.

Samton, at [64].

36.

Samton, at [65].

37.

Samton, at [66].

38.

Berbatis, at [15] per Gleeson CJ, at [57] per Gummow and Hayne JJ, at [185] per Callinan J (Kirby J dissenting at [114]–[115]).

39.

Berbatis, at [15].

40.

Berbatis, at [17].

41.

[2005] NSWCA 73 (‘Turner’).

42.

Turner, at [68]–[75] per Giles JA (Bryson JA agreeing at [105] and Santow JA dissenting at [96]–[97]).

43.

Turner, at [72] per Giles JA.

44.

[2016] NSWCA 322 (‘Wu’) at [100] per Bergin CJ.

45.

Turner, at [75] per Giles JA.

46.

[2013] VSC 723.

47.

ibid, at [123].

48.

Australia and New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 at [289]– [290] per McLure J; Davey v Challenger Managed Investments Ltd [2003] NSWCA 172 at 23 per Handley JA (Hodgson JA and Grove J agreeing); Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10 at [233] and [242] per Murphy J.

49.

Bridgewater, at [116] per Gaudron, Gummow and Kirby JJ; Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10 at [234]–[243] per Murphy J.

50.

[2003] NSWCA 172.

51.

ibid, at 23 per Handley JA (Hodgson JA and Grove J agreeing).

52.

A distinction drawn by French J in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2000] FCA 1376 at [123]. The distinction was adopted in Samton at [48](i) per Full Court and affirmed (or at least not rejected) in Berbatis, at [9]–[10] per Gleeson CJ, at [87] per Gummow and Hayne JJ and at [95] per Kirby J. But note that Gleeson CJ in Berbatis, at [9] warns: ‘There is a risk that categories, adopted as a convenient method of exposition of an underlying principle, might be misunderstood, and come to supplant the principle. The stream of judicial exposition of principle cannot rise above the source.’

53.

Or to be precise no experience in the same field of business in which their son and his company operated: Amadio, at 464 per Mason J, at 470 and 476 per Deane J.

54.

Samton, at [48](i) per Full Court.

55.

Although Gleeson CJ in Berbatis said at [10] that he would not assign the facts in Bridgewater to such a category.

56.

A very large sum ($58,000) for a man of comparatively modest means.

57.

Louth, at 629–30 per Brennan J, at 638 per Deane J. See also Williams v Maalouf [2005] VSC 346 (a woman who had survived ovarian cancer and experienced significant emotional distress on the death of her mother paid $200,000 to the de facto partner of a work colleague for treatment of ovarian cancer).

58.

Bridgewater, at [120]–[122] per Gaudron, Gummow and Kirby JJ.

59.

Mackintosh v Johnson [2013] VSCA 10.

60.

ibid, at [83] per Buchanan and Whelan JJA and Hargrave AJA.

61.

Wu, at [103] per Bergin CJ (Leeming and Payne JJA agreeing).

62.

Kakavas, at [38] per plurality.

63.

[2018] FCA 36 (‘Guy’).

64.

Guy, at [504].

65.

Jenys v Public Curator (Qld) (1953) 90 CLR 113 at 118–19 per Dixon CJ, McTiernan and Kitto JJ. The orthodoxy of this approach was affirmed in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at [23] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ; Kakavas, at [123] per Full Court; Thorne, at [43] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ, at [86] per Gordon J.

66.

Kakavas, at [123]–[124] per Full Court.

67.

Kakavas, at [134]–[135] per Full Court.

68.

Kakavas, at [65], [73], [88] and [108] per Full Court.

69.

A summary of the case is in Chapter 1, 1.114–1.119.

70.

Thorne, at [47] and [64] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ, at [74]–[76] per Nettle J, at [116]–[118] per Gordon J.

71.

Kakavas, at [144] per Full Court citing Louth, at 639–40 per Dawson, Gaudron and McHugh JJ; Thorne, at [42] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. See also Wilton, at 654–5 per Rich J and Blomley, at 409.

72.

Wilton, at 654 per Rich J and quoted with approval in Louth, at 633 per Deane J and Thorne, at [42] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ.

73.

Louth, at 649–50 per Toohey J and quoted with approval in Thorne, at [42] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ.

74.

Louth, at 638.

75.

Thorne, at [38] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ.

76.

Louth, at 626 per Brennan J; Berbatis, at [9] and [14] per Gleeson J; Kakavas, at [161]; Thorne, at [38] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ.

77.

Other synonyms used in the authorities to describe the relevant conduct were identified by the plurality in Thorne (at [38]) to include ‘victimisation’ and ‘unconscientious conduct’.

78.

Thorne, at [38] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ.

79.

R Bigwood, ‘Kakavas v Crown Melbourne Ltd — Still Curbing Unconscionability: Kakavas in the High Court of Australia’ (2013) 37(2) Melbourne University Law Review 463 at 481.

80.

[2005] FCA 1133 at [19].

81.

See also Micarone v Perpetual Trustees [1999] SASC 265 at [585] per Debelle and Wicks JJ: ‘A party would not act unconscientiously if he did not know of the other’s disability’; Louth, at 637 per Deane J.

82.

Kakavas, at [158].

83.

Amadio, at 476 per Mason J, at 477 per Deane J; Nicols v Jessup [1986] 1 NZLR 226 at 235; Westwill Pty Ltd v Heath (1989) 52 SASR 461 at 475; Australia and New Zealand Banking Group Ltd v Barry [1992] 2 Qd R 12 at 23 per Derrington J; Akins v National Australia Bank (1994) 34 NSWLR 155 at 171 per Clarke JA.

84.

Amadio, at 467.

85.

Amadio, at 474.

86.

See, for example, Ashton v Melbourne Money Pty Ltd [1992] ANZ ConvR 95; Teachers Health Investments Pty Ltd v Wynne [1996] ASC 56-356; Micarone v Perpetual Trustees [1999] SASC 265.

87.

Kakavas, at [152].

88.

Kakavas, at [152]–[154], citing Manchester Trust v Furness [1895] 2 QB 539 at 545; Barnes v Addy (1874) LR 9 Ch App 244 at 251 and 255; Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana [1983] 2 AC 694 at 703–4; Oxley v Jones (1938) 38 SR (NSW) 362 at 375; Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 at [22]; Garcia, at [39].

89.

Kakavas, at [155]–[156].

90.

Owen v Homan (1853) 4 HLC 997 at 1035: ‘[W]illful ignorance is not to be distinguished in its equitable consequences from knowledge.’

91.

Kakavas, at [146].

92.

Kakavas, at [145].

93.

Radio Rentals had signed Mr Groth up to 15 rental, two loan and 19 service agreements and three rental agreements with Walker Stores (operating through Radio Rentals) all related to electrical goods. Mr Groth’s monthly rental liability under these agreements was in the range of 25 to 35 per cent of his monthy income: Radio Rentals, at [1] and [122].

94.

Radio Rentals, at [72]. See also Hart (purchaser unaware that vendor was of unsound mind); Melverton v Commonwealth Development Bank of Australia (1989) ASC 55-921 (no evidence that bank aware of Ms Melverton’s special disability when she executed mortgage to secure loan to son’s company); Webb v Australian Agricultural Machinery Pty Ltd (1990) 6 WAR 305 (insurer did not know that worker’s judgment was impaired by brain damage when settlement deed executed); Lisciandro v Official Trustee in Bankruptcy (1995) ATPR 41-436 (special disability of bankrupt not known to creditor).

95.

Thorne, at [65] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ, at [74] per Nettle J, at [120] per Gordon J. See also Louth, at 637 per Deane.

96.

Amadio, at 466–7 per Mason J.

97.

Garcia, at [30] per Gaudron, McHugh, Gummow and Hayne JJ. See also Geelong Building Society (in liq) v Thomas (1996) V ConvR 54-545 (in front of bank officer husband told wife that it was ‘all right’ to sign a guarantee in favour of himself and his father).

98.

Kakavas, at [161].

99.

Amadio, at 474.

100. Louth, at 637. 101. Turner, at [2]. See also Lopwell, at [48] per Macfarlan JA (Ipp and Campbell JJA agreeing); Australia and New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305 at [366] per McLure J; Lampropoulos v Kolnik [2010] WASC 193 at [389] per Simmonds J; Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10 at [221] per Murphy J; Aboody v Ryan [2012] NSWCA 395 at [65] per Allsop P (Bathurst CJ and Campbell JA agreeing).

102. Bigwood, above note 79, at 481. 103. Louth, at 632. 104. Kakavas, at [18]. 105. [2018] FCA 36. 106. ibid, at [481]–[484]. 107. Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) [2018] FCA 751 at [2133] per Beach J. 108. Blomley, at 405 per Fullagar J: ‘[I]nadequacy of consideration … may be important in either or both of two ways — firstly as supporting the inference that a position of disadvantage existed, secondly as tending to show that an unfair use was made on that occasion.’ See also Amadio, at 490 per Dawson J. 109. Amadio, at 475 per Deane J. 110. Amadio, at 475 per Deane J; Blomley, at 405 per Fullagar J, at 429 per Kitto J: ‘[T]he principle applied is not one which extends sympathetic benevolence to a victim of undeserved misfortune: it is one which denies to those who act unconscientiously the fruits of their wrongdoing.’ 111. Amadio, at 475 per Deane J. 112. Amadio, at 474 per Deane J; Bridgewater, at [122] per Gaudron, Gummow and Kirby JJ; Lopwell, at [25]. See also Hart, at 171 per Lord Brightman: ‘It is victimisation, which can consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances.’ 113. (1997) 72 FCR 138 at 148 per Burchett, Carr and Kiefel JJ. In this case the Krambousanos, Greek migrants who did not speak English fluently, provided a mortgage, and an ‘all money’ guarantee to secure a business loan to their son and his wife. 114. Huguenin v Baseley (1807) 33 ER 526 at 536 per Lord Eldon LC; Bridgewater, at [118] per Gaudron, Gummow and Kirby JJ. 115. [2004] NSWSC 663 at [59]. 116. The debt being the purchase price for the property under a contract of sale between Mr York and his nephew. 117. Johnson v Smith [2010] NSWCA 306 (‘Johnson’) at [5] per Allsop P, at [98]–[102] per Young JA; Aboody v Ryan [2012] NSWCA 395 at [65] per Allsop CJ; Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at [305] per Allsop CJ; Wu v Ling [2016] NSWCA 322 (‘Wu’) at [8] per Leeming JA. 118. Johnson, at [43]. 119. Johnson, at [30]. 120. Johnson, at [5] and see also Young JA at [101]: ‘There are situations where a person who has no active intention of doing another down may still be guilty of unconscientious conduct if he or she accepts “the benefit of an improvident bargain by an ignorant person acting without independent advice which cannot be shown to be fair”’ (citing Nicols v Jessup [1986] 1 NZLR 226 at 234 per McMullin J).

121. Wu, at [2]. 122. Wu, at [33]. 123. Wu, at [44]. 124. Wu, at [49]. 125. Wu, at [52]. 126. Wu, at [54]. 127. Wu, at [7]. 128. Ling v Pan Pac Investment Ltd [2015] NSWSC 850 at [101]. Button J also describes Ms Wu, at [96], as ‘making a serious error of judgment’ and ‘being defrauded and misguided’. 129. ibid. 130. Wu, at [97] and [101]. 131. Wu, at [100]. 132. Wu, at [15] per Leeming JA, at [105]–[106] per Bergin CJ. 133. Wu, at [16] and see also Bergin CJ at [107]–[108]: ‘She could still make a judgment (as unsound as it was) about whether she borrowed money at a particular rate of interest to continue to pay to the fraudster.’ 134. Wu, at [19] per Leeming JA, at [105] per Bergin CJ. 135. Wu, at [19] per Leeming JA, at [112]–[113] per Bergin CJ. 136. Amadio, at 474. 137. [2012] NSWCA 395 (‘Aboody’). 138. ibid, at [80] per Allsop P (Bathurst CJ and Campbell JA agreeing). An outline of the case is below at 4.46. 139. R Bigwood, Exploitative Contracts, Oxford University Press, Oxford, 2003, at 265–6. 140. ibid. 141. [2012] NSWCA 395. 142. ibid, at [66]–[67] (Bathurst CJ and Campbell JA agreeing). 143. ibid, at [66]. 144. ibid, at [67]. 145. ibid, at [68]. 146. Lopwell, at [24]. 147. Lopwell, at [47]. 148. Lopwell, at [56]. 149. Lopwell, at [60]. 150. [2009] FCA 1124 (‘Zanok’). 151. Zanok, at [15]. 152. Zanok, at [16].

153. Zanok, at [17]. 154. [2010] WASC 10 (‘Vandenbergh’). 155. Vandenbergh, at [329]–[331]. An examination of the principles and facts in respect of agency and knowledge is at [278]–[326]. 156. Vandenbergh, at [347]. 157. Vandenbergh, at [332]–[336]. 158. Vandenbergh, at [158]–[159]. 159. Vandenbergh, at [335]. 160. ibid. 161. Contained in Sch 2 to the Competition and Consumer Act 2010 (Cth) (CCA). 162. The predecessor to s 20 was s 51AA in the Trade Practices Act 1974 (Cth) (TPA). An outline of the legislative history of s 51AA and an examination of enforcement of the provision by the regulator can be found in Michelle Sharpe and Christine Parker, ‘A Bang or a Whimper? The Impact of ACCC Unconscionable Conduct Enforcement’ (2007) 15 Trade Practices Law Journal 139. 163. Australian Competition and Consumer Commission v Samton Holdings Pty Ltd [2002] FCA 62 at [48]. 164. See Trade Practices Amendment (Australian Consumer) Bill (No 2) 2010, Explanatory Memorandum, [4.17] and see Commonwealth of Australia, Parliamentary Debates, House of Representatives, 3 November 1992, 2408 introducing the amending legislation that inserted s 51AA into the Trade Practices Act 1974 (Cth), the predecessor to s 20. 165. Commonwealth of Australia, Parliamentary Debates, House of Representatives, 3 November 1992, 2408. 166. CCA s 131A. 167. ASIC Act s 12BAA. 168. These activities include: operate a registered scheme, provide a custodial or depository service, operate a financial market or clearing and settlement facility, provide a service (not being the operation of a derivative trade repository) that is otherwise supplied in relation to a financial product (other than an Australian carbon credit unit or an eligible international emissions unit) and conduct prescribed in any regulations made for the purpose of s 12BAB. 169. See ACL Pt 5-5. 170. ACL s 278(2). 171. CCA s 4(2)(a). A definition in the same terms is provided in ASIC Act s 12BA(2). 172. ACL s 2 and ASIC Act s 12BA(1). 173. (1990) 169 CLR 594. 174. ibid, at 604. 175. (1948) 76 CLR 1 at 381. 176. (1990) 169 CLR 594 at 603. 177. (1982) 44 ALR 347 per Ellicott J.

178. [2013] QSC 146 per Atkinson J. See also Johnstone v Victorian Lawyers RPA Ltd [2003] FCA 1052 per Sundberg J. 179. See Chapter 1 (1.101–1.107) for a general outline of the concept of unconscionability in contract law. 180. A construction of s 12CA will be governed by the same considerations as a construction of s 51AA or s 20: GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd (2001) 191 ALR 342 at [126] per Gyles J; Razdan v Westpac Banking Corporation [2014] NSWCA 126 at [150] per Bergin CJ (McColl and Macfarlan JJA agreeing). 181. Explanatory Memorandum, Trade Practices Legislation Amendment Bill 1992 (Cth), cat no 92 5320 8, para 41. 182. ibid, para 45. 183. Commonwealth, Parliamentary Debates, House of Representatives, 3 November 1991, 2408 (Mr Duffy). 184. [2000] FCA 2. 185. ibid, at [23]. 186. [2001] FCA 1761. 187. ibid, at [125]. 188. [2002] FCA 62. 189. ibid, at [49]. 190. ibid, at [5]. 191. ibid, at [48]. 192. (1983) 151 CLR 447. 193. See Chapters 3 and 4 respectively. 194. (1992) 175 CLR 621. 195. (1998) 194 CLR 457. 196. See Chapter 3. 197. (1988) 194 CLR 395. 198. (1988) 164 CLR 387. 199. (1990) 170 CLR 394. 200. (1983) 152 CLR 406. 201. (1988) 165 CLR 489. 202. At [42]–[46] per Gummow and Hayne JJ. Other cases noting the unsettled state of the law include Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2007] FCA 881 at [76]–[81] per Gilmour J; Body Bronze International Pty Ltd v Soleil Tanning Oxford Pty Ltd [2007] FCA 371 at [26] per Weinberg J; Hampton v BHP Billiton Minerals Pty Ltd (No 2) [2012] WASC 285 at [189] per Edelman J. 203. See, for example, Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd [2007] FCA 1319 at [61] per Besanko J; Optus Networks Ltd v Telstra Corporation Ltd (No 3) [2009] FCA 728 at [9] per Edmonds J; Rasch Nominees Pty Ltd v Bartholomaeus [2009]

SASC 87 at [35] per Bleby J; Highfield Property Investments Pty Ltd v Commercial & Residential Developments (SA) Pty Ltd [2012] SASC 165 at [341] per Blue J; McIntosh v Suncorp-Metway Ltd [2013] QSC 255 at [69] per Henry J; Ottoway Engineering Pty Ltd v Westpac Banking Corporation (No 3) [2017] FCA 1500 at [192] per Besanko J. 204. See, for example, Cauvin v Philip Morris Ltd [2002] NSWSC 736 at [26] per Windeyer J; Joelco Pty Ltd v Balanced Securities Ltd [2009] QSC 236 at [2] per de Jersey CJ; Razdan v Westpac Banking Corporation [2014] NSWCA 126 at [150] per Bergin CJ (McColl and Macfarlan JJA agreeing). 205. [2012] WASC 285 (‘Hampton’). 206. Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at [100] citing Muschinski v Dodds [1985] 160 CLR 583 at 619–20 per Deane J. 207. Hampton, at [190].

[page 175]

Chapter 5 Legislative Proscriptions on Unconscionable Conduct, Unjust Contracts and Unfair Terms 5.1 To redress the shortcomings of the common law and equity in protecting the vulnerable from exploitation, Commonwealth and state and territory parliaments have enacted legislation prohibiting or providing relief in respect of certain kinds of conduct. This legislation, outlined below, includes proscribing unconscionable conduct, unjust contracts and unfair terms.

STATUTORY UNCONSCIONABLE CONDUCT 5.2 Conduct that is in all the circumstances unconscionable is prohibited under the Australian Consumer Law (ACL),1 Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and in state and territory legislation regulating retail leases. These provisions are substantially alike and are outlined together below. 5.3 The National Credit Code (NCC)2 also empowers a court to review interest and other charges in certain kinds of credit contracts that the court is satisfied are unconscionable. This provision is quite different from those referred to in the preceding paragraph. This provision is considered separately below.

[page 176]

Legislative history of the prohibition on unconscionable conduct 5.4 Unconscionable conduct was first proscribed in the Trade Practices Act 1974 (Cth) (TPA) which preceded the ACL.3 The section, originally numbered s 52A, was inserted into the TPA in 1986 and prohibited unconscionable conduct in the supply, or possible supply of goods or services to consumers.4 The section did not define the term ‘unconscionable conduct’ but provided a list of factors to assist the court in determining whether conduct was unconscionable. The section was inserted on the recommendation of the Swanson Committee5 to give the TPA greater ability to deal with the general disparity of bargaining power between consumers and sellers.6 The section was renumbered s 51AB in 1992 when the TPA was amended again.7 At that time, s 51AA was also inserted into the TPA.8 Section 51AA (canvassed in Chapter 4) served to incorporate the equitable doctrine of unconscionable conduct into the TPA.9 In 1998, s 51AC was inserted into the TPA to prohibit unconscionable conduct in respect of transactions with small businesses and substantially followed the same form as s 51AB.10 Section 51AC was inserted on the recommendation of the Reid Report11 to give greater protection to small businesses. 5.5 The ACL, enacted in 2010, initially contained three provisions (ss 20, 21 and 22) that essentially duplicated the TPA provisions. The ACL was amended in 2011 to consolidate ss 21 and 22 (ss 51AB and 51AC under the TPA).12 Section 21 was amended to simply proscribe unconscionable conduct and s 22 was amended to enumerate the matters the court is [page 177] directed to consider in determining whether conduct is unconscionable.

Parliament amended to consolidate sections 21 and 22 to avoid the risk that different meanings would be ascribed to the different provisions.13 5.6 The ASIC Act was amended each time to mirror the TPA and, subsequently, the ACL provisions.

Prohibition on unconscionable conduct 5.7 The ACL and ASIC Act contain almost mirror provisions prohibiting conduct that is, in all the circumstances, unconscionable.14 The only material difference between the provisions being that the ACL provision is confined to conduct in respect of the supply or acquisition of goods and services (or finance for the supply or acquisition of goods15) while the ASIC Act provision is concerned only with conduct in connection with the supply or acquisition of financial services. The concept of unconscionability is the same in both the ACL and ASIC Act.16 5.8 Similar provisions can also be found in legislation in each state and territory in respect of retail leases with the exception of South Australia.17

Scope of prohibition Extends beyond the unwritten law 5.9 The proscription contained in the ACL and ASIC Act expressly provides that it is not limited to the unwritten law relating to [page 178] unconscionable conduct.18 The retail leases legislation does not contain a similar provision but a long line of authority in respect of cognate provisions has held that statutory unconscionability is broader than, and intended to build on, unconscionability within the meaning of the unwritten law.19

5.10 Although not limited to the unwritten law, the unwritten law will usually be of assistance in assessing whether conduct is unconscionable in breach of the legislation.20 Includes a system of conduct or a pattern of behaviour 5.11 In 2012 the ACL and ASIC Act were amended21 to expressly provide that the prohibition extended to ‘a system of conduct or a pattern of behaviour’ irrespective of whether or not a particular person is identified as being disadvantaged by the conduct.22 5.12 The provision reflects the observations made by the Full Federal Court in Australian Securities and Investments Commission v National Exchange Pty Ltd23 in respect of the predecessor to the current provisions in the ACL and ASIC Act.24 The Full Federal Court said that ‘(t)here is no foundation in the language or purpose [of the provisions] … to impose limitations from unwritten law, such as the need to identify a specific or [page 179] particular person’.25 In that case, National Exchange, a company controlled by the infamous David Tweed, made unsolicited offers to members of a recently demutualised company, Aveum Ltd, to purchase their company shares at a price substantially below the market price. The court found National Exchange’s conduct to be unconscionable. The court said: In a case where the discrepancy in price and value is great, as in the present case, and the conduct is systematically and directly focused on vulnerable but unnamed members, some of whom can be expected to accept the offers, such conduct can be reasonably described as being against good conscience. The targeted offerees in this case could reasonably be expected to include persons who are unacquainted with share values, inexperienced in trading their interests, lacking in commercial experience and some of whom act inadvertently and are elderly. The evidence shows that Tweed believed from his past experience that such persons are more likely to accept the offer.26 [emphasis added]

5.13

Following the Full Federal Court’s decision in National

Exchange, it is unarguably open to a court to find a system of unconscionable conduct in respect of conduct that pre-dates the amendment to the ACL and ASIC Act27 and in respect of the retail leases legislation which is drafted in similar terms. 5.14 Although the ACL and ASIC Act expressly provide that particular people do not need to be identified to establish a system of unconscionable conduct, Beach J, in Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2),28 considered that proof of similar conduct in respect of individual cases could be used to establish the features of a system of conduct or a pattern of behaviour.29 Beach J also considered that: … the evidence of unconscionable conduct may be quite varied and, in some cases, not even substantial, but still form part of an overall pattern or system of unconscionability. It may be established by a systemic pattern of behaviour involving an accumulation of minor incidents.30

5.15 Perram J, in Australian Competition and Consumer Commission v Unique International College,31 opined that the expression, ‘a system of [page 180] conduct or a pattern of behaviour’, could cover many situations including ‘those where an internal process is deliberately adopted … (and) also … those situations where a process emerges without necessarily ever having been expressly articulated’.32 5.16 Importantly, while the legislation expressly provides that a person need not be identified as having been disadvantaged by a system of conduct, such a claim cannot exist at a ‘hypothetical level’ at least in describing the class of consumers targeted by the conduct.33 That is, it must be possible to identify with some certainty and precision the people falling within the targeted group. 5.17

While there has been little analysis by the courts as to what

evidence is required to establish a system or pattern of conduct, within the meaning of the legislation, there have been a number of cases in which such a system has been found to exist.34 Three cases, in particular, provide a helpful illustration of systems of conduct: Unique International, Get Qualified and Australian Competition and Consumer Commission [page 181] v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd).35 5.18 In Unique International Perram J found that evidence from six different witnesses established that a provider of vocational training had engaged in a system of conduct to secure enrolments that was unconscionable.36 The provider had adopted a strategy of targeting disadvantaged people by holding sign-up meetings at locations that were remote and/or where the residents were from lower socioeconomic and Indigenous backgrounds. Potential students were lured to meetings and to sign up to courses by the promise of gifts of laptops and iPads. The provider also used incentives to motivate staff to sign up as many students as possible. Perram J concluded that all of the features of the strategy, save one, were the result of a considered decision by management, the exception being the targeting of disadvantaged people. Perram J was satisfied that disadvantaged people were targeted by the provider but was uncertain how this came about. Perram J finally concluded that all he simply needed to be satisfied of was that the conduct formed a pattern even if he was unable to determine precisely how that pattern came about.37 On being satisfied that there was a pattern of conduct, Perram J went on to determine that the pattern was unconscionable. 5.19 In Get Qualified Australia, Get Qualified Australia Pty Ltd (GQA) operated a business assisting and advising customers to obtain nationally recognised qualifications from registered training

organisations. Some nine witnesses gave evidence of their experiences with GQA. Drawing on this evidence Beach J determined that GQA engaged in a system of conduct that was unconscionable.38 This system included engaging telemarketers, who were ‘money hungry’, to falsely hold themselves out to consumers as ‘skills recognition specialists’. The telemarketers were provided with scripts to overcome objections raised by consumers and were directed to use a range of unfair tactics to entice consumers into agreements. The agreements also contained an unfair refund term and no cooling-off period. 5.20 In Advanced Medical Institute, Advanced Medical Institute (AMI) offered medications and medical services for the treatment of male sexual dysfunction. Consultations typically occurred by [page 182] telephone and were recorded. At trial the Australian Competition and Consumer Commission (ACCC) relied on evidence which included 145 recordings of telephone consultations, witness statements from a total of 24 patients and two affidavits from doctors employed by AMI. In a scathing judgment, North J found that the evidence demonstrated that AMI had designed a system of conducting business that included some general elements. These features included targeting vulnerable men who felt frustrated and ashamed about their sexual dysfunction. AMI trained its salespeople in high pressure sales techniques that exploited patients’ vulnerability. The fact that these salespeople were paid by commission was never disclosed to patients. Further, it was never disclosed to patients that the medications offered by AMI were not scientifically proven to be effective and that other medications were available which were shown to be effective and were typically used as front-line treatments. AMI’s medical doctors were required to recommend treatment programs of 12 to 18 months because this was more commercially advantageous to AMI. Consultations did not include diagnosing any underlying causes of the sexual dysfunction so that consultations could be kept brief and allow for even more patients to be treated. North J found these features or conduct to be unconscionable.

North J went on to note that the conduct occurred in most of the individual patient cases in evidence but not all. Even so, North J concluded that ‘all the conduct found to be unconscionable was sufficiently widespread to justify the relief sought’.39

Limits of the prohibition Limited to conduct 5.21 The prohibition is confined to conduct. As Santamaria JA observed in Director of Consumer Affairs Victoria v Scully,40 ‘the word “unconscionable” is an epithet, and, in the provision, it is predicated of “conduct”’.41 In Scully, Santamaria JA drew an important distinction between conduct and the consequences of conduct.42 Well-intentioned conduct may, inadvertently, have dire consequences for other people and malign conduct may, by sheer chance, have benign consequences. Santamaria JA noted: [page 183] The fact that the circumstances of a person or a group of persons, or the circumstances of some transaction they entered into, may reasonably be described as ‘unfair’ is the commencement of the enquiry, not its terminus.43

5.22 The terms ‘engage in conduct’ and ‘conduct’ have the same meaning as those terms defined in the CCA.44 The term ‘engage in conduct’ is defined in the CCA as the doing or refusing to do any act including the making or giving effect to a contract.45 The term ‘conduct’ is defined in the CCA as the doing or refusing to do any act including the making or giving effect to a contract.46 In respect of refusing to do an act the CCA describes such conduct as refraining (otherwise than inadvertently) from doing an act or otherwise making it known that the act will not be done.47 Limited to conduct in trade or commerce ‘in connection with’ the supply or acquisition of goods or services

5.23 The impugned conduct must be conduct in trade or commerce in connection with the supply or acquisition of goods or services.48 That is, the prohibition only concerns conduct between suppliers and consumers of goods and services and not third parties. This may be contrasted with the proscription of unconscionable conduct within the meaning of the unwritten law, outlined in Chapter 4, which prohibits unconscionable conduct in trade or commerce generally. 5.24 In Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia,49 Monroe Topple & Associates (MTA) failed in its claim under s 51AC of the TPA against the Institute because there was no supply of goods or services between MTA and the Institute. Members of the Institute were entitled to call themselves ‘Chartered Accountants’. Candidates seeking membership were required to have an appropriate university degree and pass examinations and assessments held by the Institute after payment of an enrolment fee. MTA was one of a number of businesses that supplied support training and course materials for a fee to candidates in respect of the Institute’s assessment. The Institute [page 184] subsequently developed its own program and course materials which it provided at no extra or separate cost from the enrolment fee. MTA argued that the Institute’s conduct was unconscionable in breach of s 51AC because the Institute used its monopoly over its membership, or the Chartered Accountant certification, to intercept transactions between candidates and providers of support services like MTA. MTA argued that the Institute’s conduct denied candidates freedom to choose their own training. The Full Federal Court held that s 51AC did not apply because MTA was a third party to transactions between the Institute and candidates. 5.25 The relationship between supplier and consumer need not be direct. The term ‘in connection with’ has been construed widely. In

Australian Competition and Consumer Commission v Woolworths (South Australia) Pty Ltd50 Mansfield J said (although in the context of s 87B of the TPA) that the term ‘in connection with’ was: … given a wide scope of operation … as requiring ‘a substantial relation, in a practical business sense’. The test does not necessarily require an immediate causal relationship.51

5.26 In Guy v Crown Melbourne Ltd (No 2)52 Aristocrat, a manufacturer and supplier of hardware and software for gaming machines, unsuccessfully argued that it was a third party in transactions between Crown and vulnerable players. Ms Guy argued that Aristocrat engaged in unconscionable conduct, in breach of s 21 of the ACL, in its manufacture and supply of the Dolphin Electronic Gaming Machine (EGM) to Crown for use by vulnerable players in Crown’s casino. Ms Guy argued that when Aristocrat supplied Crown with the Dolphin EGMs it knew that vulnerable players were a disadvantaged group of consumers and that the machine operated in a way that was misleading. Mortimer J, in dismissing Aristocrat’s argument that it was a stranger to the transactions between Crown and vulnerable players, pointed out that Aristocrat knew, and intended, its machines to be used by members of the gambling public. Mortimer J concluded that this was capable of constituting conduct ‘in connection with’ the supply of gambling services by Crown to members of the public.53 [page 185] 5.27 The meaning of the term ‘in trade or commerce’ is outlined in Chapter 4. Prior to 2012 the ACL and ASIC Act contained provisions proscribing unconscionable conduct in business transactions. These provisions additionally required the transaction to be ‘for the purpose of trade or commerce’. That is, the transaction itself must be to enable some further activity that has a trading or commercial character.54 For example, in Australian Securities and Investments Commission v National Exchange Pty Ltd,55 the Full Federal Court found that David Tweed, through his company National Exchange, had engaged in unconscionable conduct by sending unsolicited mail to vulnerable

shareholders offering to purchase their shares for a price well below market value. But the court held that the legislation did not apply because the transaction was not ‘for the purpose of trade or commerce’. The sale of the shares was simply the realisation of an asset by the shareholders. Does not extend to publicly listed companies 5.28 The prohibition, contained in the ACL and ASIC Act, does not extend to the supply of goods or services to publicly listed companies.56 Does not extend to the commencement of a dispute resolution process 5.29 The prohibition also does not extend to conduct which consists of nothing more than the commencement of legal proceedings or referral to arbitration of a dispute in respect of a supply or acquisition of good or services.57 5.30 Retail leases legislation (with the exception of the Australian Capital Territory) additionally provides that the prohibition does not extend to conduct that merely consists of a failure to renew a lease or issue a new lease.58 Legislation in Victoria and Western Australia also [page 186] provides that simply refusing to agree to an independent valuation of current market rent cannot amount to unconscionable conduct.59

Meaning of ‘unconscionable’ — the legislation 5.31 The term ‘unconscionable’ is not defined in the legislation. Instead, the legislation enumerates a number of relevant matters the court may or may not have regard to in determining whether conduct is unconscionable. Matters a court may have regard to

5.32 The matters a court may have regard to include: (a) the relative strengths of the bargaining positions of supplier and the customer;60 and (b) whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier;61 and (c) whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services or lease;62 and (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used by one party (or their agent) against another in respect of the transaction;63 and (e) the amount for which, and the circumstances under which, the [page 187] customer/tenant could have acquired identical or equivalent goods or services or lease from a person other than the supplier /landlord;64 and (f)

the extent to which conduct by the supplier/acquirer/landlord/tenant towards the other party to the transaction was consistent with their conduct in similar transactions with other parties;65 and

(g) the requirements of any applicable industry code66 or the Retail Leases Act;67 and (h) the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code;68 and (i)

the extent to which the supplier/acquirer/landlord/tenant unreasonably failed to disclose to the other party;69 (i)

any intended conduct that might affect the interests of the

other party; and (ii) any risks to the other party (foreseeable by the supplier/acquirer/landlord/tenant) arising from the intended conduct; and (j)

if there is a contract or a lease; (i)

the extent to which the supplier/acquirer/landlord/tenant was willing to negotiate the terms and conditions;70 and [page 188]

(ii) the terms and conditions of the contract; and (iii) the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and (iv) any conduct that the supplier or customer engaged in, in connection with their commercial relationship, after they entered into the contract; and (k) whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and (l)

the extent to which the supplier and the customer acted in good faith71 or honestly.72

5.33 In addition to the matters listed in the preceding paragraph, retail leases legislation in Victoria and Western Australia provides that the courts may have regard to the following matters: (a) the extent to which either the landlord or tenant was not reasonably willing to negotiate the rent under the lease;73 and (b) the extent to which either the landlord or tenant unreasonably used information about the turnover of the tenant’s or previous tenant’s business to negotiate the rent;74 and (c) the extent to which the landlord required the tenant to incur unreasonable fit-out costs;75 and

(d) the extent to which the tenant was willing to incur reasonable fitout costs.76 5.34 In determining whether conduct is unconscionable the court is not limited to a consideration of the circumstances surrounding the formation of the contract and may also have regard to: (a) the terms of the contract; and [page 189] (b) the manner in which, and the extent to which, the contract was performed.77 5.35 The court may also have regard to conduct engaged in or circumstances existing before the commencement of the provisions prohibiting unconscionable conduct.78 Matters to which a court may not have regard 5.36 The court must not have regard to circumstances that were not reasonably foreseeable at the time of the alleged conduct.79

Applicable legal principles in assessing impugned conduct 5.37 As Allsop CJ observed in Paciocco v Australia and New Zealand Banking Group Ltd, ‘a degree of morality lies within the word “unconscionable”’ and ‘“[u]nconscionability” is a value-laden concept’.80 Importantly, the relevant values are the values that parliament, in enacting the legislation, considered relevant.81 They are not the idiosyncratic values of the decision-maker. 5.38 Statutory unconscionability provides an evaluative normative standard against which conduct is compared.82 Conduct is unconscionable, in breach of the legislation, if it is inconsistent with public norms and values. It follows that an inquiry into whether conduct is unconscionable

[page 190] involves two separate, but overlapping, tasks.83 First, it requires some organisation of ‘the relevant values and norms by reference to which the word [‘unconscionable’] is to be ascertained’84 in the context of the circumstances.85 Second, it requires an evaluation of the facts by reference to the identified ‘normative standard of conscience’ in order to determine whether the impugned conduct falls short.86

Defining the evaluative statutory standard Meaning of ‘unconscionable’ to be determined first and foremost by statute 5.39 In determining the meaning of the term ‘unconscionable’ in the legislation the court must have regard, first and foremost, to the language of the statute.87 The courts have ‘stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text’.88 5.40 Santamaria J in Scully noted that although courts will typically use different words and phrases from that in the legislation to explain what it understands the legislation to mean, ‘it must not drift from that text; the statutory text must anchor the “task of construction”’.89 Basten JA, in Canon Australia Pty Ltd v Patton,90 also warned against substituting synonyms for statutory words. In that case he said: [T]o treat the word ‘unconscionable’ as having some larger meaning, derived from ordinary language, and then to seek to confine it by such concepts as high moral obloquy is to risk substituting for the statutory term language of no greater precision in an attempt to impose limits without which the court may wander from well-trodden paths without clear criteria or guidance. That approach should not be adopted unless the statute clearly so requires.91

[page 191] 5.41 Similarly, Allsop CJ, in Paciocco, cautioned:

[A]n understanding of the meaning conveyed by the word ‘unconscionable’ is not simply restated by substituting other words for those chosen by Parliament; danger easily lurks in the use of other words to capture the meaning of the statutory language. The task involved is not the choice of synonyms; rather, it is to identify and apply the values and norms that Parliament must be taken to have considered relevant to the assessment of unconscionability: being the values and norms from the text and structure of the Act, and from the context of the provision.92

5.42 In construing the legislation, the court should also have due regard to the remedial and beneficial objects of the legislation93 and the penal character of the provisions.94 Matters listed in the legislation 5.43 The legislation provides a list which enumerates various matters to be considered by the court.95 The list was intended by parliament to provide the courts with some guidance in understanding the meaning of unconscionable conduct and the proper application of the provisions.96 The court is required to consider all of the matters listed97 but the list does not provide an exhaustive inventory of exploitative conduct: ‘(t)hey are indicia of unconscionability’.98 It does not prevent the court having regard to other matters if they are relevant.99 And the presence or absence [page 192] of the matters enumerated is not determinative.100 Litigants do not get to ‘pick and choose’ from the list.101 Any one or more of the matters listed form part of ‘the totality of the circumstances’ to be taken into account.102 As the Full Federal Court, in Australian Competition and Consumer Commission v Oceana Commercial Pty Ltd,103 warned: [I]t distorts the proper application of s 51AC to search through the twelve criteria set out in subs (3), find one that seems to fit the case in hand, and then move to a conclusion of unconscionable conduct. … Parliament has expressly stipulated that the twelve criteria do not limit the matters to which the court may have regard …104

5.44 Oceana provides a vivid example of the inherent foolishness of

fastening a claim on to one or more of the matters enumerated in the legislation. The case concerned a ‘two-tier’ marketing scheme. The scheme was ‘two-tier’ because property on the Gold Coast was offered at two different prices depending on whether or not the prospective purchaser was local to the area. Purchasers from interstate were usually offered property at the higher price than local purchasers who were more likely to know the true value of the property. The banks, who provided finance for the purchase, did not tell purchasers that they were buying the property at an inflated price. Bank procedure required banks to obtain a valuation of the property before the loan could be approved but these valuations were not shared with the purchasers. The ACCC argued that the Commonwealth Bank of Australia had engaged in unconscionable conduct, in breach of s 51AC of the TPA, because it had unreasonably failed to disclose the risks of the purchase to the purchaser by failing to disclose the property valuation (disclosure of risk being one of the matters listed by parliament). The ACCC failed both at first instance105 and on appeal in its claim against the bank. 5.45 Some of the matters listed in the legislation warrant specific comment. This commentary is provided below. [page 193] Inequality of bargaining power 5.46 Included in the statutory list of matters the court is to have regard to, in determining whether conduct is unconscionable, is the relative strengths of the bargaining positions between the parties to a transaction for the supply or acquisition of goods or services.106 5.47 As Allsop CJ observed in Paciocco v Australia and New Zealand Banking Group Ltd: The inclusion … of inequality of bargaining power can be seen to be a recognition that in commerce there may arise circumstances of asymmetry of power; such asymmetries are sometimes ruthlessly exploited in a manner that may offend the commercial conscience …107

5.48 But the use of a superior bargaining position is not, in itself, necessarily unconscionable.108 As Keane J observed in Paciocco, ‘[t]he existence of a disparity of bargaining power … is an all pervading feature of a capitalist economy’109 and the legislation ‘does not proscribe the existence of a disparity of bargaining power as opposed to the manner of its exercise’.110 Good faith 5.49 Included in the statutory list of matters the court is to have regard to, in determining whether conduct is unconscionable, is the extent to which the supplier, or acquirer, of goods or services has acted in good faith.111 5.50 The meaning or content of ‘good faith’ in the legislation is the same as that defined in the common law.112 Good faith has been recognised in Australian contract law as attending the performance of some (but not all) contracts (or types of contract) and the construction of their terms.113 As Allsop CJ observed in Paciocco, good faith: … is an obligation to act honestly and with a fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain

[page 194] entered or the substance of the contractual benefit bargained for; and an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained.114

5.51 The obligation to act in good faith does not require the legitimate interests of a contracting party to be subordinated to the other party.115 The particular requirements of the obligation are determined by the nature of the particular contract. But the obligation does not import equitable notions of the fiduciary into the contract. Instead, the obligation is ‘rooted in honest and reasonable fair dealing’.116

Normative standard in statutory unconscionability 5.52 The matters listed in the legislation assist in setting out a framework of values and conceptions that inform the normative standard in statutory unconscionability. These values and conceptions have been identified117 as ‘fairness and equality’,118 ‘a lack of understanding or ignorance of a party’,119 ‘the risk and worth of the bargain’,120 and ‘good faith and fair dealing’.121 5.53 The normative standard in statutory unconscionability is also informed by the common law, equity and accepted community values.122 The Full Federal Court, in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd,123 observed that the ‘normative standard is permeated with accepted and acceptable community [page 195] values’124 and ‘it is conduct against conscience by reference to the norms of society that is in question’.125 Similarly, Allsop CJ, in the Full Federal Court Decision of Paciocco, noted that the legislation ‘can be taken to have been using the conception of “unconscionable” used in Australian legal discourse. It is Australian legal and public values that inform the meaning of words of an Australian statute’.126 5.54 Three cases offer a neat illustration of the court’s identification of a normative standard in assessing conduct: Lux, Paciocco and Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq)(formerly Advanced Medical Institute Pty Ltd) (AMI).127 5.55 In Lux, the Full Federal Court held that the provisions in the ACL and state legislation regulating door-to-door sales manifested the relevant norms against which Lux’s conduct was to be measured. The provisions required, among other things, that salespeople selling doorto-door were required to announce the purpose of their visit, to leave

when asked to do so and to not remain on the premises for a long period of time. The court held that the relevant values in the context of the impugned conduct were: … honesty and fairness in the dealing with consumers. The content of those values is not solely governed by the legislature, but the legislature may illuminate, elaborate and develop those norms and values by the act of legislating, and thus standard setting. The existence of State legislation directed to elements of fairness is a fact to be taken into account. It assists the Court in appreciating some aspects of the publicly recognised content of fairness, without in anyway constricting it. Values, norms and community expectations can develop and change over time. Customary morality develops ‘silently and unconsciously from one age to another’, shaping law and legal values … These laws of the States and the operative provisions of the ACL reinforce the recognised societal values and expectations that consumers will be dealt with honestly, fairly and without deception or unfair pressure. These considerations are central to the evaluation of the facts by reference to the operative norm of required conscionable conduct.128

5.56 The Full Federal Court in Lux concluded that the conduct of Lux’s representative was unconscionable because the representatives applied a [page 196] ‘deceptive ruse’ to gain entry into the homes of elderly consumers.129 This conduct fell short of the values of honesty and fairness embodied in the door-to-door provisions of the ACL and state legislation. 5.57 In the Full Federal Court decision of Paciocco, Allsop CJ identified certainty in the law as being an enduring and central public value that went ‘to the heart of the conception of the rule of law’.130 Allsop CJ also identified the values that informed the equitable notion of unconscionable to include ‘honesty, fraud, surprise, mistake and hardship’131 and ‘the protection of the vulnerable from exploitation by the strong’.132 Additionally, he drew on the common law concept of good faith, to identify the value of acting ‘honestly and with a fidelity to the bargain’133 and the concept of keeping promises fairly and freely made.134 5.58

Applying these norms, Allsop CJ did not consider that, in

Paciocco, the bank’s conduct, in charging late payment fees, was unconscionable. His Honour said: In all the circumstances, in particular, the lack of proven predation on the weak or poor, the lack of real vulnerability requiring protection, the lack of financial or personal compulsion or pressure to enter or maintain accounts, the clarity of disclosure, the lack of secrecy, trickery or dishonesty, and the ability of people to avoid the fees or terminate the accounts, I do not consider the conduct of ANZ to be unconscionable.

5.59 Allsop CJ’s decision, with which Besanko and Middleton JJ agreed, was upheld by the High Court.135 5.60 In AMI, North J drew on a code of conduct for medical doctors136 to provide a normative standard. North J found that the Code ‘provided a normative standard for professional medical practice accepted by the [page 197] community.’137 North J considered that the Code ‘required doctors to make the welfare of the patient their primary concern’.138 Against this standard, his Honour held that the Advanced Medical Institute had engaged in unconscionable conduct. The Institute carried on a business supplying medications and treatments for male sexual dysfunction. The Institute directed their consulting doctors to prescribe lengthy treatment programs and to refrain from recommending any other treatments (that the Institute did not offer for sale) or attempt to diagnose any existing underlying condition. 5.61 On appeal, the Full Federal Court upheld North J’s decision.139 More than unfair or unreasonable 5.62 As outlined above, conduct that is unconscionable is conduct that transgresses public norms and values. Such conduct is plainly unethical.140 It follows that conduct that is merely unreasonable or unfair will not be unconscionable conduct.141 Conduct that is

characterised by unreasonableness or unfairness may be a circumstance that, among others, leads to a conclusion that the conduct is unconscionable142 but it cannot be the sole basis for such a finding. Definitions and synonyms of ‘unconscionable’ 5.63 Various courts have attempted to define or identify synonyms to explicate the meaning of ‘unconscionable’ in the legislation. For completeness, it is convenient to outline those definitions and synonyms here. But this outline is provided with two important warnings. First, it is not possible to provide a comprehensive definition of unconscionable conduct.143 As Allsop CJ observed in Paciocco, the: … [normative] standard is based on a broad expression of values and norms. Thus, any agonised search for definition, for distilled epitomes or

[page 198] for shorthands of broad social norms and general principles will lead to disappointment, to a sense of futility, and the likelihood of error.144

5.64 Second, synonyms of ‘unconscionable’ cannot be used to substitute the words of the legislation.145 The task is to identify and apply the values and norms that parliament must be taken to have considered relevant to the assessment of unconscionability.146 5.65 One of the earliest cases in which the courts attempted to define the term ‘unconscionable’ is Qantas Airways Ltd v Cameron.147 In that case, the Full Federal Court adopted a dictionary definition of ‘unconscionable’ as ‘showing no regard for conscience; irreconcilable with what is right and reasonable’.148 This definition has been embraced in a number of subsequent decisions.149 To this definition, Lindgren J in Qantas Airways added that suggested synonyms of unconscionable (‘victimisation manipulation, exploitation, unfairness, unreasonableness, unscrupulous taking of advantage, and to one person’s taking advantage of another’s special vulnerability or

misadventure’)150 judgment’.151

all

correctly

imported

‘a

pejorative

moral

[page 199] 5.66 Subsequently, Spigelman CJ, in Attorney-General (NSW) v World Best Holdings Ltd, sought to distinguish unconscionable conduct from conduct that was merely unreasonable or unfair and described unconscionability as requiring ‘a high level of moral obloquy’.152 His Honour explained: If it were to be applied as if it were equivalent to what was ‘fair’ or ‘just’, it could transform commercial relationships in a manner which the Minister expressly stated was not the intention of the legislation. The principle of ‘unconscionability’ would not be a doctrine of occasional application, when the circumstances are highly unethical, it would be transformed into the first and easiest port of call when any dispute about a retail lease arises.153

5.67 The term ‘moral obloquy’ has been coined by many courts since.154 5.68 In Tonto Home Loans Australia Pty Ltd v Tavares155 Allsop P (as he then was) said of the requirement of a high level of moral obloquy: Whether that is too stringent and whether ‘significant’ or ‘real’ may be preferable need not be decided. What is required is some degree of moral tainting in the transaction of a kind that permits the opprobrium of unconscionability to characterise the conduct of the party.156 [emphasis added]

5.69 But later, in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd,157 the Full Federal Court held: [page 200] Notions of moral tainting have been said to be relevant, as often they no doubt are, as long as one recognises that it is conduct against conscience by reference to the norms of society that is in question.158

5.70 In Director of Consumer Affairs Victoria v Scully159 the Director argued, citing the decision in Lux, that moral obloquy was not required to find unconscionable conduct. The Victorian Court of Appeal, in dismissing the appeal, held, citing the decision of Allsop P in Tonto, that ‘a distinctive quality of unconscionable conduct as against unreasonable or unfair conduct is that it is unethical’.160 5.71 Allsop CJ, in Paciocco, emphasised that the task before the court was to identify and apply the norms that parliament thought relevant in assessing unconscionability but considered: That unconscionability contains an element of deviation from rectitude or right practice or of delinquency can be readily accepted, as long as the phrase ‘moral obloquy’ is not taken to import into unconscionability a necessary conception of dishonesty. The statutory language is ‘unconscionable’: that is, against conscience. A sense of moral obloquy or moral obliquity can be accommodated within the meaning or conception of unconscientious or unconscionable conduct.161

5.72 Some courts have since observed that the term ‘moral obloquy’ is ambiguous and unhelpful in determining the meaning of unconscionability.162 5.73 Leeming JA, in Ipstar Australia Pty Ltd v APS Satellite Pty Ltd, complained: ‘Moral’ is a notoriously imprecise adjective … When combined with ‘obloquy’, which is scarcely a word in common parlance, the imprecision is heightened. To insist on the presence of a ‘high level’ of such an imprecise quality does not, in my respectful opinion, assist in the task of giving legal meaning to unconscionable in s 22 of the Australian Consumer Law. But even if the epithet were less imprecise, there would be no warrant to

[page 201] construe s 22 as being subject to some kind of threshold requirement. Instead the statutory language falls to be applied in terms.163

5.74 It follows that there is no substitute for construing the words of the legislation to determine the meaning of ‘unconscionable’. This involves identifying the morals and values that parliament considered

relevant to inform the standard against which business conduct would be assessed, not synonyms.

Applying the evaluative statutory standard Equity informs the judicial technique used to evaluate the impugned conduct 5.75 Evaluating the impugned conduct does not, or should not, involve ‘personal intuitive assertion’.164 Certainty is central to any rational, coherent system of law.165 Allsop CJ, in Paciocco, observed that ‘(c)ertainty goes to the heart of the conception of the rule of law, not of men [or women]’. In the same case, Middleton J explained that people need certainty in order to arrange their commercial affairs in advance.166 5.76 Nor does the evaluation of impugned conduct involve ‘a process of deductive reasoning predicated upon the presence or absence of fixed elements or fixed rules’.167 Instead, the evaluation requires an assessment of the impugned conduct in all the circumstances against a statutory normative standard to determine whether it should be characterised as unconscionable. Allsop CJ, in Paciocco, held that the correct judicial technique in this evaluation is the characteristic technique or approach of equity. 5.77 Dixon CJ, McTiernan and Kitto JJ, in Jenyns v Public Curator (Qld),168 described the characteristic approach of equity, in contrast to that of the common law, as follows: [page 202] A court of law works its way to short issues, and confines its views to them. A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case.

5.78 Unsurprisingly, it is the approach that the court adopts when

assessing whether conduct amounts to unconscionable conduct in equity.169 5.79 The High Court, in affirming the Full Federal Court’s decision in Paciocco, did not disturb Allsop CJ’s statement as to the correct approach to evaluating conduct in respect of statutory unconscionability. Allsop CJ subsequently restated the approach in Commonwealth Bank of Australia v Kojic170 with the agreement of Besanko J171 and Edelman J.172 Leeming JA, in Ipstar Australia Pty Ltd v APS Satellite Pty Ltd,173 expressly adopted the characteristic approach of equity and observed: There is nothing to suggest that the statute in applying and expanding the equitable doctrine in any way curtailed the approach to be adopted in evaluating whether the party’s conduct contravened it.

5.80 The approach has also been adopted in several other decisions.174 Primary focus on stronger party (alleged wrongdoer) 5.81 The primary focus is on the stronger party or alleged wrong doer. As outlined above, the legislation is concerned with unconscionable conduct not consequence or outcome, although the approach described in Jenyns, which requires a close consideration of all the circumstances, will necessarily require some consideration of the impact of the impugned conduct on others. Unconscionable conduct requires conscious conduct 5.82 The impugned conduct must involve an act that is deliberate (in the sense of being intentional) or reckless (in the form of wilful [page 203] blindness).175 Negligence is not enough.176 Unconscionable conduct is not strict liability.177 But dishonesty or conscious wrongdoing need not be proven178 (although the presence of dishonesty or conscious

wrongdoing would certainly assist the court in finding that the impugned conduct is unconscionable). Consider, by way of analogy the equitable doctrine of unconscionable conduct. The equitable doctrine does not require proof of dishonesty or conscious wrongdoing. For example,179 in Commercial Bank of Australia Ltd v Amadio,180 Deane J did not consider that the bank manager, Mr Virgo (or any other bank employee), had acted dishonestly in his dealings with the Amadios.181 5.83 As with the equitable doctrine of unconscionable conduct, for conduct to be unconscionable, ‘and stigmatised as wrongful’,182 there must be knowledge of the facts and circumstances relevant to a finding of a breach of the legislation. Two cases illustrate this principle: Australian [page 204] Competition and Consumer Commission v Radio Rentals Ltd183 and Director of Consumer Affairs Victoria v Gibson.184 In Radio Rentals, Finn J found that a supplier of electrical goods had not engaged in unconscionable conduct in selling numerous goods on a payment plan to a mentally disabled man because the man’s disability would not have been obvious to the supplier’s employees. In Gibson, Mortimer J found that Ms Gibson did not engage in unconscionable conduct when, in promoting her smart phone application and book on whole foods, she claimed to have survived brain cancer through alternative remedies because the Director had failed to prove that Gibson knew that she had never been ill. 5.84 In respect of a corporation (a legal fiction that can only operate through natural persons) the ACL and ASIC Act provide for the attribution of the state of mind and acts of the company’s directors, employees or agents to the company.185 It is unclear whether, for a corporation to be found to have acted unconscionably, one or more of its officers would have to have engaged in unconscionable conduct. In PT Ltd v Spuds Surf Chatswood Pty Ltd186 the New South Wales

Court of Appeal held that a corporation can be found to have engaged in unconscionable conduct without a finding that one or more of the officers of that corporation have acted with deliberate impropriety.187 The Court of Appeal considered that the ‘ethical quality’ of a corporation’s behaviour had to be assessed by reference to the actions of the corporation. The honesty or good faith of the corporation’s officers is only one element, among many others, relevant to the court’s determination as to whether the corporation has engaged in unconscionable conduct.188 To illustrate this point Sackville AJA offered the following example. Officers of a corporate lessor inform tenants of the lessor’s plans to upgrade a shopping centre but inadvertently omit to tell one of the tenants that the proposed upgrade is subject to finance. That tenant undertakes substantial expenditure in the expectation that the upgraded centre will attract more customers. Finance subsequently becomes available but at a cost that the lessor’s head office considers to be unjustifiable. Head office overrules local management’s plans to upgrade the centre and refuses to compensate the tenant for the expenditure to which it has committed itself. Sackville AJA observed that no officer of the corporate lessor can be singled out [page 205] as having acted with impropriety but, when all the circumstances are taken into account, the corporation’s conduct ‘justifies the opprobrium of unconscionability’.189 5.85 Conversely in Commonwealth Bank of Australia v Kojic190 Edelman J considered that ‘(i)t is not easy to see how a corporation, which can only act through natural persons, can engage in unconscionable conduct when none of those natural persons acts unconscionably’.191 Edelman J’s view was expressed in the context of determining the issue of whether the knowledge of two bank employees could, or should, be aggregated and attributed to the bank. 5.86 In that case Mrs Kojic, an experienced property developer, agreed

to purchase a half interest in a property from Southern Construction Services Pty Ltd to be developed into 14 individual housing allotments. Mrs Kojic obtained a loan from the bank to fund her purchase of the half share. Prior to Mrs Kojic purchasing an interest in the property the company had obtained finance from the (same) bank to assist in funding the purchase and development of the property. This finance was secured against the whole property. The company’s relationship manager at the bank (Mr Barden) knew that the bank’s finance was secured against the whole property. Mrs Kojic’s relationship manager at the bank (Mr Coombe) knew that Mrs Kojic was buying a half share in the property but did not know that the property had been mortgaged to the bank. The bank did not have any process in place that required the two relationship managers to share information. Some time later the bank exercised its rights as mortgagee and sold the property. Mrs Kojic complained that, by virtue of the combined knowledge of the relationship managers, the bank should have warned her that the property had been mortgaged to the bank and that the bank’s failure to do so amounted to unconscionable conduct. The Full Federal Court did not agree. 5.87 Edelman J identified four obstacles to the aggregation of knowledge in respect of statutory unconscionability. First, he considered that there was a tension between the operation of legislative provisions in respect of attribution and the concept of aggregation.192 He thought that although the legislative provisions are generally broader than the common law rule of attribution they were narrower in one respect: a requirement that the conduct be carried out by the same person who has the relevant [page 206] state of mind.193 Both Allsop CJ194 and Besanko J195 disagreed with Edelman J and did not consider that the provisions were enacted with the intention of limiting the common law. Second, Edelman J thought that the aggregation of knowledge undermined the fundamental question of whether conduct was unconscionable. He thought it was

difficult to see how a corporation could be found to have acted unconscionably if none of its agents or officers had acted unconscionably. Here Edelman J drew upon fraud cases involving corporations in which it was observed, inter alia, that ‘you cannot add an innocent state of mind to an innocent state of mind and get as a result a dishonest state of mind’.196 Besanko J agreed with Edelman J and noted: … the aggregation of knowledge might be seen as similar to constructive knowledge which is not, ordinarily at least, successfully deployed where equitable fraud (of which unconscionable dealing is a species) is in issue in the context of commercial transactions.

5.88 Allsop CJ, however, considered that it may be appropriate to aggregate knowledge if there was a duty and an opportunity to communicate such information.197 Third, Edelman J thought that an aggregation of knowledge could allow for a finding of unconscionable conduct in circumstances that involved negligence rather than deliberate wrongdoing.198 Finally, he observed that the aggregation of knowledge puts corporations under pressure to adopt systems to detect wrongdoing that may be inconsistent with other legal norms such as, for example, keeping confidential information confidential.199 5.89 Ultimately, the question will be whether the corporation’s conduct can be said to be unconscionable.200

Examples of unconscionable conduct 5.90 As has been previously observed, little may be gained by a close factual analysis of cases in which unconscionable conduct was [page 207] established.201 Each case turns on its facts. But a study of such cases may assist to illustrate and illuminate the normative standard in statutory unconscionability and its application to particular conduct. The facts in three cases are outlined below.

5.91 The facts in Director of Consumer Affairs Victoria v Gibson202 have been widely publicised in the media.203 In this case Annabelle Natalie Gibson, otherwise known as ‘Belle’ Gibson, developed a smart phone application (app) known as ‘The Whole Pantry’ and authored a book under the same name published by Penguin. In promoting her app and book, Ms Gibson made a number of representations in respect of her health and donations to various charities by her business. Ms Gibson claimed that following a stroke at work, in 2009 at the age of 20, she had been diagnosed with malignant brain cancer and told that she had, at most, four months to live. Ms Gibson also claimed that, after having briefly received chemotherapy and radiation therapy, she had eschewed conventional treatments for her illness in favour of natural remedies. Ms Gibson said, or implied, that she would donate, or had donated, profits from the sales of her app and her business to various charities or families. One such family was the Schwarz family. Gibson had declared that all of the money received from all sales of her app over a week would be donated to the Schwarz family to fund cancer treatment for Joshua Schwarz. On her Instagram account, Ms Gibson declared: Josh [Schwarz] has a similar malignant, inoperable brain tumor to the one I have. From the greatest ache and pains in my heart, I feel this little boy’s journey and story. Like I said last night — for the week, we chose this family to donate 100% of app sales to, in hopes to find them a medicine, holistic or happy miracle. If you’ve already bought the app, you can go to the link on my profile and buy a ‘virtual ticket’ to our ‘world changing events’ — this ‘ticket’ (donation) gives you power to give back to those without support, inspiration, education or quality of life most of us are blessed with everyday.204

5.92 The Director of Consumer Affairs Victoria brought proceedings against Ms Gibson alleging that she had made false and misleading representations and had engaged in unconscionable conduct. Ms Gibson did not defend the proceeding or participate in it. In her absence, [page 208] Mortimer J found that Ms Gibson’s representations as to her health and charitable donations were false and misleading. In respect of her health

misrepresentations, Mortimer J considered that Ms Gibson had no reasonable basis to believe that she had cancer.205 Ms Gibson had been ‘diagnosed’ with inoperable brain cancer by an unqualified person using ‘electronic equipment’ in her own home.206 A subsequent MRI scan did not reveal the existence of any tumour.207 In respect of Ms Gibson’s charitable donations, Mortimer J found that she had made some small donations to a few charities (some paid shortly after an investigation into Ms Gibson’s conduct had begun) but others had received nothing. But Ms Gibson did have the capacity to make the donations because the business made a profit of $250,031 in the financial year ending June 2014.208 5.93 The Director was not as successful in his unconscionable conduct claim against Ms Gibson. Mortimer J did not consider that Ms Gibson’s conduct, in making false representations about her health, was unconscionable.209 His Honour did not find that the evidence established that Ms Gibson had ‘no genuine belief’ that she did not have cancer.210 Although there was no reasonable or rational basis for Ms Gibson’s health claims, Mortimer J observed ‘(n)ot all human beings are rational and reasonable all of the time’.211 Importantly, he noted that ‘at least in some respects, it might be open to find that Ms Gibson suffered from a series of delusions about her health condition’212 or ‘(s)he may have had other psychological or psychiatric issues. Those possibilities are reasonably open on the evidence’.213 5.94 Conversely, Mortimer J held that Ms Gibson’s conduct in making false representations about her charitable donations was unconscionable.214 Unlike Ms Gibson’s health claims, Mortimer J did not consider that there was any exculpatory explanation for Ms Gibson’s failure to make the charitable donations that she had claimed that she [page 209] would make or had made.215 Instead, his Honour inferred that Ms

Gibson ‘well knew the drawing power’ of her representations.216 He concluded: [Ms Gibson] had the capacity to follow through on the representations she had made on social media, which representations were made to serve her own commercial interests and those of her company, as well as marketing an image of herself in the media which she clearly took advantage of. In order to secure those advantages for herself and her company (financial, business, promotional) she played on the empathy and generosity of the Australian community towards causes that were deserving. Her ‘pitch’ overwhelmingly used groups likely to evoke sympathy because of their vulnerabilities … The use of Joshua Schwarz, a seriously ill child, in this way was particularly unconscionable.217

5.95 In Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd218 a syndicate of investors purchased property in Box Hill through a trustee company, Twentieth Green Unit Trust (Twentieth Green), for the purpose of building and selling apartments (Project). Colin R Price Pty Ltd (CRP) was the builder engaged by the Twentieth Green to complete the Project pursuant to a written agreement made in November 2006. CRP was controlled by its director, Mr Colin Price. Mr Price was also one of two directors of Grovan Pty Ltd (Grovan). The other director of Grovan was Mr Price’s wife. Grovan was one of a number of investors in the project and was a 10 per cent unit holder in the Trust. 5.96 In early September 2008 Mr Price told Twentieth Green that the costs of the Project were much higher than had been allowed for and that CRP had run out of money to complete the Project and was unable to obtain any more credit. Mr Price also told Twentieth Green that he was under significant financial distress. CRP was unable to pay various tradespeople who had provided goods and services in relation to the Project and Mr Price was receiving angry phone calls demanding payment. Mr Price revealed to Twentieth Green that it seemed likely he would have to sell properties that he owned with his wife to repay bank loans. He also revealed that the financial situation had strained his relationship with his wife and that he was depressed. In any event, Mr Price’s erratic behaviour made it apparent to Twentieth Green members that Mr Price was under significant stress.219 [page 210]

5.97 In September 2008, Mr Price had a meeting with Mr Power and Mr Reynolds who were associated with two corporate members of Twentieth Green to discuss the Project. Mr Reynolds typed up a document immediately after the meeting. Briefly, that document, the ‘First Payment Authority’, provided that Resort Company Systems Pty Ltd (a company associated with several members of Twentieth Green) would advance $150,000 to CRP and that Mr and Mrs Price, on behalf of Grovan, had agreed to repay the loan with interest at 10 per cent per annum calculated daily. Repayment of the loan would be made from Grovan’s share of the proceeds of the Project. Mr Price signed the First Payment Authority but Mrs Price did not in spite of the fact that a place was provided for her signature. 5.98 Two weeks later, Mr Price asked Mr Power for a letter that Mr Price could give to his bank to assure the bank that Grovan would soon receive its share of the proceeds of the Project. On that day Mr Power provided Mr Price with a letter which stated that Grovan’s share of the Project, due in October 2008, would be $170,000. At the time Mr Power wrote the letter he knew that, by virtue of the First Payment Authority, Grovan would receive nothing. 5.99 In December 2008, Mr Power met with Mr Price again. Immediately after that meeting Mr Price typed up a second document for Mr Price to sign. The second document, the ‘Second Payment Authority’, provided that in consideration of advances made to CRP, Mr Price had agreed that interest would be calculated at a daily rate of 18 per cent, from the date of the Second Payment Authority, and repayment of the principal and interest would be made from Grovan’s share of the proceeds of the Project. Mr Price signed the Second Payment Authority but no place had been provided for Mrs Price’s signature. 5.100 The Full Federal Court upheld the trial judge’s decision that the members of Twentieth Green had engaged in unconscionable conduct. The court agreed with the primary judge’s findings that: Mr Price was in a much weaker bargaining position than Twentieth Green, Twentieth Green imposed conditions on Grovan that were not reasonably necessary for the

protection of Twentieth Green’s legitimate interests and Mr Price was not in a position to properly consider Grovan’s best interests. Twentieth Green had not given Mr Price an opportunity to go away and consider his position on the First Payment Authority, discuss it with Mrs Price or obtain advice and this involved undue pressure and an unfair tactic.220

[page 211] 5.101 The Full Federal Court added that Mr Power’s letter reflected poorly on Mr Power’s ‘business conscience and ethics (and through him on Twentieth Green)’.221 5.102 The facts in Ipstar Australia Pty Ltd v APS Satellite Pty Ltd222 concerned the wholesale supply of satellite broadband services and proprietary user terminals (UTs) by Ipstar Australia Pty Ltd (Ipstar) to APS Satellite (known at the time as SkyMesh Pty Ltd)(SkyMesh). Ipstar supplied bandwidth using a satellite in geostationary orbit. To connect to the satellite the user needed to install a UT. Ipstar did not manufacture UTs but imported them into Australia for sale. Pursuant to an agreement struck in 2007, SkyMesh bought bandwidth and UTs from Ipstar which it then on-sold to the end user. 5.103 User terminals consist of an outdoor unit (ODU) connected by two coaxial cables to an indoor unit (IDU). In the period 2009 to 2011, Ipstar supplied UTs to SkyMesh that contained two significant defects. The first defect, known as ‘the water ingress problem’, was caused by a failure to adequately seal the ODU against rain.223 The second defect, known as the ‘firmware problem’, was caused by issues with the UT firmware (embedded software that enables the UT to function and communicate to the network and other devices).224 Both the water ingress problem and the firmware problem resulted in the UT being unable to access the Ipstar satellite system.225 5.104 Ipstar was made aware of the water ingress problem and the firmware problem and had notionally accepted responsibility for them.226 But it refused to make payment in respect of any warranty claims submitted by SkyMesh (even if Ipstar considered those claims to

be valid). Ipstar rejected SkyMesh’s warranty claims on the stated basis that SkyMesh had failed to provide sufficient and correct information in respect of those claims.227 At the same time Ipstar and SkyMesh had begun to negotiate the price for bandwidth for the next 12-month term of their agreement. Ipstar made a final offer to SkyMesh which amounted to a 15 per cent increase in price. Ipstar calculated the price increase on its estimate of what it would cost Ipstar to meet the statutory warranties. [page 212] Ipstar did not reveal the basis of its price increase to SkyMesh and did not impose a similar price increase on its other customers. SkyMesh complained to Ipstar that its offer was not ‘commercially viable for SkyMesh’228 but SkyMesh, having no other practical alternative, agreed. SkyMesh was dependent on Ipstar to provide bandwidth. To switch to another bandwidth supplier would have required SkyMesh to replace tens of thousands of Ipstar UTs, with the total cost likely to run into millions. 5.105 The court did not consider that the fact that the TPA and ACL each prohibited parties from contracting out of the liability for statutory warranties led to a conclusion that Ipstar’s conduct in seeking to cover the cost of that liability was unconscionable.229 Bathurst CJ considered that a ‘corporation has a legitimate interest in taking steps to protect itself against any future or accrued liability’ (even if SkyMesh was not in a position to resist).230 But the court ultimately found that Ipstar’s conduct was, in all the circumstances, unconscionable. Bathurst CJ said: [T]o consider the price increase and its purpose in isolation is not to take into account the whole of the circumstances, which essentially involved imposing a price increase based on an estimated accrued liability whilst taking steps to avoid payment of that liability, including claims which had already been determined as valid. This was done in circumstances where the cross-examination of Mr Cross [of Ipstar] revealed he attempted to hide the reason for the increase, which was unsurprising, considering that all claims made … [by SkyMesh] had been rejected. In these circumstances, the conduct of Ipstar in requiring the price increase … was, in my view, unconscionable. It fell well below the standards of conduct expected of commercial enterprises and was not reasonable having

regard to the interests of both parties. Ipstar, in these circumstances could not be said to have acted in good faith, one of the matters s 22(2) [of the ACL] states the Court may take into account.231

Unconscionable interest and other charges — National Credit Code (NCC) 5.106 The NCC232 commenced on 1 July 2011 and replaced the Uniform Consumer Credit Code (UCCC).233 Contracts formed before [page 213] the commencement of the NCC, but otherwise falling within the scope of UCCC, are nonetheless regulated by the new code.234 5.107 The NCC, under s 78, empowers to the court to review ‘unconscionable’ interest and other charges payable under certain kinds of credit contracts. 5.108 It is important to note that an application for relief under s 78 must be brought within two years after the charge takes effect, or is charged or the credit contract is rescinded/discharged.235 Credit contracts regulated by the NCC 5.109 The term ‘credit’ is defined in the NCC to describe either: (a) the deferred payment of a debt by one person (the debtor) to another (the credit provider); or (b) where one person (the debtor) has incurred a deferred debt to another (the credit provider).236 5.110 The ‘amount of credit’, as referred to in the NCC, is only the amount actually deferred. It does not include any interest or charges.237 5.111 A ‘credit contract’ is a term used in the NCC to refer to a

contract under which credit is, or may be, provided.238 The NCC only regulates certain kinds of credit contracts. 5.112 The NCC only applies to credit contracts (or proposed credit contracts) where:239 (a) the debtor is natural person or an strata corporation (otherwise known as a body corporate or owners corporation); and (b) the credit is provided, or intended to be provided, wholly or predominately:240 (i)

for personal, domestic or household purposes;241 or [page 214]

(ii) to purchase renovate or improve residential property for investment purposes; or (iii) to refinance credit that has been provided wholly or predominately to purchase, renovate or improve residential property for investment purposes; and (c) a charge is or may be made for providing the credit; and (d) the credit provider provides the credit in the course of a business in providing credit in the jurisdiction.242 5.113 The NCC extends to cover a mortgage243 or a guarantee244 used to secure a credit contract. The NCC also extends to ‘rent to buy’ goods leases if the amount payable under the lease exceeds the cash price of the good.245 The NCC may extend, in certain circumstances, to the purchase of land246 and goods247 where payment of the purchase price is made by instalments. 5.114 The NCC expressly provides that it does not apply to credit contracts for the provision of certain types of credit such as: short-term credit, credit without express prior agreement, credit for which only an account charge is payable, joint credit and debit facilities, bill facilities,

insurance premiums by instalments, pawnbroker loan, credit by trustees of an estate, employee loans, margin loans and any credit excluded under the regulations to the NCC.248 5.115 Importantly, the NCC provides a rebuttable presumption that the NCC does apply249 unless the debtor makes a declaration to the contrary (in the prescribed form250) before entering into the credit contract.251 But any declaration will be ineffective if the credit provider knew, or ought [page 215] to have known, that the credit was being applied for a purpose covered by the NCC.252 5.116 It is not yet settled whether the purpose to which the credit is being applied is to be considered subjectively or objectively or a combination of the two.253 5.117 There is some authority in support of an objective test: that the purpose is to be determined by what a reasonable person, standing in the shoes of the credit provider, understood the purpose to be.254 In support of the objective test it has been argued that the NCC refers to the purpose for which the credit was provided and not obtained.255 It has also been argued that a subjective test would create a ‘legal fiction’ allowing a borrower to claim protection under the NCC simply by proving what he or she subjectively sought to do with the credit.256 5.118 Conversely there is authority257 in support of an approach directed at discerning the ‘true purpose’258 for which credit is provided through a consideration of ‘the substance of the transaction in the context of its performance’.259 It has been argued that this approach more readily reflects the natural meaning of the NCC and avoids the possibility of a credit provider evading the operation of the NCC through carefully cultivated ignorance as to the debtor’s purpose.260 It

has also been observed that such an approach is not unfair to the credit provider because the NCC provides for a debtor’s declaration that the NCC does not apply.261 [page 216] 5.119 Although not settled, the preponderance of authority appears to support the second approach. This arguably includes an authority from the Queensland Court of Appeal in Shakespeare Haney Securities Ltd v Crawford in which Muir JA appeared to favour the second approach.262

Unconscionable interest and other charges 5.120 Section 78 of the NCC entitles the court to review a change in interest rate charges or certain other charges payable under a credit contract if the court is satisfied that they are unconscionable. In addition to interest rate charges,263 the court may review an establishment fee,264 an early termination fee265 and a fee for prepayment of an amount under the credit contract.266 5.121 The NCC provides that an interest rate change unconscionable ‘if and only if’ it appears to the court that either:

is

(a) the amount or the manner of the change is unreasonable having regard to advertised interest rates, representations made previously by the credit provider, the period of time since the formation of the credit contract and any other consideration the court thinks relevant; or (b) the change unjustifiably discriminates against the debtor when compared to other debtors under similar credit contracts.267 5.122 The NCC provides that in determining whether the an establishment fee charged by the credit provider is unconscionable the court is to have regard to whether the amount of the fee is equal to the credit provider’s reasonable costs in processing the application for credit

and the initial administrative cost in providing credit.268 In respect of early termination and prepayment fees, the NCC provides that these fees are only unconscionable ‘if and only if’ it appears to a court that the amount of fee exceeds a reasonable estimate of the credit provider’s loss arising from the early termination or prepayment.269 [page 217] 5.123 If found to be unconscionable, the court may annul or reduce the amount of the charge or fee and may make ancillary or consequential orders.270 5.124 An example of an unconscionable establishment fee can be found in Knowles v Victorian Mortgage Investments Ltd.271 In that case the credit provider sought payment of an establishment fee in the amount of $23,100 in respect of an application for a loan of $1.05 million. The money was never advanced to Ms Knowles but the provider still sought payment of the fee together with legal costs totaling $8,646.48. The credit provider provided little or no evidence at trial of its reasonable costs in processing Ms Knowles loan application, leaving Croft J to conclude that the fee was unconscionable.272 Croft J also found that the contract was unjust within the meaning of s 76 of the NCC.273 This provision is outlined below.

UNJUST CONTRACTS 5.125 The Contracts Review Act 1980 (NSW) (CRA)274 and the NCC275 both allow the court to reopen transactions found to be unfair. The kinds of orders that the court is empowered to make on reopening unjust transactions276 is canvassed in Chapter 6. 5.126 McHugh JA in West v AGC (Advances) Ltd277 (West) heralded the CRA as being: … revolutionary legislation whose evident purpose is to overcome the common law’s failure to provide a comprehensive doctrinal framework to deal with ‘unjust’ contracts.

Very likely its provisions signal the end of much of classical contract theory in New South Wales.278

5.127 In many respects the CRA, and the NCC provision referred to above, are substantially similar to the legislative proscription against [page 218] unconscionable conduct. Each requires the application of an evaluative normative standard. 5.128 It is important to note that a two-year time limit applies within which an application for relief must be brought.279

Scope of the legislation Types of transaction 5.129 The kinds of credit contracts covered by the NCC are described above at 5.109–5.119. Briefly, these credit contracts are contracts for the provision of consumer credit. 5.130 Relief under the CRA is essentially confined to consumers and farmers. The CRA expressly provides that the Act will not grant relief to the Crown, a public or local authority, a corporation or any person in respect of a contract entered into ‘in the course of or for the purpose of a trade, business or profession’.280

Focus on contracts not investments 5.131 The NCC and CRA are confined to contracts. It is the conduct that has induced a party to enter into a contract or the contract or its provisions that must be unjust.281 A court will not grant relief merely because the transaction underlying the contract was not in someone’s interests282 or a hard bargain283 or resulted in a loss284 or because the [page 219]

party seeking relief was foolish, gullible or greedy,285 although a bad bargain might indicate that the party seeking relief was not in a position to safeguard her or his own interests.286

NCC (s 76) does not apply in certain circumstances 5.132 The NCC provision does not apply in circumstances where s 78(1) of the NCC (unconscionable interest or charges) applies or to a change to a contract made under the NCC.287

The court’s three-staged task 5.133 In Perpetual Trustee Co Ltd v Khoshaba288 Handley JA (with whom Basten JA agreed289) considered that a case under the CRA involved a three-stage process. First, the court is required to make findings of fact. Second, the court is required to make a finding as to whether the contract is or is not unjust (and why). Third, the court is required to exercise its discretionary power to grant relief and determine the extent of that relief. The discretion to grant relief does not automatically follow from a finding that a contract is unjust.290 5.134 Although a finding that a contract is, or is not, unjust (stage 2) requires an evaluative judgment it is a finding of fact (being based on the primary facts as found). In an appeal of a decision in respect of an unjust contract an appellate court will be required to apply the principles stated by the High Court in Warren v Coombes.291 5.135 Conversely, a decision to grant, or not grant, relief in respect of an unjust contract (stage 3) is an exercise of a discretion. It follows that [page 220] in an appeal of such a decision the appellate court will be required to exercise the principles stated by the High Court in House v King.292

Identifying ‘unjust’ contracts

5.136 Both the NCC and the CRA define the term ‘unjust’ to include ‘unconscionable, harsh or oppressive’.293 But as McHugh JA observed in West, ‘(t)he definition of “unjust” is not exclusive’.294 McHugh JA explained that it is: … a mistake to think that a contract or one of its terms is only unjust when it is unconscionable, harsh or oppressive. Contracts which fall within any one of those categories will be ‘unjust’. But the latter expression is not limited to the so-called ‘tautological trinity’.295

5.137 Like the legislative proscription on unconscionable conduct, both the NCC and CRA set out matters the court is to have regard to in determining whether a contract is unjust. Whether a contract is ‘unjust’ depends ‘on all the circumstances and not on labels’.296 Like the legislative proscription on unconscionable conduct, both the NCC and CRA provide an evaluative normative standard against which conduct is compared. This standard incorporates contemporary community standards about what is just (which may change over time).297 In Provident Capital Ltd v Papa298 Allsop P (as he then was) helpfully observed: The broad evaluation of unjustness under the Contracts Review Act 1980 (NSW) ss 4, 7 and 9 involves the normative evaluation of the totality of relevant circumstances. … Central to the normative evaluation is the recognition that there is a need for the protection of some people in some circumstances, who are not able fully to protect their own interests against factors that may cause injustice. That vulnerability may come from one or more of many circumstances, such as lack of education or of intelligence, from gullibility, from predation of fraud and greed, and also sometimes loyalty and love. The characterisation of a contract as unjust and the sheeting home to the other contracting party of the consequences of its

[page 221] unjustness may be a difficult evaluative exercise. At its heart, however, is the recognition of the inadequacy of one party to protect her or his interests in the circumstances.299

5.138 A contract may be substantively unjust (because its terms are unfair) or procedurally unjust (because the method by which it was procured was unfair) or, more likely, a contract will be unjust because it is both substantively and procedurally unjust.300

5.139 Importantly, ‘unconscionable’ (especially in the context of a penal section) has a higher moral threshold than ‘unjust’ and ‘unfair’ (especially in a non-penal context)’301 See, for example, Tonto Home Loans Australia Pty Ltd v Tavares.302 In that case the New South Wales Court of Appeal found that three loan contracts were unjust but that Tonto’s lack of knowledge of complicity in the conduct of its broker meant that Tonto’s conduct could not be characterised as unconscionable.303

Matters to be considered by the court Public interest 5.140 The NCC and CRA both provide that in determining whether a contract, or a provision of a contract, is unjust the court must have regard to ‘the public interest and to all the circumstances of the case’,304 including ‘such consequences or results’ arising from either compliance or non-compliance with the provisions of the contract. 5.141 In Custom Credit Corp Ltd v Lupi305 Murphy J considered that ‘public interest’ could be understood as directing attention to a consideration of whether the credit provider’s conduct ‘offended [page 222] against community standards of business morality’.306 Croft J has been described307 as having expressed a different view of the ‘public interest’ requirement in Knowles v Victorian Mortgage Investments Ltd.308 In that case Croft J said that the public interest ‘may represent the underlying consumer protection purpose of the [NCC] or the need to keep parties to their bargains’.309 Arguably Croft J has not expressed a different view at all from Murphy J. Not only can it be said that Croft J’s description reflects community standards of business but he also cites Murphy J in support of his view. 5.142 In any event, it is settled that one aspect of the public interest is

the need to keep people to their bargains.310 Other matters 5.143 Both the NCC and the CRA also list a number of other matters to be considered by the court in determining whether a transaction is unjust. These matters are substantially similar to the matters listed in legislation proscribing unconscionable conduct. Briefly these matters include: (a) the relative bargaining power of the parties311 (and the CRA directs the court to consider in particular the relative economic circumstances, educational background and literacy of the parties to the contract312); (b) whether the contract was the subject of any negotiation;313 (c) whether or not it was ‘reasonably practicable’ for the party seeking relief to negotiate the alteration or reject any provision of the contract;314 (d) whether or not the provisions of the contract imposed conditions that were ‘unreasonably difficult’ to comply with;315 [page 223] (e) whether or not the person seeking relief (or a person acting on their behalf) was ‘reasonably able’ to protect her or his interests because of her or his ‘age or physical or mental condition’;316 (f)

the intelligibility of the language used in the written contract;317

(g) whether or not independent legal or expert advice was obtained;318 (h) the extent to which the provisions of the contract were explained to the party seeking relief;319 (i)

whether any ‘unfair pressure, undue influence or unfair tactics’ were used against the party seeking relief by the other contract party (or their agent);320

(j)

the provisions of other comparable contracts or (in respect of the CRA) the conduct of the parties in similar contracts or courses of dealing to which any of them have been a party;321 and

(k) any other relevant factor322 or the commercial or other setting, purpose and effect of the contract.323 5.144 In addition to the above, the NCC expressly directs the court to consider the following matters: (a) whether the credit provider took measures to ensure that the person seeking relief understood the nature and implications of the transactions and, if so, the adequacy of those measures;324 (b) whether the credit provider knew, or ought to have reasonably known, that the debtor could not have repaid the debt, in accordance with the terms of the credit contract, without substantial hardship;325 (c) whether the terms of the credit contract or the conduct of the credit provider is justified in light of the risks undertaken by the credit provider;326 and [page 224] (d) if the transaction is a mortgage — whether any provision of the mortgage is void under the NCC.327 5.145 A finding that one or more of the criteria, listed in the legislation, has been established does not necessarily mean that the court must find that the contract is unjust.328 Conversely, a contract may be found to be unjust even if none of the criteria listed above apply in the circumstances.329 Foreseeability and knowledge 5.146 As with statutory unconscionability, both the NCC and CRA expressly provide that in determining whether a contract is unjust the

court is not to have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made or changed.330 Unjustness is to be determined at the time that the contract was made331 (but subsequent conduct is a relevant consideration in the exercise of the discretion to grant relief).332 But (contrary to analogous equitable doctrines) a contract may be unjust even though the circumstances that gave rise to that injustice are not known to the other contracting party.333 Contract may be unjust even where the contracting parties act innocently 5.147 A contract may be found to be unjust even where the parties act innocently. See, for example, Antonovic v Volker334 in which a contract for the sale of land was found to be unjust because (unknown to the vendor) the estate agent applied unfair pressure on the purchaser to make the winning bid at auction. [page 225]

Examples of unjust contracts 5.148 It may not be ‘fruitful’ to compare cases of unjust contract given that it may prove a distraction from the task of evaluating all of the particular circumstances of any given matter.335 But an outline of some cases may assist to illuminate the meaning and application of the law. 5.149 In the much-cited case of Baltic Shipping Company v Dillon (‘Mikhail Lermontov’)336 the New South Wales Full Court of Appeal held that a settlement agreement between a shipping company and Ms Dillon, a 52-year-old widow, was unjust. In that case Ms Dillon was a passenger on the shipping company’s ship (the ‘Mikhail Lermontov’) when it sank off the coast of New Zealand. Ms Dillon lost all of her belongings and suffered physical injury and nervous shock. She consulted a lawyer but later terminated the retainer after her lawyer’s letters to the shipping company went unanswered. Ms Dillon

subsequently accepted an ex gratia payment from the shipping company in the amount of $4,786 in settlement of her claim and signed a release form (which included a release from personal injury claims). The settlement sum was less than one-tenth of what Ms Dillon’s claim was worth.337 The trial judge found that there was material inequality between the contracting parties and that Ms Dillon’s ability to protect her interests was diminished as a consequence of her injuries.338 The trial judge also expressed the view that the shipping company exploited Ms Dillon’s vulnerable position by denying liability and confronting her with the possibility of a potentially enormous litigation.339 5.150 The New South Wales Full Court of Appeal held that the settlement was unjust in the circumstances because Ms Dillon was in a position of ‘special vulnerability’340 at the time that the shipping company made the offer to settle and there was a ‘serious inequality’341 between Ms Dillon’s entitlements and what she recovered under the settlement agreement.342 [page 226] 5.151 Tonto Home Loans Australia Pty Ltd v Tavares343 concerned three cases in which loans by Origin Mortgage Management Services (a subsidiary of the ANZ bank) were found to be unjust. In that case Origin used a mortgage originator, Tonto, who itself engaged a broker, Streetwise. Streetwise was responsible for conducting the loan interview, providing the customer with advice and assisting the customer to prepare the loan documentation and obtain supporting documentation. It was agreed between Tonto and Streetwise that correspondence with the customer would be branded with the Streetwise logo and that Tonto would have no contact with the customer until the loan agreement had been finalised. This system allowed Streetwise to dishonestly mislead customers. After having conned customers into taking out loans the principal of Streetwise, Mr Bangaru, made off with the proceeds. 5.152 Although the Court of Appeal did not find that Streetwise were

the agents of Tonto, the court considered that the relationship between the parties allowed the fraud to occur. This included a failure by Tonto to follow its own lending guidelines. The court was also critical of the customers’ conduct in signing incomplete or blank documents. Consequently, the court found that the contracts were unjust but exercised their discretion to provide customers with partial relief.

UNFAIR TERMS 5.153 In Pt 2-3 of the ACL and Pt 2, Div 2, Subdiv BA of the ASIC Act can be found the ‘Unfair Contract Terms Law’ (UCTL).344 The UCTL partly regulates terms in standard form, or boilerplate, business and consumer contracts. 5.154 It is convenient to note here that retail leases legislation in the Northern Territory, South Australia and Victoria also regulates ‘harsh or unconscionable terms’.345 This legislation, drafted in very different terms from the UCTL, permits a tribunal to rescind or vary terms which the tribunal is satisfied are harsh or unconscionable. [page 227]

Legislative history of the UCTL 5.155 The UCTL largely adopts the unfair contract term provisions inserted, in 2003, into Pt 2B of the Fair Trading Act 1999 (Vic).346 The Victorian provisions were replaced by the UCTL in 2010. The now defunct Victorian provisions mirrored the unfair contract terms regulations in force at that time in the United Kingdom347 which implemented a European Union directive with respect to unfair terms in consumer contracts.348 5.156 The UCTL was enacted on the recommendation of the Productivity Commission.349 The Commission noted that consumer groups, state and territory governments and businesses had expressed

concerns about unfair contract terms.350 The Commission identified the biggest concern as being in respect of standard form contracts which are typically used in the supply of a broad range of services such as telecommunications, air travel, consumer credit, car hire, holiday packages, home improvements and software sales.351 The Commission observed that: Such non-negotiated contracts have advantages for consumers — in particular, in competitive markets, lower business costs will be passed on to consumers as lower prices. But, by their nature, these contract terms are offered on a ‘take-it-or-leave-it’ basis, are often complex and apparently mostly not read. The concern is that businesses sometimes use unfair terms against consumers and the public interest generally.352

5.157 The cost of unfair contract terms to the community is difficult to quantify but it is thought that unfair contract terms cause individual consumers distress and loss running into the tens of thousands [page 228] of dollars.353 Consumer protection legislation existing at the time was inadequate to counter unfair contract terms. The Commission recognised that: The existing unconscionability provisions of generic consumer law — which could in principle, tackle unfair contracts — are very costly, slow and uncertain in their application … Actions often take years to progress and cost hundreds of thousands of dollars and sometimes millions for single cases. They set a hurdle for unconscionability that is high and their application to the use of unfair terms, while evolving, is still not clear. The NSW Contracts Review Act 1980, which bars ‘unjust’ contracts, is more amenable to use than provisions against unconscionability … but still suffers significant limitations as an effective tool against the use of unfair terms …354

5.158 When first enacted, in 2010, the UCTL only applied to consumer contracts. In 2015, the UCTL was extended to apply to small business contracts.355 The explanatory memorandum to the amending Act acknowledged that small businesses were, like consumers, vulnerable to unfair terms in standard form contracts.356 Like consumers, small businesses are unlikely to have ‘robust risk management policies’ and are unlikely to have the capacity to absorb risk when it arises.357 Like consumers, small businesses are also unlikely

to have on-hand legal expertise to review contracts and obtaining legal advice for small contracts is likely to be cost prohibitive.358 But, unlike consumers, small businesses also engage in high-value transactions in which it is reasonable to expect a small business to undertake due diligence. The UCTL strikes a balance between these considerations by only applying to low-value small business contracts.

Rationale of the UCTL 5.159 In relation to the former equivalent provisions of the UCTL, Cavanough J, in Jetstar Airways Pty Ltd v Free,359 observed that the underlying policy of the legislation ‘respects true freedom of contract [page 229] and … seeks principally to prevent the abuse of standard form contracts which, by definition, will not have been individually negotiated’.360 Cavanough J also observed that ‘(t)he legislation proceeds on the assumption that some terms in consumer contracts, especially in standard form consumer contracts, may be inherently unfair’.361 5.160 The UCTL, in stark contrast to the common law, invalidates contract terms in standard form contracts that are substantively unfair.362 It is not intended that under the UCTL the court is to assume the role of a ‘price regulator’363 but, as outlined below, the UCTL test for unfair terms is concerned with the effect of the contract terms364 rather than the process by which the contract came to be made.365 Conversely, the common law will not invalidate contract terms simply because they are unfair.366 As the Productivity Commission observed,367 statutory unconscionability and the Contracts Review Act 1980 (NSW) could, in principle, address unfair terms. But the courts have been cautious in their approach to substantive unfairness and tend to look for procedural unfairness before granting relief.368 An illustration of this conservatism

[page 230] can be found in Hurley v McDonald’s Australia Ltd.369 In 1999, McDonald’s (the hamburger chain) ran a ‘Monopoly McMatch and Win’ competition. In this competition participants would collect game stamps on a food purchase at McDonald’s and would be awarded a particular prize on collecting a certain sequence of stamps. These stamps resembled stamps used by McDonald’s in a similar promotion the previous year. Many participants presented claims to McDonald’s that were made up from stamps issued the previous year together with those issued that year. McDonald’s rejected most of these claims by relying on a clause in the competition’s terms and conditions that gave McDonald’s a very broad discretion to reject claims that did not meet its ‘verification and security checks’. The participants claimed that McDonald’s conduct in relying on the clause was unconscionable but the Full Federal Court held that: Before s 51AA, s 51AB or s 51AC will be applicable there must be some circumstance other than the mere terms of the contract itself that would render reliance on the terms of the contract ‘unfair’ or ‘unreasonable’ or ‘immoral’ or ‘wrong’.370

It would seem likely, though, that had the clause been challenged today it would have been caught by the UCTL. 5.161 The UCTL is outlined below. The case law in respect of the Victorian provisions and UK regulations, outlined above, assist in understanding the meaning and scope of the UCTL.371

Unfair terms void 5.162 The UCTL provides that unfair terms in a ‘consumer contract’ or a ‘small business contract’ are void if the contract is a ‘standard form contract’.372 5.163 An unfair term is void ab initio, that is, the term is treated as if it had never existed.373 [page 231]

5.164 The UCTL expressly provides that the contract continues to bind the parties if it is capable of operating without the unfair term.374

Meaning of ‘consumer contract’ 5.165 A ‘consumer contract’ is a contract for the supply of goods or services or the sale or grant of an interest in land to a person for whom the acquisition is solely or predominately for personal, domestic or household use or consumption.375

Meaning of ‘small business contract’ 5.166 A ‘small business contract’ is a contract for the supply of goods or services or the sale or grant of an interest in land where: (a) one of the contracting parties was, at the time that the contract was entered into, a business that employed fewer than 20 people (not including casual employees unless those employees are employed on a regular and systematic basis376); and (b) either: (i)

the upfront price payable under the contract does not exceed $300,000; or

(ii) the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000.377

Meaning of ‘standard form contract’ 5.167 The UCTL does not define the term ‘standard form contract’ but, instead, provides a rebuttable presumption that a contract is a standard form contract.378 5.168 If the presumption is sought to be rebutted, the UCTL enumerates some six matters that a court may take into account when determining whether a contract is a standard form contract.379 Broadly, these matters describe a boilerplate or pro forma contract drafted by one contracting party (who is in a superior bargaining position relative

to the other) and presented to the other contracting party on a ‘take it or leave it’ basis. The matters listed include the following: [page 232] (a) whether one of the parties has all or most of the bargaining power in the transaction;380 (b) whether the contract was prepared by one party prior to any negotiation between the parties;381 (c) whether another party was, in effect, required to accept or reject the terms in the form that they were presented;382 (d) whether an opportunity was given to negotiate the terms;383 (e) whether the terms of the contract took into account the specific characteristics of the other party;384 (f)

any other matter prescribed by the regulations.385

Meaning of ‘unfair’ 5.169 The legislation contains a three-limbed test for unfair terms.386 A term is unfair if: (a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract (significant imbalance requirement); and (b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term (legitimate interest requirement); and (c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on (detriment requirement). 5.170 For a term to be unfair it must satisfy each of the three limbs listed above.387 5.171

Allsop CJ, in the Full Federal Court decision in Paciocco v

Australia and New Zealand Banking Group Ltd (‘Paciocco FFC Decision’), observed, in respect of the Victorian provisions equivalent to the UCTL, that ‘(t)he characterisation of unjustness or unfairness [page 233] is, of course, evaluative and a task to be carried out with a close attendance to the statutory provisions’.388 Allsop CJ also recognised that ‘unjustness and unfairness are of a lower moral or ethical standard than unconscionability’.389 5.172 Similarly, Edelman J, in Australian Competition and Consumer Commission v Chrisco Hampers Australia Ltd, noted, in respect of the ACL provisions, that the UCTL ‘creates a broad evaluative criteria to be developed incrementally’.390 Edelman J described the UCTL as ‘a guided form of open-ended legislation’391 that ‘necessarily attract(s) a more purposive and less minutely textual mode of construction’.392 By analogy, Edelman also referred to the English decision of Plevin v Paragon Personal Finance Ltd393 in which Lord Sumption considered a legislative provision that permitted the reopening of credit transactions where the relationship between the parties was ‘unfair’.394 In that case Lord Sumption had concluded that it was not possible to identify a precise or universal test for the application of the provision.395 5.173 Likewise, Millet J in Director General of Fair Trading v First National Bank plc396 recognised, in respect of the UK regulations, that in determining whether a term is unfair there can be no one single test.397 5.174 Whatever the test, it appears uncontroversial that the fairness of the term is to be judged at the time when the contract was made.398 The UCTL is concerned, after all, with contract terms, and not conduct, and a term does not need to be enforced to be unfair.399 An illustration of this point can be found in the late payment fee case of Paciocco v Australia and New Zealand Banking Group Ltd. In that case the

consumer complained that terms allowing the bank to charge him late payment fees on his credit card account were unfair. The High Court [page 234] examined the terms at the time at which the contract was formed rather than at the time at which the consumer fell into default and was required to pay the fee. The High Court concluded that the terms were not unfair. The detriment incurred by the consumer could have been avoided by prompt payment.400 Significant imbalance requirement 5.175 The significant imbalance requirement requires the court to consider whether the term, as a matter of fact, would cause a significant imbalance in the parties’ contractual rights and obligations.401 5.176 The applicant bears the onus of establishing the significant imbalance requirement on the balance of probabilities.402 5.177 The lack of negotiation in the standard form contract is not relevant to the inquiry as to whether the term causes a significant imbalance in the contracting parties’ rights and obligations.403 5.178 The House of Lords studied the significant imbalance requirement, in the UK regulations, in First National Bank. Lord Bingham stated that: The requirement of significant imbalance is met if a term is so weighted in favour of the supplier as to tilt the parties’ rights and obligations under the contract significantly in his favour. This may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty.404

5.179 Lord Bingham’s statement on the significant imbalance requirement has been widely cited, with approval, by Australian courts.405

[page 235] 5.180 The courts have held that ‘significant’ means ‘significant in magnitude’ or ‘sufficiently large to be important’ or ‘being a meaning not too distant from substantial’.406 5.181 Lord Millett, in First National Bank, proposed various approaches by which the balance or imbalance of the term could be measured. Lord Millett suggested that: It is obviously useful to assess the impact of an impugned term on the parties’ rights and obligations by comparing the effect of the contract with the term and the effect it would have without it. But the inquiry cannot stop there. It may also be necessary to consider the effect of inclusion of the term on the substance or core of the transaction; whether if it were drawn to his (or her) attention the consumer would likely be surprised by it; whether the term is a standard term, not merely in similar non-negotiable consumer contracts, but in commercial contracts freely negotiated between parties acting on level terms and at arms’ length; and whether, in such cases, the party adversely effected by the inclusion of the term or his (or her) lawyer might reasonably be expected to object to its conclusion and press for its deletion. The list is not necessarily exhaustive; other approaches may sometimes be more appropriate.407

5.182 In First National Bank, the House of Lords found that a term in a loan agreement,408 with respect to a failure by the debtor to repay the loan, was not unfair. The term provided that the bank was entitled to its standard interest rate interest on default even after judgment. The bank’s standard rate of interest was over and above the rate of interest that a court would have awarded. But their Lordships considered that the debtor would not have been surprised to find that a loan agreement made provision for the payment of interest and ‘(t)here is nothing unbalanced or detrimental to the consumer in that obligation: the absence of such a term would unbalance the contract to the detriment of the lender’.409 5.183 In contrast to First National Bank, Edelman J, in Chrisco, adopted Lord Bingham’s definition of ‘significant imbalance’410 but arrived at a

[page 236] different result. Edelman J found the ‘HeadStart Term’411 in Chrisco’s standard terms and conditions for the supply of Christmas hampers to be unfair. Consumers could purchase Christmas hampers from Chrisco by making a number of small payments toward the purchase price, via direct bank account debits, over the course of the year ahead of Christmas. The HeadStart Term provided that, after Chrisco had received full payment of the purchase price, the debits would continue and this money would be applied toward the purchase of a Christmas hamper for the following year. Although the consumer could cancel his or her order at any time and receive a full refund of the money withdrawn by Chrisco, the consumer incurred a financial detriment. The consumer lost the use of the money withdrawn by Chrisco but received no advantage in exchange. Consumers paid the full purchase price for the hamper, Chrisco gave no discount, and the money withdrawn by Chrisco did not earn any interest. Edelman J concluded that this detriment was not balanced by any substantial corresponding right to the consumer against Chrisco.412 Legitimate interest requirement 5.184 The legitimate interest requirement requires the court to consider whether the term is reasonably necessary to protect the legitimate interests of the contracting party advantaged by the term (likely the drafter of the standard form contract and the respondent in any proceedings).413 5.185 The legislation provides a rebuttable presumption that a term is not reasonably necessary in order to protect the legitimate interests of the respondent (the person advantaged by the term).414 The respondent must establish that the term is reasonably necessary to protect its legitimate interests on the balance of probabilities.415 The respondent is entitled to adduce any evidence relevant to this requirement.416 The explanatory memorandum to the ACL provisions of the UCTL, relevantly states that:

[page 237] While it is ultimately a matter for the court to determine whether a term is reasonably necessary to protect the legitimate interests of the respondent, the provision will require the respondent to establish, at the very least, that its legitimate interest is sufficiently compelling on the balance of probabilities to overcome any detriment caused to the consumer, or class of consumers, and that therefore the term was ‘reasonably necessary’.417

Detriment requirement 5.186 The detriment requirement directs the court to consider whether, as a matter of fact, the term would cause financial or nonfinancial detriment to a contracting party if the term was relied on. 418 5.187 The applicant bears the onus of establishing the detriment requirement on the balance of probabilities.419 Although the applicant is required to do more than establish a hypothetical case, the applicant is not required to have proof of having actually suffered detriment.420 The applicant must simply prove that the term would cause detriment if relied on.421 A term does not need to be enforced to be unfair.422 But whether or not a term is enforced, and a contracting party incurs actual damage, will have a bearing on the remedies available beyond declarations and injunctions.423 5.188 In Paciocco v Australia and New Zealand Banking Group Ltd, Mr Paciocco failed to show that terms entitling the bank to charge him late payment fees on his credit card account caused him any detriment. The bank’s standard terms and conditions provided that the bank would issue Mr Paciocco monthly statements and Mr Paciocco was required to make the minimum payment shown on the statement by the due date also shown on the statement. If Mr Paciocco failed to make this payment he was charged interest on his purchases, and all subsequent purchases, until the closing balance was paid and also incurred a late payment charge of $20. The bank’s terms also permitted Mr Paciocco to terminate the credit card contract at any time. The Full Federal Court held that the term did not cause Mr Paciocco any

detriment because the contract was terminable at will and the fee could be avoided by conduct [page 238] that was ‘not unreasonable,’ namely by complying with the contract.424 The High Court upheld the Full Federal Court’s decision. Keane J observed that: The requirement of s 32W (in the equivalent Victorian provisions) that the term be ‘to the detriment of the consumer’ was not satisfied because the late payment fee was not a detriment to Mr Paciocco. As has been seen it was an expense which he chose to risk as more convenient to him than paying his account on time.425

Transparency 5.189 In determining whether a term is unfair, the UCTL requires that the court is to take into account the extent to which the term is transparent.426 A term is ‘transparent’ if the term is: (a) expressed in reasonably plain language; and (b) legible; and (c) presented clearly; and (d) readily available to any party affected by the term.427 5.190 A lack of transparency may be a strong indication of a significant imbalance in the parties’ contractual rights.428 But the extent to which the terms are (or are not) transparent is not, in itself, determinative of unfairness.429 A term may not be transparent but not unfair and, conversely, a term may be transparent but unfair. In Jetstar Airways Cavanough J observed that the UCTL ‘clearly proceeds on the basis that the use of some kinds of terms can be proscribed absolutely, regardless of how comprehensively they might be drawn to the consumer’s attention’.430 See, for example, Bass Coast Resort Pty Ltd v Success Resources Australia Pty Ltd431 outlined below.

5.191 The UCTL only requires a court to consider the transparency of the particular term alleged to be unfair and only in relation to the threepronged legislative test for unfairness.432 [page 239] Contract as a whole 5.192 In determining whether a term is unfair, the UCTL also requires the court is to take into account the contract as a whole.433 But the UCTL only requires the court to assess the contract as a whole in relation to the particular term alleged to be unfair.434 Cavanough J, in Jetstar Airways, explains that ‘(t)he main requirement is to consider terms that might reasonably be seen as tending to counterbalance the term in question. The task involves an exercise of judgment against a statutory standard, rather than an exercise of discretion’.435 Cavanough J went on to consider that in an appeal, limited to a question of law, a court will not interfere with the decision-maker’s exercise of judgment unless satisfied that: (a) the decision-maker ignored or disregarded some other relevant term or terms; and either (b) the decision-maker did not appreciate that he/she was under a duty to consider and balance other relevant terms; or (c) the decision-maker’s treatment of the other relevant terms was not open as an exercise of the power to judge whether the term was unfair under the UCTL; and (d) had the decision-maker not so erred, the ultimate result might have been different.436 Examples of unfair terms 5.193 The legislation provides a list of some 14 examples of unfair terms.437 This list includes: (a) a term that permits, or has, or has the effect of permitting, one

party (but not another party) to avoid or limit performance of the contract; (b) a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; (c) a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract; (d) a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; [page 240] (e) a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew that contract; (f)

a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract;

(g) a term that permits, or has the effect of permitting, one party unilaterally to vary the characteristics of the goods or services supplied, or the interest in land to be sold or granted, under the contract; (h) a term that permits, or has the effect of permitting, one party unilaterally to determine whether the contract has been breached or to interpret its meaning; (i)

a term that limits or has the effect of limiting, one party’s vicarious liability for its agents;

(j)

a term that permits or has the effect of permitting one party to assign the contract to the detriment of another party without that other party’s consent;

(k) a term that limits, or has the effect of limiting, one party’s right to sue another party; (l)

a term that limits, or has the effect of limiting the evidence one party can adduce in proceedings relating to the contract;

(m) a term that imposes or has the effect of imposing the evidential burden on one party in proceedings relating to the contract; (n) a term of a kind, or a term that has an effect of a kind, prescribed by the regulations. 5.194 The examples listed in the preceding paragraph provide statutory guidance only as to the types of terms that could be unfair. The list neither prohibits nor creates a presumption that the terms listed are unfair.438 5.195 The explanatory memorandum describes the statutory examples as providing an illustration of broadly four different kinds of terms:439 (a) terms that allow a party to unilaterally change key terms of the contract (including termination);440 [page 241] (b) terms that have the effect of limiting the rights of the weaker party (that is the party to whom the contract is presented);441 (c) terms that penalise, or have the effecting or penalising, the weaker party for a breach or termination of the contract ‘(reflecting the common law concept of ‘penalties’)’;442 and (d) terms that allow a party to assign the contract to another without the weaker party’s consent.443 5.196 The Australian Competition and Consumer Commission has also helpfully published booklets identifying terms in consumer and small business contracts that may be caught by the UCTL.444

Exclusion Does not apply to certain kinds of terms 5.197 The legislation does not apply to terms to the extent that the term only:

(a) defines the subject matter of the contract; or (b) sets the upfront price payable under the contract; or (c) is a term expressly required or permitted by a Commonwealth, state or territory law.445 5.198 The term ‘upfront price’ means the consideration payable for the supply under the contract disclosed prior to entry into the contract.446 In respect of contracts for financial services, the ‘upfront price’ is the total amount of principal owed under the contract.447 Does not apply to certain kinds of contracts 5.199 The legislation also does not apply to certain kinds of contracts, namely: (a) contract of marine salvage or towage;448 [page 242] (b) a charterparty of a ship;449 (c) a contract for the carriage of goods by ship;450 (d) a contract that is the constitution of a company, managed investment scheme or other kind of body;451 (e) a small business contract to which a prescribed law of the Commonwealth, state or territory applies.452

Examples of unfair terms 5.200 In Bass Coast Resort Pty Ltd v Success Resources Australia Pty Ltd453 a clause which provided a promoter of seminars with an unfettered discretion to change a planned event was held to be an unfair term. Clause 3 provided: We may change the Speakers, the Hours, the Dates and/or Location and: (a) we shall have no liability to you; and (b) you shall make no claim against us (including a refund), in respect of the same.

5.201 Deputy President Lulham observed that ‘Clause 3 exemplifies pure drafting overreach, because it purports to empower the Respondent to supply the opposite of what it was contracted to supply. Any number of comedic examples would come to mind were clause 3 to have any effect’.454 Deputy President Lulham observed that cl 3 was transparent (because it was ‘expressed in plain language, was legible, presented clearly, and was readily available [for the consumer] to read’455) but that this did not assist the promoter because the UCTL definition of unfair did not require the term to not be transparent. It was, as Deputy President Lulham noted, ‘quite possible’ for the term to be transparent and unfair.456 [page 243] 5.202 In NRM Corporation Pty Ltd v Australian Competition and Consumer Commission457 the Full Federal Court upheld the decision of the primary judge that a refund clause was an unfair term.458 5.203 NRM, formerly known as Advanced Medical Institute Pty Ltd (AMI), offered treatments for erectile dysfunction using nasal sprays and oral strips. The contract contained the following refund clause: Sexual dysfunction is a chronic condition and treatment can take some time. For this reason, we stipulate that your contract with us [is] for the period decided in the first consultation with the AMI doctor. You may cancel your treatment program with AMI at any time by giving AMI not less than 30 days notice. Cancelling your treatment program you will be entitled to a refund for the unexpired period of your treatment program less an administrative fee of 15% and less the cost of any medication already provided to or prepared for you. No refund will be provided for the expired period of the treatment program or the 30 day notice period. All cancellation must be communicated to AMI in writing signed by you. Oral cancellation will not be accepted in any circumstances.459

5.204 The consumer was told about the refund clause in a lengthy recorded message where ‘the terms were read out so fast and softly as to be practically inaudible’ and ‘the tone was monotonous and the pace fast’.460 And in some cases the recording wasn’t even played.461 A written copy of the clause was not provided to the consumer until after

the contract was entered into with the exception of those consumers who attended the AMI clinic.462 But the basis on which the administration fee was calculated was never disclosed to the consumer. Neither was the calculation of the cost of the medicine.463 [page 244] 5.205 The refund clause was found to satisfy each of the three limbs in the UCTL test for fairness. First, AMI did not rebut the legislative presumption that the refund clause was not reasonably necessary to protect AMI’s legitimate interests.464 Second, the refund term was found to have caused a significant imbalance in the parties’ rights and obligations under the contract. The refund clause had the effect of penalising the consumer, and not AMI, for terminating the contract.465 The refund clause operated irrespective of whether the reason for the consumer’s termination was because of a change of mind, very shortly after entering into the contract, or because the consumer suffered severe adverse side effects from the medication or where the medication proved to be ineffective.466 Third, the refund clause was found to have caused detriment to consumers when it was relied on. The refund clause effectively locked consumers into completing treatment in disadvantageous circumstances or otherwise suffer a financial penalty.467 5.206 The trial judge, pointing to the phrasing and manner in which the term was conveyed, considered that the refund term lacked transparency.468 Both the trial judge and Full Federal Court concluded that when the contract was viewed as a whole the unfairness of the term became indisputable.469 The trial judge explained: The contract provided for the supply of medications which were not regarded by the medical profession as the usual forms of treatment and there was no cogent evidence that they were effective … In those circumstances it was unfair to hold the patient to the agreement on penalty of payment of fees, the method of calculation of which was unknown, imposed in order to cancel the treatment.470

5.207

In Australian Competition and Consumer Commission v JJ

Richards & Sons Pty Ltd,471 JJ Richards (JJR) conceded that eight terms, in its standard form contracts for the supply of waste management services to small businesses (Standard Terms), were unfair terms. 5.208 Clause 1 of the Standard Terms provided: The Term. Both Parties agree the prices overleaf reflect a long-term relationship and that is the spirit of the agreement.

[page 245] The term of this agreement shall be for an initial period of [initial years]. The term shall be automatically renewed for further periods of [initial term] years thereafter unless terminated by either party giving written notice within 30 days prior to the end of the initial term or any renewed term.

5.209 JJR conceded that cl 1 created a significant imbalance in the parties’ contractual rights because the customer was given only a narrow window of time in which to terminate the contract. If the customer inadvertently missed this window the customer remained contracted to JJR for a further extensive period.472 Moshinsky J noted that the customers, as small businesses, may not have effective systems in place to alert them to impending termination periods. He also observed that the imbalance in the parties’ contractual rights was further exacerbated by the other unfair terms in the contract, for example, terms that gave JJR exclusivity over customers’ waste management and the right to unilaterally vary the price for those services.473 5.210 Clause 4 of the Standard Terms provided: Price Variations. JJR may adjust its prices during the term of the agreement for reasons such as but not limited to increased operation costs, changes in disposal fees, site profitability, changes to disposal facility locations or increased government charges and levies by giving customers 30 days notice of such increase.

5.211 JJR conceded that cl 4 created a significant imbalance in the parties’ contractual rights because the clause allowed JJR to unilaterally

increase the price of its services without the customer having any corresponding right to terminate the contract or renegotiate the scope of the services.474 5.212 Clause 6 of the Standard Terms provided: Agreed Times. JJR will use all reasonable endeavours to perform the collection at the times agreed but accepts no liability where such performance is prevented or hindered in any way.

5.213 JJR conceded that cl 6 created a significant imbalance in the parties’ contractual rights because the clause absolved JJR from its performance obligations and shifted the risk of non-performance to customers in circumstances that they do not control and without any corresponding benefit to customers.475 [page 246] 5.214 Clause 7 of the Standard Terms provided: No credit without notification. Unless previously notified JJR shall be entitled to render charges for the service if it attends the customer’s premises and is unable to perform the service due to holiday closure, lack of access or other reason. All credit requests must be within 14 days of invoice date.

5.215 JJR conceded that cl 7 created a significant imbalance in the parties’ contractual rights because the clause entitled JJR to charge the customer for services that JJR did not render for reasons that may be beyond the customer’s control or, indeed, due to a failing by JJR (such as equipment breakdown). The administrative burden is then shifted to the customer to request a refund.476 5.216 Clause 9(i) of the Standard Terms provided: The customer agrees to: … i. Grant JJR exclusive rights to the removal of waste, recyclables, combustible liquids and dangerous goods from the premises specified and not engage a second party for waste, recyclables, combustible liquids and dangerous goods removal during the term of this agreement.

5.217 JJR conceded that cl 9(i) created a significant imbalance in the parties’ contractual rights because the clause prevented the customer from obtaining additional waste management services from another provider, even if JJR itself does not provide those services.477 Moshinsky J observed that the clause limited customers’ general right to contract with whomever they wished.478 5.218 Clause 16 of the Standard Terms provided: Credit terms 7 days. The customer agrees to pay for the service subject to the credit terms and acknowledges service may be suspended if payment is not received. During the period of suspension normal charges will apply to cover expenses associated with the overdue payment including but not limited to, interest, administration, legals and equipment capital return.

5.219 JJR conceded that cl 16 created a significant imbalance in the parties’ contractual rights because it conferred no corresponding right on customers. For example, the clause did not give customers a corresponding right to withhold payment for a failure to provide service [page 247] or the right to be indemnified for any costs incurred as a consequence of a failure to provide service.479 5.220 Clause 17 of the Standard Terms provided: Indemnity. To the maximum extent permitted by law, the customer shall be responsible for and indemnify JJR from and in respect of all liabilities, claims, damages, actions, costs and expenses which may be incurred by JJR on a full indemnity basis (whether successful or not) as a result of or arising out of or otherwise in connection with this agreement, including any breach by the customer of any of the warranties, covenants and conditions herein.

5.221 JJR conceded that cl 17 created a significant imbalance in the parties’ contractual rights because it provided an unlimited indemnity in favour of JJR even where the loss incurred by JJR was not the fault of the customer or could have been avoided or mitigated by JJR.480

5.222 Clause 18 of the Standard Terms provided: No termination without final payment. Payment in full of all monies outstanding must be made before this agreement can be terminated. The equipment will not be removed until such payment is made and rental for the equipment may be charged if delays in payment of the final account occur.

5.223 Clause 18 prevented customers from terminating their contracts if payments were outstanding, and entitled JJR to continue charging customers even after customers had purported to terminate and even if JJR had ceased to provide services. JJR conceded that cl 18 created a significant imbalance in the parties’ contractual rights for three reasons. First, the clause provides customers with no corresponding right or benefit. Second, the clause could result in the contract being automatically renewed in circumstances where the customer had purported to terminate it. Third, JJR could have simply recovered any outstanding fees through ordinary legal recovery processes.481 5.224 JJR did not seek to rebut the statutory presumption that the clauses were not reasonably necessary to protect its legitimate interest.482 JJR also conceded that the clauses would cause customers detriment if JJR sought to rely on them.483 Moshinsky J also found that [page 248] the Standard Terms were not transparent. The Standard Terms were drafted in legal language in small, densely packed, print.484 Reviewing the contract as a whole, Moshinsky J considered that the other clauses contained in the Standard Terms did not appear to substantially ameliorate the unfairness of the impugned terms.485

1.

Contained in Sch 2 to the Competition and Consumer Act 2010 (Cth) (CCA).

2.

Contained in Sch 1 to the National Consumer Credit Protection Act 2009 (Cth).

3.

For a full history of the proscription of unconscionable conduct in the TPA see M Sharpe and C Parker, Working Paper, The ACCC Compliance and Enforcement Project:

Assessment of the Impact of ACCC Regulatory Enforcement Action in Unconscionable Conduct Cases (November 2006). 4.

Trade Practices Revision Act 1986 (Cth) (Act no 17 of 1986).

5.

Trade Practices Act Review Committee, Parliament of Australia, Swanson Committee Report (August 1976). A recommendation to insert the provision was also made in a subsequent Green Paper (which also included a draft of the provision): Parliament of Australia, The Trade Practices Act — Proposals for Change (1984), at 194.

6.

Explanatory memorandum to the Trade Practices Revision Act 1986 (Cth) (Act no 17 of 1986), at [59].

7.

By s 8 of the Trade Practices Legislation Amendment Act 1992 (Cth) (Act no 222 of 1992).

8.

Trade Practices Legislation Amendment Act 1992 (Cth) (Act no 222 of 1992).

9.

Explanatory memorandum to the Trade Practices Legislation Amendment Act 1992 (Cth) (Act no 222 of 1992), at [39]–[48].

10.

Trade Practices Amendment (Fair Trading) Act 1998 (Cth) (Act no 36 of 1998).

11.

House of Representatives Standing Committee on Industry, Science and Technology, Parliament of Australia, Finding a Balance — Towards Fair Trading in Australia (1997).

12.

Competition and Consumer Legislation Amendment Act 2011 (Cth) (Act no 184 of 2011).

13.

Explanatory memorandum to Competition and Consumer Legislation Amendment Act 2011 (Cth) (Act no 184 of 2011).

14.

ACL s 21(1); ASIC Act s 12CB(1).

15.

ACL Pt 5-5. Referred to in the ACL as a ‘linked credit contract’. A linked credit contract is defined in s 278(2). Briefly this definition includes a contract that a consumer enters into with a linked credit provider for the provision of credit in relation to the supply by way of sale, lease, hire or hire-purchase of goods to the consumer by the linked creditor provider.

16.

Paciocco v Australia and New Zealand Banking Group Ltd (2015) 321 ALR 584 (‘Paciocco FFC Decision’), at [257] per Allsop CJ (Besanko and Middleton JJ agreeing).

17.

Leases (Commercial and Retail) Act 2001 (ACT) (ACT Retail Leases Act) s 22(1) (note that the prohibition against unconscionable conduct also includes a prohibition against conduct that is harsh and oppressive); Retail Leases Act 1994 (NSW) (NSW Retail Leases Act) s 62B(1) and (2); Business Tenancies (Fair Dealings) Act (NT) (NT Retail Leases (Fair Dealings) Act) ss 79(1) and 80(1); Retail Shop Leases Act 1994 (Qld) (Qld Retail Leases Act) s 46A(1) and (2); Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 (Tas) (Tas Retail Tenancies Code), reg 3 (note that the prohibition against unconscionable conduct also includes a prohibition against conduct that is harsh and oppressive), Retail Leases Act 2003 (Vic) (Vic Retail Leases Act) ss 77(1) and 78(1); Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (WA Retail Leases Act) ss 15C and 15D.

18.

ACL s 21(4)(a); ASIC Act s 12CB(4)(a).

19.

These provisions include the predecessor to the current provisions in the ACL (ss 51AB

and 51AC of the TPA): Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at [24]–[25] per French J; Australian Competition and Consumer Commission v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253 at [31] per Sundberg J; Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491 at [183] per Selway J; Australian Competition and Consumer Commission v Radio Rentals Ltd (2005) 146 FCR 292 at [24] per Finn J; Pacific National (ACT) Ltd v Queensland Rail (2006) FCA 91 at [918] per Jacobson J; Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 2) [2009] FCA 17 at [113](a) per Foster J; Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [17] per Gordon J. 20.

[2013] VSCA 292 at [40] per Santamaria JA (Neave and Osborn JJA agreeing).

21.

Competition and Consumer Legislation Amendment Act 2011 (Cth) Sch 2, s 4.

22.

ACL s 21(4)(b); ASIC Act s 12CB(4)(b).

23.

(2005) 148 FCR 132 (‘National Exchange’) at 140 per Tamberlin, Finn and Conti JJ.

24.

See the explanantory memorandum to the Competition and Consumer Legislation Amendment Bill 2011, at [2.21]–[2.24]. See also Australian Competition and Consumer Commission v EDirect Pty Ltd [2012] FCA 1045 at [73] per Reeves J; Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [214] per White J; Australian Competition and Consumer Commission v Harrison [2016] FCA 1543 at [113]–[114] per Moshinsky J.

25.

National Exchange, at [30].

26.

National Exchange, at [33].

27.

See, for example, Australian Competition and Consumer Commission v EDirect Pty Ltd [2012] FCA 1045 at [73] per Reeves J and Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 at [214] per White J.

28.

[2017] FCA 709 (‘Get Qualified’).

29.

Get Qualified, at [65].

30.

Get Qualified, at [66].

31.

[2017] FCA 727 (‘Unique International’).

32.

Unique International, at [757].

33.

Guy v Crown Melbourne Ltd (No 2) [2018] FCA 36 at [464]–[475] and [507] per Mortimer J. Ms Guy failed to establish that Crown and Aristocrat had engaged in a system of conduct exploiting the disability of ‘Vulnerable Players’ by manufacturing, supplying and making available for play a Dolphin Treasure electronic gaming machine. The definition ‘Vulnerable Players’ was contested and key attributes of those consumers falling within this class of consumers were vague.

34.

National Exchange (made unsolicited offers to vulnerable group of investors to purchase shares at a below-market price); Australian Competition and Consumer Commission v Keshow [2005] FCA 558 (marketing of educational materials in Indigenous communities); Australian Competition and Consumer Commission v Titan Marketing Pty Ltd [2014] FCA 913 (marketing of first aid kits door-to-door in Indigenous communities); Australian Competition and Consumer Commission v EDirect Pty Ltd

[2012] FCA 1045 (telemarketing of mobile telephone services); Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 (affirmed on appeal: NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98) (marketing of medication and medical treatments for sexual dysfunction not proven to be scientifically effective); Unique International (marketing of vocational education); Get Qualified (marketing of services to obtain nationally recognised qualifications); Australian Securities and Investments Commission v Kobelt [2016] FCA 1327 (supply of credit to members of Indigenous community in circumstances where debtors were required to provide their debit cards and pin umbers to the creditor); Australian Competition and Consumer Commission v Harrison [2016] FCA 1543 (supply of telecommunication services in circumstances where contracts with customers were transferred to another corporate entity without customers’ consent and customers were required to pay an early termination fee); Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) [2018] FCA 751. 35.

[2015] FCA 368 (‘Advanced Medical Institute’) (decision on unconscionable conduct affirmed on appeal: NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98).

36.

Unique International, at [757]–[778].

37.

Unique International, at [776].

38.

Get Qualified, at [354]–[370].

39.

Advanced Medical Institute, at [941].

40.

[2013] VSCA 292 (‘Scully’).

41.

Scully, at [39] (Neave and Osborn JJA agreeing).

42.

See also Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at [26] per Gleeson CJ, McHugh, Gummow, Hayne and Hayden JJ; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at [19] per French CJ, Hayne Crennan, Kiefel, Bell, Gageler and Keane JJ; Australian Competition and Consumer Commission v South East Melbourne Cleaning Pty Ltd (in liq) [2015] FCA 25 at [116] per Murphy J; Tameeka Group Pty Ltd (No 3) [2016] FCA 733 at [172] per Markovic J.

43.

ibid.

44.

Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121 at [80] per Mansfield J.

45.

CCA s 4(2)(a); ASIC Act s 12BA(2)(a).

46.

CCA s 4(2)(b); ASIC Act s 12BA(2)(b).

47.

CCA s 4(2)(c); ASIC Act s 12BA(2)(c).

48.

Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia [2002] FCAFC 197 at [114]–[177] per Heerey J (Black CJ and Tamberlin J agreeing); Scully, at [46] per Santamaria JA (Neave and Osborn JJA agreeing).

49.

[2002] FCAFC 197.

50.

(2003) 198 ALR 417.

51.

ibid, at [55] citing Berry v Federal Commissioner of Taxation (1953) 89 CLR 653 at

658–9 per Kitto J and Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 at 479–80 per Wilcox J. Although Mansfield J was construing s 87B of the TPA his observation was cited with approval by Markovic J in Tameeka Group Pty Ltd (No 3) [2016] FCA 733 at [165] (which concerned unconscionable conduct under s 22 of the ACL). 52.

[2018] FCA 36 (‘Guy’).

53.

Guy, at [529]–[530].

54.

Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226 at [50] per Tamberlin, Finn and Conti JJ; Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343 at [188] per Campbell JA (Hodgson and McColl JJ agreeing); Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) [2018] FCA 751 at [2174] per Beach J.

55.

[2005] FCAFC 226.

56.

ACL s 21(1); ASIC Act s 12CB(1).

57.

ACL s 21(2)(a); ASIC Act s 12CB(2)(a); ACT Retail Leases Act s 22(4); NSW Retail Leases Act s 62B(5); NT Retail Leases (Fair Dealings) Act s 81(a); Qld Retail Leases Act s 46A(3)(a) and (b); Vic Retail Leases Act s 79(a); WA Retail Leases Act s 15E(a).

58.

NSW Retail Leases Act s 62B(6); NT Retail Leases (Fair Dealings) Act s 81(b); Qld Retail Leases Act s 46A(3)(c); Vic Retail Leases Act ss 77(1) and 78(1); WA Retail Leases Act s 15E(b).

59.

Vic Retail Leases Act s 79(c); WA Retail Leases Act s 15E(c).

60.

ACL s 22(1)(a) and 22(2)(a); ASIC Act ss 12CC(1)(a) and 12CC(2)(a); ACT Retail Leases Act s 22(2)(a); NSW Retail Leases Act ss 62B(3)(a) and 62B(4)(a); NT Retail Leases (Fair Dealings) Act ss 79(2)(a) and 80(2)(a); Qld Retail Leases Act s 46B(1)(a); Vic Retail Leases Act ss 77(2)(a) and 78(2)(a); WA Retail Leases Act ss 15C(2)(a) and 15D(2)(a).

61.

ACL ss 22(1)(b) and 22(2)(b); ASIC Act ss 12CC(1)(b) and 12CC(2)(b); ACT Retail Leases Act s 22(2)(b); NSW Retail Leases Act ss 62B(3)(b) and 62B(4)(b); NT Retail Leases (Fair Dealings) Act ss 79(2)(b) and 80(2)(b); Qld Retail Leases Act s 46B(1) (b); Vic Retail Leases Act ss 77(2)(b) and 78(2)(b); WA Retail Leases Act ss 15C(2)(b) and 15D(2)(b).

62.

ACL ss 22(1)(c) and 22(2)(c); ASIC Act ss 12CC(1)(c) and 12CC(2)(c); ACT Retail Leases Act s 22(2)(c) (if that party did not prepare the lease or other document); NSW Retail Leases Act ss 62B(3)(c) and 62B(4)(c); NT Retail Leases (Fair Dealings) Act ss 79(2)(c) and 80(2)(c); Qld Retail Leases Act s 46B(1)(c); Vic Retail Leases Act ss 77(2)(c) and 78(2)(c); WA Retail Leases Act ss 15C(2)(c) and 15D(2)(c).

63.

ACL ss 22(1)(d) and 22(2)(d); ASIC Act ss 12CC(1)(d) and 12CC(2)(d); ACT Retail Leases Act s 22(2)(d); NSW Retail Leases Act ss 62B(3)(d) and 62B(4)(d); NT Retail Leases (Fair Dealings) Act ss 79(2)(d) and 80(2)(d); Qld Retail Leases Act ss 46B(1)(d); Vic Retail Leases Act ss 77(2)(d) and 78(2)(d); WA Retail Leases Act ss 15C(2)(d) and 15D(2)(d).

64.

ACL ss 22(1)(e) and 22(2)(e); ASIC Act ss 12CC(1)(e) and 12CC(2)(e); ACT Retail Leases Act s 22(2)(e); NSW Retail Leases Act ss 62B(3)(e) and 62B(4)(e); NT Retail

Leases (Fair Dealings) Act ss 79(2)(e) and 80(2)(e); Qld Retail Leases Act s 46B(1)(e); Vic Retail Leases Act ss 77(2)(e) and 78(2)(e); WA Retail Leases Act ss 15C(2)(e) and 15D(2) (e). 65.

ACL ss 22(1)(f) and 22(2)(f); ASIC Act ss 12CC(1)(f) and 12CC(2)(f); ACT Retail Leases Act s 22(2)(f); NSW Retail Leases Act ss 62B(3)(f) and 62B(4)(f); NT Retail Leases (Fair Dealings) Act ss 79(2)(f) and 80(2)(f); Qld Retail Leases Act s 46B(1)(f); Vic Retail Leases Act ss 77(2)(f) and 78(2)(f); WA Retail Leases Act ss 15C(2)(f) and 15D(2)(f).

66.

ACL ss 22(1)(g) and 22(2)(g); ASIC Act ss 12CC(1)(g) and 12CC(2)(g); NSW Retail Leases Act ss 62B(3)(g) and 62B(4)(g); NT Retail Leases (Fair Dealings) Act ss 79(2) (g) and 80(2)(g); Qld Retail Leases Act s 46B(1)(g); Vic Retail Leases Act ss 77(2)(g) and 78(2)(g); WA Retail Leases Act ss 15C(2)(g) and 15D(2)(g).

67.

ACT Retail Leases Act s 22(2)(g).

68.

ACL ss 22(1)(h) and 22(2)(h); ASIC Act ss12CC(1)(h) and 12CC(2)(h); NSW Retail Leases Act ss 62B(3)(h) and 62B(4)(h); NT Retail Leases (Fair Dealings) Act ss 79(2)(h) and 80(2)(h); Qld Retail Leases Act ss 46B(1)(h); Vic Retail Leases Act ss 77(2)(h) and 78(2)(h); WA Retail Leases Act ss 15C(2)(h) and 15D(2)(h).

69.

ACL ss 22(1)(i) and 22(2)(i); ASIC Act ss 12CC(1)(i) and 12CC(2)(i); NSW Retail Leases Act ss 62B(3)(i) and 62B(4)(i); NT Retail Leases (Fair Dealings) Act ss 79(2)(i) and 80(2) (i); Qld Retail Leases Act s 46B(1)(i); Vic Retail Leases Act ss 77(2)(i) and 78(2)(i); WA Retail Leases Act ss 15C(2)(i) and 15D(2)(i).

70.

ACL ss 22(j)(i) and 22(2)(j)(i); ASIC Act ss 12CC(1)(j) and 12CC(2)(j); NSW Retail Leases Act ss 62B(3)(j) and 62B(4)(j); NT Retail Leases (Fair Dealings) Act ss 79(2) (i) and 80(2)(i); Qld Retail Leases Act ss 46B(1)(j); Vic Retail Leases Act ss 77(2)(i) and 78(2)(i); WA Retail Leases Act ss 15C(2)(i) and 15D(2)(i).

71.

ACL ss 22(1)(l) and 22(2)(l); ASIC Act ss 12CC(1)(l) and 12CC(2)(l); NSW Retail Leases Act ss 62B(3)(k) and 62B(4)(k); NT Retail Leases (Fair Dealings) Act ss 79(2) (k) and 80(2)(k); Qld Retail Leases Act ss 46B(1)(k); Vic Retail Leases Act ss 77(2)(j) and 78(2) (j); WA Retail Leases Act ss 15C(2)(j) and 15D(2)(j).

72.

ACT Retail Leases Act s 22(2)(i).

73.

Vic Retail Leases Act ss 77(2)(l) and 78(2)(l); WA Retail Leases Act ss 15C(2)(l) and 15D(2)(l).

74.

Vic Retail Leases Act ss 77(2)(m) and 78(2)(m); WA Retail Leases Act ss 15C(2)(m) and 15D(2)(m).

75.

Vic Retail Leases Act ss 77(2)(n) and 78(2)(n); WA Retail Leases Act ss 15C(2)(n) and 15D(2)(n).

76.

Vic Retail Leases Act ss 77(2)(n) and 78(2)(n); WA Retail Leases Act ss 15C(2)(n) and 15D(2)(n).

77.

ACL s 21(4)(c); ASIC Act s 12CB(4)(c).

78.

ACL s 21(3)(b); ASIC Act s 12CB(3)(b); NSW Retail Leases Act s 62B(7)(b) (but provision excludes conduct engaged in before the commencement of the provision); Qld Retail Leases Act s 46B(2) (but conduct engaged in before the commencement of the provision excluded — ss 46A(4) and 46B(4)(b)); Vic Retail Leases Act ss 77(3)(b) and 78(3)(b) (but provision excludes conduct engaged in before the commencement of the

provision); WA Retail Leases Act ss 15C(3)(b) and 15D(3)(b) (but provision excludes conduct engaged in before the commencement of the provision). 79.

ACL s 21(3)(a); ASIC Act s 12CB(3)(a); NSW Retail Leases Act s 62B(7)(a); Qld Retail Leases Act s 46B(4)(a); Vic Retail Leases Act ss 77(3)(a) and 78(3)(a); WA Retail Leases Act ss 15C(3)(a) and 15D(3)(a).

80.

Paciocco FFC Decision, at [262].

81.

Paciocco FFC Decision, at [262] per Allsop CJ.

82.

Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23] Allsop CJ, Jacobson and Gordon JJ; Paciocco FFC Decision; NRM Corp Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98 at [161]–[163] per Flick, Murphy and Griffiths JJ; Australian Competition and Consumer Commission v Multimedia Services Pty Ltd [2016] FCA 439 at [30] per Edelman J; Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (No 2) [2016] FCA 62 at [144] per Mortimer J (overturned in Swishette Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 45 but not on this point).

83.

Paciocco FFC Decision, at [262] per Allsop CJ.

84.

ibid.

85.

Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 (‘Lux’) at [41] per Allsop CJ, Jacobson and Gordon JJ.

86.

Lux, at [23] per Allsop CJ, Jacobson and Gordon JJ. See also Paciocco FFC Decision, at [262] per Allsop CJ.

87.

Scully, at [45]; PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [101] per Sackville AJA (McColl and Leeming JJA agreeing); Australian Competition and Consumer Commission v South East Melbourne Cleaning Pty Ltd (in liq) [2015] FCA 25 (‘South East Melbourne Cleaning’) at [116](a) per Murphy J.

88.

Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39] per French CJ, Hayne, Crennan, Bell and Gageler JJ cited by Santamaria J in Scully, at [45].

89.

Scully, at [45].

90.

[2007] NSWCA 246 cited by Santamaria J in Scully, at [45].

91.

ibid, at [4].

92.

Paciocco FFC Decision, at [262] per Allsop CJ.

93.

Investec Bank (Australia) Pty Ltd v Naude [2014] NSWSC 165 at [54] per McDougall J; South East Melbourne Cleaning, at [116](c) per Murphy J; Tameeka Group, at [172] per Markovic J.

94.

Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 at [45] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne and Heydon JJ; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [57] per French CJ, Hayne, Heydon, Crennan and Kiefel JJ; Paciocco FFC Decision, at [300] per Allsop CJ.

95.

ACL s 22; ASIC Act s 12CC.

96.

Australian Competition and Consumer Commission v Oceana Commercial Pty Ltd (2004) 139 FCR 316 at [181] per Heerey, Sundberg and Dowsett JJ; Body Bronze

International Pty Ltd v Fehcorp Pty Ltd [2011] VSCA 196 at [76] per Macaulay AJA (Harper and Hansen JJA agreeing); Director of Consumer Affairs Victoria v Scully [2013] VSCA 292 at [42] per Santamaria JA (Neave and Osborn JJA agreeing); Paciocco FFC Decision, at [262] per Allsop CJ (Besanko and Middleton JJ agreeing). 97.

Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd (2017) 349 ALR 100 at [58] per Rares, Murphy and Davies JJ: ‘The primary judge was required to consider each of the non-exhaustive list of matters set out in s 51AC(3) and (4), if relevant, because the word “may” in subss (3) and (4) is conditional not permissive.’

98.

Scully, at [44] per Santamaria JA (Osborn and Santamaria JJA agreeing).

99.

ibid; Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 at [25] per North J.

100. Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709 at [63] per Beach J. 101. Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 (Paciocco HC Decision) at [189] per Gageler J; Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd (2017) 349 ALR 100 at [58] per Rares, Murphy and Davies JJ; Guy v Crown Melbourne Ltd (No 2) [2018] FCA 36 at [527] per Mortimer J. 102. ibid. 103. (2004) 139 FCR 316. 104. ibid, at [181]. 105. Australian Competition and Consumer Commission v Oceana Commercial Pty Ltd [2001] FCA 1516 per Kiefel J. 106. ACL ss 22(1)(a) and 22(2)(a); ASIC Act ss 12CC(1)(a) and 12CC(2)(a). 107. Paciocco FFC Decision, at [286]. 108. ibid; Scully, at [43] per Santamaria J (Neave and Osborn JJA agreeing). 109. Paciocco HC Decision, at [293]. 110. Paciocco HC Decision, at [294]. 111. ACL ss 22(1)(l) and 22(2)(l); ASIC Act ss 12CC(1)(l) and 12CC(2)(l). 112. Paciocco FFC Decision, at [287] per Allsop CJ; Paciocco HC Decision, at [189] per Gageler J; Ipstar, at [198] per Bathurst CJ (Beazley P and Leeming JA agreeing). 113. ibid; Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at [42] per French CJ, Bell and Keane JJ and [107] per Kiefel J. 114. Paciocco FFC Decision, at [288] citing Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349; Burger King Corporation v Hungry Jack’s Pty Ltd (2001) 69 NSWLR 558; United Group Rail Services Ltd v Rail Corporation New South Wales (2009) 74 NSWLR 618. 115. Paciocco FFC Decision, at [289] per Allsop CJ. 116. Paciocco FFC Decision, at [291] per Allsop CJ citing Macquarie International Health

Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [12]– [13] per Allsop P. 117. Paciocco FFC Decision, at [285] per Allsop CJ. 118. See 5.32, (a), (b) and (d)–(k) above. 119. See 5.32, (c) above. 120. See 5.32, (e) and (i) above. 121. See 5.32, (l) above. 122. Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 at [23] per Allsop CJ, Jacobson and Gordon JJ; Paciocco FFC Decision, at [298] per Allsop CJ; Scully, at [56] per Santamaria JA; Commonwealth Bank of Australia v Kojic [2016] FCAFC 186 at [56]–[57] per Allsop CJ (Besanko J agreeing). 123. [2013] FCAFC 90 (‘Lux’). 124. Lux, at [23] per Allsop CJ, Jacobson and Gordon JJ. 125. Lux, at [41]. 126. Paciocco FFC Decision, at [279]. 127. [2015] FCA 368. 128. Lux, at [23]. 129. Lux, at [63]. The ruse involved calling elderly consumers and offering to provide a free maintence check of their existing vaccum cleaner. The representative who called on the consumer was a salesperson who had no technical expertise. Once inside the consumer’s home the representative was able to sell a Lux vaccum cleaner to the consumer, usually at a price well above that for the same cleaner in-store. The selling technique employed by the representative sometimes involved remaining at the premises for much longer than the legislation allowed. 130. Paciocco FFC Decision, at [264]–[265]. 131. Paciocco FFC Decision, at [281]. 132. Paciocco FFC Decision, at [282]. 133. Paciocco FFC Decision, at [288]. 134. Paciocco FFC Decision, at [297]. 135. Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525. 136. Good Medical Practice: A Code of Conduct for Doctors in Australia. The Code was approved by the Medical Board of Australia under s 39 of the Schedule to the Health Practitioner Regulation National Law Act 2009 (Qld). 137. AMI, at [932] and [933]. 138. AMI, at [932]. 139. NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98. 140. Conduct that is highly unethical is unconscionable: Scully, at [48]–[49] per Santamaria JA (Neave and Osborn JJA agreeing).

141. Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 at [121] per Spigelman J; Scully, at [44] per Santamaria JA (Neave and Osborn JJA agreeing); Australian Competition and Consumer Commission v Woolworths Ltd [2016] FCA 1472 at [130] per Yates J. 142. Scully, at [48] per Santamaria JA (Neave and Osborn JJA agreeing). 143. Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [291] per Allsop P. 144. Paciocco FFC Decision, at [304] (Besanko and Middleton JJ agreeing). 145. Canon Australia Pty Ltd v Patton [2007] NSWCA 246 at [4] per Basten JA; Scully, at [45] per Santamaria JA; PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [101] per Sackville AJA (McColl and Leeming JJA agreeing); Paciocco FFC Decision, at [262] per Allsop CJ; Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15 at [195] per Bathurst CJ (Beazley P agreeing) and at [278] per Leeming JA. 146. Paciocco FFC Decision, at [262] per Allsop CJ (Besanko and Middleton JJ agreeing); Scully, at [23] per Santamaria JA; Commonwealth Bank of Australia v Kojic [2016] FCAFC 186 at 56 per Allsop CJ. 147. (1996) 66 FCR 246 (‘Qantas’). 148. Qantas, at 262 per Davies J (Lindgren and Lehane JJ agreeing). 149. See, for example, Hurley v McDonald’s Australia Ltd [1999] FCA 1728 at [22] per Heerey, Drummond and Emmett JJ; Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491 at [184] per Selway J; Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132 at [30], [33] per Tamberlin, Finn and Conti JJ; Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 2) [2009] FCA 17 at [113](b) per Foster J; Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [17] per Gordon J; Transmarket Trading Pty Ltd v Sydney Futures Exchange Ltd (2010) 188 FCR 1 at [126] per Perram J; Ange v First East Auction Holdings Pty Ltd (2011) 284 ALR 638 at [96] per Neave and Tate JJA and Sifris AJA; Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [291], [293]; Australian Competition and Consumer Commission v Lux Pty Ltd [2004] FCA 926 at [41] per Allsop CJ, Jacobson and Gordon JJ; Scully, at [36] per Santamaria J (Neave and Osborn JJA agreeing). 150. Qantas, at 281. 151. Qantas, at 284. 152. (2005) 63 NSWLR 557 at [121]. 153. ibid. 154. See, for example, Canon Australia Pty Ltd v Patton [2007] NSWCA 246 at [41]–[42] per Hodgson JA (Harrison JA agreeing); Landmark Operations Ltd v J Tiver Nominees Pty Ltd [2008] SASC 322 at [755] per Sulan J; Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343 at [214] per Campbell JA (Hodgson and McColl JJA agreeing); Vale v Rosychamp Pty Ltd [2008] NSWSC 1373 at [120] per White J; Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10 at [359] per Murphy J; Astram Financial Services Pty Ltd v Bank of Queensland Ltd [2010] FCA 1010 at [339] per Buchanan J;

Body Bronze International Pty Ltd v Fehcorp Pty Ltd [2011] VSCA 196 at [90] per Macaulay AJA (Harper and Hansen JJA agreeing); Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [291] per Allsop P; Fast Financial Solutions Pty Ltd v Crawford [2012] NSWSC 40 at [42] per Barrett J; Technology Leasing Ltd v Lenmar Pty Ltd [2012] FCA 709 at [251] per Cowdroy J; Perpetual Trustee Co Ltd v Burniston (No 2) (2012) 271 FLR 122 at [186], [306] and [324] per Edelman J; Violet Home Loans Pty Ltd v Schmidt [2013] VSCA 56 at [57] per Warren CJ, Cavanough and Ferguson AJJA; Paciocco HC Decision, at [188] per Gageler J; Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15 at [195] per Bathurst CJ (Beazley P agreeing). 155. [2011] NSWCA 389. 156. ibid, at [293]. 157. [2013] FCAFC 90. 158. ibid, at [41] per Allsop CJ (Jacobson and Gordon JJ agreeing). 159. [2013] VSCA 292. 160. Scully, at [48] per Santamaria JA (Neave and Osborn JJA agreeing). 161. Paciocco FFC Decision, at [262]. 162. See, for example, PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [101]– [103] per Sackville AJA (McColl and Leeming JJA agreeing); Commonwealth Bank of Australia v Kojic [2016] FCAFC 186 at [54]–[60] per Allsop CJ, at [72] per Besanko J, at [88] per Edelman J; Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd [2017] FCAFC 75 at [52] per Rares, Murphy and Davies JJ; Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15 at [278] per Leeming JA. 163. ibid, at [278]. 164. Paciocco FFC Decision, at [296]. 165. Muschinski v Dodds (1985) 160 CLR 583 at 616 per Deane J: ‘[P]roprietary rights fall to be governed by principles of law and not by some mix of judicial discretion, … subjective views about which party “ought to win” and “the formless void of individual moral opinion” … Long before Lord Seldon’s anachronism identifying the Chancellor’s foot as the measure of Chancery relief, undefined notions of “justice” and what was “fair” had given way in the law of equity to the rule of ordered principle which is the essence of any coherent system of rational law.’ The observations made by Deane J are equally applicable to statutory unconscionability: Scully, at [35] per Santamaria JA and Paciocco FFC Decision, at [306] per Allsop CJ. 166. Paciocco FFC Decision, at [402]. 167. Paciocco FFC Decision, at [304] per Allsop CJ. 168. (1953) 90 CLR 113 at 119. 169. As most recently stated by the High Court in Thorne v Kennedy [2017] HCA 49 at [41]– [43] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ, at [86] per Gordon J. 170. [2016] FCAFC 186 at [56]–[57]. 171. ibid, at [69]. 172. ibid, at [85].

173. [2018] NSWCA 15 at [270]. 174. Australian Competition and Consumer Commission v ACN 117 3 72 915 Pty Ltd (in liq)(formerly Advanced Medical Institute Pty Ltd [2015] FCA 368 at [46] per North J; Australian Battery Distributors Pty Ltd v Robert Bosch (Australia) Pty Ltd [2017] FCA 707 at [50] per Dowsett J; Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd [2017] FCAFC 75 at [55] per Rares, Murphy and Davies JJ; Guy v Crown Melbourne Ltd (No 2) [2018] FCA 36 at [513]–[514] per Mortimer J. 175. Australian Competition and Consumer Commission v 4WD Systems Pty Ltd [2003] FCA 850 at [185] per Selway J; Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 2) (2009) 253 ALR 324 at [113] per Foster J; Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [17] per Gordon J; Australian Competition and Consumer Commission v Seal-a-Fridge Pty Ltd (2010) 268 ALR 321 at [16] per Logan J; Director of Consumer Affairs (Vic) v Scully (No 3) [2012] VSC 444 at [31] per Hargrave J; Violet Home Loans Pty Ltd v Schmidt [2013] VSCA 56 at [59] per Warren CJ, Cavanough and Ferguson AJA; Scully, at [56] per Santamaria JA (Neave and Osborne JJA agreeing); Commonwealth Bank of Australia v Kojic [2016] FCAFC 186 at [114] per Edelman J (Allsop CJ and Besanko J agreeing). 176. ibid. 177. Commonwealth Bank of Australia v Kojic [2016] FCAFC 186 at [114] per Edelman J (Allsop CJ and Besanko J agreeing). 178. Video Ezy International Pty Ltd v Sedema Pty Ltd [2014] NSWLR 143 at [96] per Harrison AsJ; PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 at [101] and [104] per McColl and Leeming JJA and Sackville AJA; Paciocco FFC Decision, at [262] and [305] per Allsop CJ; Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) [2018] FCA 751 at [2178] per Beach J. 179. An example made by Allsop CJ in Paciocco FFC Decision, at [282]. Other examples cited by Allsop CJ include: Johnson v Smith [2010] NSWCA 306 at [5] per Allsop P, Hodgson and Young JJA (no dishonesty found in respect of the attempt by both father and son to retain money given by the wife/mother); and Aboody v Ryan [2012] NSWCA 395 at [65] per Allsop P (Bathurst CJ and Campbell JA agreeing) (concerned transfer of house by elderly man to his daughter). 180. (1983) 151 CLR 447. 181. ibid, at 478: ‘It must in fairness, be stressed that there is no suggestion that Mr Virgo or any other officer of the bank had been guilty of dishonesty or moral obliquity in the dealings between Mr and Mrs Amadio and the bank.’ 182. Australian Competition and Consumer Commission v Radio Rentals Ltd [2005] FCA 1133 at [18] per Finn J. 183. [2005] FCA 1133 per Finn J. 184. [2017] FCA 240 per Mortimer J. 185. CCA s 139B; ASIC Act s 12GH. 186. [2013] NSWCA 446 (‘Spuds’). 187. Spuds, at [101]–[111] per Sackville AJA (McColl and Leeming JJA agreeing).

188. Spuds, at [110]. 189. Spuds, at [109]. 190. [2016] FCAFC 186 (‘Kojic’). 191. Kojic, at [112] per Edelman J. 192. Kojic, at [112] per Edelman J. 193. Kojic, at [107]–[111] per Edelman J. 194. Kojic, at [64]. 195. Kojic, at [81]. 196. Kojic, at [112]–[113] citing Armstrong v Strain [1952] 1 TLR 856 at 872 per Devlin J (Besanko J agreeing). 197. Kojic, at [66]. 198. Kojic, at [114]. 199. Kojic, at [117]. 200. Kojic, at [65] per Allsop CJ; Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) [2018] FCA 751 at [2150] per Beach J. 201. Violet Home Loans Pty Ltd v Schmidt [2013] VSCA 56 at [59] per Warren CJ, Cavanough and Ferguson AJA; Australian Securities and Investments Commission v Kobelt [2016] FCA 1327. 202. [2017] FCA 240 (‘Gibson’). 203. And in a book: Beau Donelly and Nick Toscano, The Woman Who Fooled the World: Belle Gibson’s Cancer Con, Scribe Publications, Melbourne, 2017. 204. Gibson, at [45]. 205. Gibson, at [165]. 206. Gibson, at [166]–[167]. 207. Gibson, at [167]. 208. Gibson, at [235]. 209. Gibson, at [184]–[196]. 210. Gibson, at [170]. 211. Gibson, at [170]. 212. Gibson, at [170]. 213. Gibson, at [194]. 214. Gibson, at [238]–[242]. 215. Gibson, at [238]. 216. Gibson, at [238]. 217. Gibson, at [239]. 218. [2017] FCAFC 75 (‘Price’). 219. Price, at [34]–[36].

220. Price, at [65]. 221. Price, at [67]. 222. [2018] NSWCA 15 (‘Ipstar’). 223. Ipstar, at [21]. 224. Ipstar, at [22]. 225. Ipstar, at [23]. 226. Ipstar, at [33] and [201]. 227. Ipstar, at [204]. 228. Ipstar, at [88]. 229. Ipstar, at [208] per Bathurst CJ (Beazley P and Leeming JA agreeing). 230. Ipstar, at [208] per Bathurst CJ (Beazley P and Leeming JA agreeing). 231. Ipstar, at [210] per Bathurst CJ (Beazley P and Leeming JA agreeing). 232. Contained in Sch 1 to the National Consumer Credit Protection Act 2009 (Cth) (‘NCCP Act’). 233. Contained in an appendix to the Consumer Credit (Queensland) Act 1994 (Cth). 234. The transitional regime applying to these contracts is described by Croft J in Knowles v Victorian Mortgage Investments Ltd [2011] VSC 611 at [16]–[37]. 235. NCC s 80(2). 236. NCC s 3(1). 237. NCC s 3(2). 238. NCC s 4. 239. NCC s 5(1). 240. That is the purpose for which more than half the credit is intended to be used or (if the credit is intended to be used to purchase goods or services) the purpose for which the goods or services are intended to be most used: NCC s 5(4). 241. Does not include investment by the debtor: NCC s 5(3). 242. Or as part of any other business carried on by the credit provider in the jurisdiction. See also s 12 of the NCCP Act for a definition of ‘carried on in this jurisdiction’. But the NCC applies to all transactions or acts under the credit contract irrespective of whether or not they occur within the jurisdiction: NCC s 5(2)(a). And the NCC continues to apply even if the credit provider subsequently ceases to exist: NCC s 5(2)(b). 243. NCC s 7. 244. NCC s 8. 245. NCC s 9. 246. NCC s 10. 247. NCC ss 11 and 12. 248. NCC s 6. 249. NCC s 13(1).

250. NCC s 13(5). 251. NCC s 13(2). 252. NCC s 13(3). 253. Lauvan Pty Ltd v Bega [2018] NSWSC 154 at [251] per Gleeson JA. 254. See, for example, Park Avenue Nominees Pty Ltd v Boon [2001] NSWSC 700 at [38] per Brabazon DCJ; Taylor v Third Szable Holdings Pty Ltd [2001] VCAT 1841 at [59]–[60] per McKenzie DP. 255. Taylor v Third Szable Holdings Pty Ltd [2001] VCAT 1841 at [59]–[60] per McKenzie DP. 256. Park Avenue Nominees Pty Ltd v Boon [2001] NSWSC 700 at [38] per Brabazon DCJ. 257. See, for example, Linkenholt Pty Ltd v Quirk [2000] VSC 166 at [98] per Gillard J; Dale v Nichols Constructions Pty Ltd [2003] QDC 453 at [27] per McGill DCJ; Jonsson v Arkway Pty Ltd [2005] NSWSC 304 at [27] and [34] per Shaw J; Brott v Shtrambrandt [2009] VSC 467 at [71] per Beach J; Bank of Queensland Ltd v Dutta [2010] NSWSC 574 at [123]–[124] per Davies J; Knowles v Victorian Mortgage Investments Ltd [2011] VSC 611 at [47] per Croft J; Westpac Banking Corporation v Haynes [2017] SASC 23 at [46] per Nicolson J. 258. Dale v Nichols Constructions Pty Ltd [2003] QDC 453 at [27] per McGill DCJ. 259. Linkenholt Pty Ltd v Quirk [2000] VSC 166 at [98] per Gillard J. 260. Dale v Nichols Constructions Pty Ltd [2003] QDC 453 at [27] per McGill DCJ; Knowles v Victorian Mortgage Investments Ltd [2011] VSC 611 at [47] per Croft J. 261. Bank of Queensland Ltd v Dutta [2010] NSWSC 574 at [124] per Davies J. 262. [2009] QCA 85 at [33] per Muir JA (Mullins and Douglas JJ agreeing). 263. NCC s 78(1)(a). 264. NCC s 78(1)(b). The NCC does not define ‘establishment fee’ but the term is taken to refer to any fee charged in connection with an application for credit or the establishment of an account for the provision of credit: Knowles v Victorian Mortgage Investments Ltd [2011] VSC 611 at [81] per Croft J. 265. NCC s 78(1)(c). 266. NCC s 78(1)(d). 267. NCC s 78(2). 268. NCC s 78(2). 269. NCC s 78(3). 270. NCC s 78(1). 271. [2011] VSC 611. 272. ibid, at [93]–[95]. 273. ibid, at [62]–[79]. 274. CRA s 7. 275. NCC s 76. Note that s 76 in the NCC is substantially similar to its predecessor (s 70) in

the now repealed UCCC: Wolfe v Permanent Custodians Ltd [2013] VSCA 331 at [20] per Warren CJ, Neave and Whelan JJA. 276. NCC s 77; CRA s 7(1) and (2). 277. (1986) 5 NSWLR 610 (‘West’). 278. West, at 610 (Hope JA agreeing). 279. NCC s 80(1); CRA s 16. 280. CRA s 6. 281. West, at 621 (Hope JA agreeing); Baltic Shipping Company v Dillon (‘Mikhail Lermontov’) (1991) 22 NSWLR 1 at 20; Crowe v Commonwealth Bank of Australia [2005] NSWCA 41 at [75]–[77] per Tobias JA (Sheller and Bryson JJA agreeing); Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [65] per Spigelman CJ (Handley and Basten JJA agreeing); Paciocco FFC Decision, at [348]–[350] per Allsop CJ (Besanko and Middleton JJ agreeing). 282. West, at 621 (Hope JA agreeing); Esanda Finance Corporation Ltd v Tong (1997) 41 NSWLR 482 at 491 per Handley JA (Santow and Simos AJJA agreeing); Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 at [60] per Gleeson JA (Meagher and Leeming JJA agreeing). 283. Conley v Commonwealth Bank of Australia [2000] NSWCA 101 at [96] per Heydon JA (Handley JA agreeing); Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 at [60] per Gleeson JA (Meagher and Leeming JJA agreeing). 284. Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413 at [78] per Beazley JA (Santow JA and Campbell AJA agreeing); Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 at [60] per Gleeson JA (Meagher and Leeming JJA agreeing). 285. Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [128] per Bastan JA; Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 at [60] per Gleeson JA (Meagher and Leeming JJA agreeing). 286. See, for example, Baltic Shipping Company v Dillon (‘Mikhail Lermontov’) (1991) 22 NSWLR 1 per Gleeson CJ, Kirby P and Mahoney JA. 287. NCC s 76(6). 288. [2006] NSWCA 41 at [99]. Note Brereton J considered that there were just two distinct stages/steps: Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 at [51]. 289. ibid, at [106]. 290. Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343 at [88] per Campbell JA; Canty v Paperlinx Australia Pty Ltd [2014] NSWCA 309 at [123] per Gleeson JA (Barrett and Emmett JJA agreeing). 291. (1979) 142 CLR 531. See Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [100] per Handley JA (Basten JA agreeing); Canty v Paperlinx Australia Pty Ltd [2014] NSWCA 309 at [124]–[126] per Gleeson JA (Barrett and Emmett JJA agreeing). 292. (1936) 55 CLR 499. See Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [34] per Spigelman CJ at [100] and at [109] per Basten JA; Canty v Paperlinx Australia Pty Ltd [2014] NSWCA 309 at [124]–[126] per Gleeson JA (Barrett and Emmett JJA agreeing).

293. NCC s 204; CRA s 4(1). 294. West, at 620 (Hope JA agreeing). 295. West, at 621 (Hope JA agreeing). 296. Fast Fix Loans Pty Ltd v Samardzic [2011] NSWCA 260 at [43] per Allsop P. 297. Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [64] per Spigelman CJ (Handley JA and Basten JA agreeing). 298. [2013] NSWCA 36. 299. ibid, at [7]. See also Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [80] per Spigelman CJ, at [101] per Handley JA, at [107] per Basten JA; Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343 at [102] per Campbell JA (Hodgson and McColl JJA agreeing); Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [270] per Allsop P (Bathurst CJ and Campbell JA agreeing); Paciocco FFC Decision, at [321] per Allsop CJ. 300. West, at 620 per McHugh JA (Hope JA agreeing); Canty v Paperlinx Australia Pty Ltd [2014] NSWCA 309 at [119] per Gleeson JA; Calvo v Ellimark Pty Ltd [2016] NSWCA 136 at [101] per Leeming JA (Ward and Gleeson JJA agreeing); Al Maha Pty Ltd v Coplin [2017] NSWCA 318 at [28] per Meagher JA (Macfarlan and Gleeson JJA agreeing). 301. Paciocco FFC Decision, at [357] per Allsop CJ. 302. [2011] NSWCA 389. 303. ibid, at [293] per Allsop P (Bathurst CJ and Campbell JA agreeing). 304. NCC s 76(1); CRA s 9(1). 305. [1992] 1 VR 99. 306. ibid, at 210. Subsequently cited in Custom Credit Corp Ltd v Gray [1992] 1 VR 540 at 558 per McGarvie and Gobbo JJ; Paciocco v Australia and New Zealand Banking Group Ltd [2014] FCA 35 at [320] per Gordon J; Paciocco FFC Decision, at [320] per Allsop CJ. 307. Paciocco v Australia and New Zealand Banking Group Ltd [2014] FCA 35 at [320] per Gordon J; Paciocco FFC Decision, at [320] per Allsop CJ. 308. [2011] VSC 611. 309. ibid, at [68]. 310. Sharman v Kunert (1985) 1 NSWLR 225 at 231 per Holland J; Baltic Shipping Co v Dillon (‘Mikhail Lermontov’) (1991) 22 NSWLR 1 at 9 per Gleeson CJ; Dale v Nichols Constructions Pty Ltd [2003] QDC 453 at [105] per McGill DCJ; Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 at [269] per Allsop P; AF&L Mortgages Ltd v Owens [2014] VCC 1190 at [158]. 311. NCC s 76(2)(b); CRA s 9(2)(a). 312. CRA s 9(2)(f). 313. NCC s 76(2)(c); CRA s 9(2)(b); 314. NCC s 76(2)(d); CRA s 9(2)(c).

315. NCC s 76(2)(e); CRA s 9(2)(d). 316. NCC s 76(2)(d); CRA s 9(2)(c). 317. NCC s 76(2)(g); CRA s 9(2)(g). 318. NCC s 76(2)(h); CRA s 9(2)(h). 319. NCC s 76(2)(i); CRA s 9(2)(i). 320. NCC s 76(2)(j); CRA s 9(2)(j). 321. NCC s 76(2)(o); CRA s 9(2)(k). 322. NCC s 76(2)(p). 323. CRA s 9(2)(l). 324. NCC s 76(2)(k). 325. NCC s 76(2)(l). Also a relevant consideration in determining whether a contract is unjust under the CRA: Provident Capital Ltd v Papa [2013] NSWCA 36 at [113] per Macfarlan JA. 326. NCC s 76(2)(m). 327. NCC s 76(2)(n). For proscribed mortgage provisions see NCC s 50. 328. Barker v GE Mortgage Solutions Ltd [2013] QCA 127 at [64] per Phillippides J (White JA and Lyons J agreeing); Fast Fix Loans Pty Ltd v Samardzic [2011] NSWCA 260 at [55] per Allsop P (Bathurst CJ and Campbell JA agreeing). 329. Barker v GE Mortgage Solutions Ltd [2013] QCA 127 at [64] per Phillippides J (White JA and Lyons J agreeing). 330. NCC s 76(4); CRA s 9(4). 331. CIT Credit Pty Ltd v Keable [2006] NSWCA 130 at [65] per Spigelman CJ. 332. NCC s 76(5); CRA s 9(s). See further Chapter 6, 6.35–6.38. 333. Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256 at 277 per Meagher JA; Nguyen v Taylor (1992) 27 NSWLR 48 at 71 per Sheller JA; Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [94]–[95] per Spigelman CJ; Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343 at [86] per Campbell JA. 334. (1986) 7 NSWLR 151 per Kirby P, Samuels and Mahoney JJ. 335. Provident Capital Ltd v Papa [2013] NSWCA 36 at [7] per Allsop P. See also Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [73] per Spigelman CJ (Handley and Basten JJA agreeing): ‘Where a Court has to apply a standard as general as what is “unjust”, it cannot be confined by such reasons as if they were rules.’ 336. (1991) 22 NSWLR 1 (‘Baltic Shipping’) per Gleeson CJ, Kirby P and Mahoney JA. 337. Baltic Shipping, at 9 per Gleeson CJ. 338. ibid. 339. ibid. 340. Baltic Shipping, at 21 per Kirby J. 341. ibid.

342. Baltic Shipping, at 9 per Gleeson CJ, at 18 and 21 per Kirby P (Mahoney JA dissenting). 343. [2011] NSWCA 389. 344. A description coined in Jeannie Paterson, ‘The Unfair Contract Terms Law’ (2011) 106 Precedent 10. 345. Residential Tenancies Act (NT) s 22; Residential Tenancies Act 1995 (SA); Residential Tenancies Act 1997 (Vic) s 28. 346. The most significant distinction between the UCTL and the Victorian provision is that the Victorian test for unfair terms required that the term be ‘contrary to the requirements of good faith’ (s 32W) rather than ‘not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term’. Cavanough J, in the Supreme Court of Victoria, considered the Victorian provisions in some detail in Jetstar Airways Pty Ltd v Free [2008] VSC 539. 347. Unfair Terms in Consumer Contracts Regulations 1999 (UK). The regulations were subsequently replaced by the Consumer Rights Act 2015 (UK) from 1 October 2015. 348. Council Directive 93/13/EEC of 5 April 1993 on Unfair Terms in Consumer Contracts. See Jeannie Paterson, ‘The Australian Unfair Contract Terms Law: The Rise of Substantive Unfairness as a Ground of Review of Standard Form Contracts’ (2009) 33 Melbourne University Law Review 934 at 935. 349. Productivity Commission, Review of Australia’s Consumer Policy Framework, Inquiry Report No 45 (2008) (‘Productivity Commission Report’) vol 1, at 34–5 and vol 2 at 155–6 and 433–8. 350. Productivity Commission Report, at 149. 351. Productivity Commission Report, at 149. 352. Productivity Commission Report, at 149. 353. Productivity Commission Report, at 152–3. 354. Productivity Commission Report, at 154. 355. Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth). The Act was enacted in response to submissions received in a Treasury review on extending the UCTL to small business contracts: Extending Unfair Contract Protections to Small Business — Consultation (May 2014). 356. Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015, Explanatory Memorandum (‘2015 EM’), at [1.2]. 357. 2015 EM, at [1.3]. 358. 2015 EM, at [1.4]. 359. [2008] VSC 539 (‘Jetstar Airways’). The case concerned Pt 2B of the Fair Trading Act 1999 (Vic). 360. Jetstar Airways, at [112]. This passage was cited with approval in Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377 (‘CLA Trading’) at [54](a) per Gilmour J and in Australian Competition and Consumer Commission v JJ Richards & Sons Pty Ltd [2017] FCA 1224 (‘JJ Richards’) at [19](a) per Moshinsky J.

361. Jetstar Airways, at [115]. 362. Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 at [37] per Lord Steyn; CLA Trading at [48] and [54](b) per Gilmour J. The distinction between procedural and substantive unfairness is outlined in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620 per McHugh JA. 363. Paciocco FFC Decision, at [365] per Allsop CJ (Besanko and Middleton JJ agreeing). Although, as Allsop CJ went on to note, price may affect an evaluation of unfairness but it will not be determinative of it. Allsop CJ was cited with approval by Keane J in Paciocco HC Decision, at [302]–[303] (French CJ and Kiefel J agreeing). 364. That is, whether it is imbalanced, whether it is reasonably necessary to protect the legitimate interests of the drafter and whether it would cause detriment to the other party if relied on. 365. See Paterson, note 348 above, at 937. 366. Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 132–3 per Kirby P; Woolworths Ltd v Kelly (1991) 22 NSWLR 189 at 193–4 per Kirby P; Baltic Shipping, at 20 per Kirby P Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377 at [47] per Gilmour J. See also Elizabeth Lanyon, ‘Equality and the Doctrine of Penalties’ (1996) 9 Journal of Contract Law 234 at 250; and Paterson, note 348 above, at 937–9. 367. See above 5.157. 368. Paterson, note 348 above, at 939. See also Liam Brown, ‘The Impact of Section 51AC of the Trade Practices Act 1974 (Cth) on Commercial Certainty’ (2004) 28 Melbourne University Law Review 589 at 612–17; Nicola Howell, ‘Catching Up with Consumer Realities: The Need for Legislation Prohibiting Unfair Terms in Consumer Contracts’ (2006) 34 Australian Business Law Review 447 at 450–3; Tyrone M Carlin, ‘The Contracts Review Act 1980 (NSW) — 20 Years On’ (2001) 23 Sydney Law Review 125 at 136–7; Ben Zipser, ‘Unjust Contracts and the Contracts Review Act 1980 (NSW)’ (2001) 17 Journal of Contract Law 76 at 79–85. 369. [1999] FCA 1728. 370. ibid, at [31] per Heerey, Drummond and Emmett JJ. But for a rare example of an unfair term being found to amount to unconscionable conduct see Australian Competition and Consumer Commission v ACN 117 3 72 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Limited) [2015] FCA 368 at [936]–[938] per North J. 371. CLA Trading, at [52]–[54] per Gilmour J. 372. ACL s 23(1); ASIC Act s 12BF(1). 373. Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010, Explanatory Memorandum (‘2010 EM’), at [5.17]. 374. ACL s 23(2); ASIC Act s 12BF(2). 375. ACL s 23(3). 376. ACL s 23(5). 377. ACL s 23(4). 378. ACL s 27(1); ASIC Act s 12BK(1).

379. ACL s 27(2); ASIC Act s 12BK(2). 380. ACL s 27(2)(a); ASIC Act s 12BK(2)(a). 381. ACL s 27(2)(b); ASIC Act s 12BK(2)(b). 382. ACL s 27(2)(c); ASIC Act s 12BK(2)(c). 383. ACL s 27(2)(d); ASIC Act s 12BK(2)(d). 384. ACL s 27(2)(e); ASIC Act s 12BK(2)(e). 385. ACL s 27(2)(f); ASIC Act s 12BK(2)(f). 386. ACL s 24(1); ASIC Act s 12BG(1). 387. Australian Competition and Consumer Commission v Chrisco Hampers Australia Ltd [2015] FCA 1204 (‘Chrisco’) at [43](1) per Edelman J; NRM Corporation Pty Ltd v Australian Competition and Consumer Commission [2016] FCAFC 98 at [193] per Flick, Murphy and Griffiths JJ. 388. Paciocco FFC Decision, at [364] per Allsop CJ (Besanko and Middleton JJ agreeing). 389. Paciocco FFC Decision, at [363]. 390. Chrisco, at [39]. 391. Chrisco, at [40]. 392. ibid, citing M Leeming, ‘Equity: Ageless in the ‘Age of Statutes’’ (2015) 9 Journal of Equity 108 at 116. 393. [2014] UKSC 61 (‘Plevin’). 394. Chrisco, at [39]. 395. Plevin, at [10]. 396. [2002] 1 AC 481 (‘First National Bank’). 397. First National Bank, at [54]. 398. Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 at [20] per Lord Bingham (Lords Steyn, Hope, Millett and Rodger agreeing); Paciocco FFC Decision, at [358] per Allsop CJ; Paciocco HC Decision, at [301] per Keane J. 399. 2010 EM, at [5.32]. 400. Paciocco FFC Decision, at [358] per Allsop CJ (Besanko and Middleton JJ agreeing); Paciocco HC Decision, at [301] and [304] per Keane J (French CJ and Kiefel J agreeing). 401. 2010 EM, at [5.23]. 402. Chrisco, at [43](2) per Edelman J; 2010 EM, at [5.24]. 403. Jetstar Airways, at [112] per Cavanough J; Paciocco v Australia and New Zealand Banking Group Ltd [2014] FCA 35 at [331] per Gordon J; Chrisco, at [50] per Edelman J. 404. First National Bank, at [17] per Lord Bingham (Lords Steyn, Hope, Millett and Rodger agreeing). 405. Chrisco, at [47]; Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 at [950]; CLA Trading, at [54] per Gilmour J; JJ Richards, at [19] per Moshinsky J.

406. Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493 at [32]–[33] per Morris J; Jetstar Airways, at [104]–[105] per Cavanough J; CLA Trading, at [54] per Gilmour J; JJ Richards, at [19] per Moshinsky J. 407. First National Bank, at [54]. 408. Clause 8 which read: ‘Interest on the amount which becomes payable shall be charged in accordance with Condition 4, at the rate stated in paragraph D overleaf (subject to variation) until payment after as well as before any judgement (such obligation to be independent of and not merge with the judgement).’ 409. First National Bank, at [20] per Lord Bingham (Lords Steyn, Hope, Millet and Rodger agreeing). 410. Chrisco, at [47]–[49]. 411. On Chrisco’s website the term read: ‘When your 2014 (…) Order is fully paid you will automatically roll into a 2015 Headstart Plan for the following year. Your HeadStart Plan is fully refundable. You can choose not to have this option by ticking here’ and ‘HeadStart Plan Your direct Debit payments will continue until your order is fully paid for (no later than 24th October 2014). After the 24th October 2014, a HeadStart Plan will be created for you and payments will continue accordingly. A HeadStart Plan allows you to make payments towards next year’s order, while giving you time to decide exactly which products you want. We will write to you to confirm your HeadStart Plan payments prior to commencing your direct debits. Your HeadStart Term is fully refundable at no cost to you should you change your mind.’ 412. Chrisco, at [69]. 413. 2010 EM, at [5.25]. 414. ACL s 24(3); ASIC Act s 12BG(3). See also Chrisco, at [43](2); 2010 EM, at [5.26]. 415. 2010 EM, at [5.27]. 416. ibid. 417. 2010 EM, at [5.28]. 418. 2010 EM, at [5.29], [5.33]. 419. Chrisco, at [43](2); 2010 EM, at [5.30]. 420. 2010 EM, at [5.30]. 421. ibid. 422. 2010 EM, at [5.32]. 423. 2010 EM, at [5.34]. 424. Paciocco FFC Decision, at [358] per Allsop CJ (Besanko and Middleton JJ agreeing). 425. Paciocco HC Decision, at [304] (French CJ and Kiefel J agreeing). 426. ACL s 24(2)(a); ASIC Act s 12BG(2)(a). 427. ACL s 24(3); ASIC Act s 12BG(3). 428. 2010 EM, at [5.38]. 429. 2010 EM, at [5.39].

430. Jetstar Airways, at [115] per Cavanough J. Cited with approval in CLA Trading, at [54] per Gilmour J and JJ Richards, at [19] per Moshinsky J. 431. [2017] VCAT 1217. See 5.200–5.206 below. 432. Chrisco, at [43] per Edelman J; JJ Richards, at [24] per Moshinsky J. 433. ACL s 24(2)(b); ASIC Act s 12BG(2)(b). 434. Chrisco, at [43] per Edelman J; JJ Richards, at [24] per Moshinsky J. 435. Jetstar Airways, at [128]. Cited with approval in CLA Trading, at [54] per Gilmour J and JJ Richards, at [19] per Moshinsky J. 436. Jetstar Airways, at [128]. 437. ACL s 25; ASIC Act s 12BG(3). 438. 2010 EM, at [5.44]. See also Second Reading Speech of the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (Cth), Hansard, House of Representatives, 24 June 2009, 6986 (Dr Emerson); Chrisco, at [44] per Edelman J. 439. 2010 EM, at [5.49]–[5.57]. 440. That is, (a), (b), (d), (e), (f) and (g). For an explanation as to why unilateral variation clauses are unfair see Jeannie Paterson and Rhonda L Smith, ‘Why Unilateral Variation Clauses in Consumer Contracts are Unfair’ (2016) 23 Competition and Consumer Law Journal 201. 441. That is, (i), (k), (l) and (m). 442. 2010 EM, at [5.55], that is, (c). 443. That is, (j). 444. Unfair Contract Terms: Industry Review Outcomes (March 2013); Unfair Terms in Small Business Contracts: A Review of Selected Industries (November 2016). 445. ACL s 26(1); ASIC Act s 12BF(1). 446. ACL s 26(2); ASIC Act s 12BF(2). 447. ASIC Act s 12BF(3). 448. ACL s 26(1)(a). 449. ACL s 26(1)(b). 450. ACL s 26(1)(c). Note reference to a contract for the carriage of goods by ship includes a reference to any contract covered by a sea carriage document within the meaning of the amended Hague Rules referred to in s 7(1) of the Carriage of Goods by Sea Act 1991 (Cth): ACL s 28(3). 451. ACL s 28(3); ASIC Act s 12BL(1). 452. ACL s 28(4); ASIC Act s 12BL(2). 453. [2017] VCAT 1217. 454. ibid, at [13]. 455. ibid, at [22]. 456. ibid.

457. [2016] FCAFC 98 (‘AMI FFC Decision’) per Flick, Murphy and Griffiths JJ. Affirmed decision at first instance: Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd) [2015] FCA 368 (‘AMI Decision’) per North J. 458. Another example of an unfair refund term can be found in Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709 at [77]–[78], [314]–[321] and [340]–[353] per Beach J. The case concerned a refund term in a contract for assisting customers to obtain nationally recognised qualifications from registered training organisations. The refund term was heavily qualified allowing the service provider to reject requests for refunds. The qualifications were not made clear to consumers nor was the 25 per cent administration processing fee. 459. AMI Decision, at [857]; AMI FFC Decision, at [189]. 460. AMI Decision, at [857], [953]; AMI FFC Decision, at [195]. 461. ibid. 462. AMI Decision, at [953]. 463. AMI Decision, at [952]. 464. AMI Decision, at [948]; AMI FFC Decision, at [199], [204]. 465. AMI Decision, at [950]. 466. AMI Decision, at [951]. 467. AMI Decision, at [951] (individual consumer experiences are described briefly at [845]– [850]). 468. AMI Decision, at [953]. 469. AMI Decision, at [954]; AMI FFC Decision, at [202]. 470. AMI Decision, at [954]. 471. [2017] FCA 1224. 472. ibid, at [56](a) and appendix, at [23]–[25]. 473. ibid, at [56](a). 474. ibid, at [56](b) and appendix, at [26]–[27]. 475. ibid, at [56](c) and appendix, at [28]–[29]. 476. ibid, at [56](d) and appendix, at [30]–[33]. 477. ibid, at [56](e) and appendix, at [34]–[36]. 478. ibid, at [56](e). 479. ibid, at [56](f) and appendix, at [37]–[39]. 480. ibid, at [56](g) and appendix, at [40]–[41]. 481. ibid, at [56](g) and appendix, at [42]–[46]. 482. ibid, at [58]. 483. ibid, at [59]. 484. ibid, at [60].

485. ibid, at [63].

[page 249]

Chapter 6 Remedies and Defences REMEDIES 6.1 This chapter outlines the remedy of rescission, in common law and in equity, being the primary remedy for the doctrines of duress, undue influence and unconscionable conduct at common law canvassed in the preceding chapters. This chapter also outlines the remedies available under the Australian Consumer Law (ACL),1 the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), the National Credit Code (NCC), the Contracts Review Act (CRA) and state and territory retail leases legislation.

Rescission of the contract 6.2 Rescission is a term that has multiple meanings in the law.2 Used here rescission (in common law or equity) ‘means the restoration of the parties to the situation they respectively occupied immediately before the contract was made’.3 Rescission in this sense should not be confused with the termination of a contract. Termination discharges the contracting parties from future performance of the contract from the date of termination.4 Although, as outlined below, a partial rescission may only involve future obligations. [page 250]

6.3 The effect of rescission is to avoid the relevant transaction from the beginning (ab initio).5 The transaction is treated in law as if it had never existed.6 This fundamental principle is neatly illustrated in the New South Wales Court of Appeal decision of Cockburn v GIO Finance Ltd (No 2).7 In that case Mr Cockburn rescinded a mortgage he executed as a consequence of the undue influence of his father. GIO was found to have notice of the father’s undue influence. GIO crossclaimed against Mr Cockburn’s solicitor. GIO alleged that the solicitor had engaged in misleading and deceptive conduct in relation to a certificate that the solicitor had provided in connection with the mortgage. GIO sought, against the solicitor, one half of the balance owed to GIO under the mortgage at the date that the mortgage was discharged. GIO failed. Mason P explained that GIO could not recover the debt from the solicitor because the rescission of the mortgage ‘operated from the outset of the transaction … It followed that the plaintiff [Mr Cockburn] was to be treated as never having been indebted to GIO for the relevant sum. Nor was the value of his ownership in the mortgaged property diminished by that amount’.8

Rescission: an election 6.4 Rescission is the main remedy (and an essential pre-condition to other remedies) for contracts procured by duress, undue influence or unconscionable conduct. Contracts procured in this way are voidable (not void). The contract remains binding unless, or until, rescinded. Rescission is an election. The weaker (or wronged) party can elect to either rescind or affirm the contract. The wronged party is not bound to make an election straight away. The wronged party can ‘keep the question open, so long as it did nothing to affirm the contract and so long as the respondents’ position was not prejudiced in consequence of the delay’.9 [page 251] 6.5 The wronged party may rescind the contract by unequivocal words or conduct.10 The words or conduct must be unequivocal in the sense

that they are consistent only with rescission of the contract.11 The commencement of legal proceedings may amount to a valid rescission of a contract.12 But the mere commencement of legal proceedings is not enough. Relief sought in the originating process must be based on rescission of the contract.13 Similarly, a contract can be validly rescinded in a defence to a claim if specifically pleaded.14 The originating process or defence must also be served on the other contracting party to be a valid rescission of the contract.15 6.6 It is essential that rescission be communicated to the other contracting party.16 But the rule is not absolute. Where communication is not possible because the other contracting party is deliberately being evasive then the failure to communicate will not be a bar to validly rescinding a contract: see, for example, Car & Universal Finance Co Ltd v Caldwell.17 In that case the wronged party sold his car to a fraudster who paid for the car with a bad cheque and then promptly disappeared. When the wronged party discovered the fraud he informed the police and the Automobile Association but was unable to notify the fraudster of his [page 252] rescission of the contract. The Court of Appeal held that the wronged party had, in the circumstances, effectively rescinded the contract. 6.7 An election once made cannot be retracted. Rescission is irrevocable.18 Mason J, in Sargent v ASL Developments Ltd, explained: No doubt this rule has been adopted in the interests of certainty and because it has been thought to be fair as between the parties that the person affected is entitled to know where he stands and that the person electing should not have the opportunity of changing his [or her] election and subjecting his [or her] adversary to different obligations.19

6.8 It follows, from the matters outlined in the preceding paragraphs, that rescission at common law is strictly not a judicial remedy but an act by a party entitled to rescind.20 The role of the court is to determine whether rescission was lawful and, if so, make the necessary

consequential orders.21 Conversely, rescission in equity is discretionary.22 Rescission will be unavailable in equity if the respondent has an equitable defence (such as affirmation or delay) or if a bona fide purchaser for value has acquired title.

Rescission at common law and in equity Ability to return to original position a precondition to rescission 6.9 A precondition of a lawful rescission at common law is that there must be restitution in integrum.23 That is, it must be possible to restore the parties precisely to their original position prior to the contract. [page 253] Equity is more flexible than the common law. Equity will allow rescission where it is possible (through the exercise of equity’s powers) to restore the parties substantially to the status quo24 and where rescission is ‘timely and just and fair’.25 Equity is concerned to do ‘what is practically just between the parties’.26 Equity will be more inclined to make orders necessary to restore the parties to their original position in cases of fraud or wrongdoing.27 But in some cases, to do what is practically just for both parties, equity will not undo the entire transaction. Partial rescission 6.10 The High Court in Vadasz v Pioneer Concrete (SA) Pty Ltd28 observed that: … unconscionability works in two ways. In its strict sense, it provides the justification for setting aside a transaction. More loosely, it provides the justification for not setting aside the transaction in its entirety or in doing so subject to conditions, so as to prevent one party obtaining an unwanted benefit at the expense of another.

6.11 By way of illustration the High Court, in Vadasz, referred to the decision in Commercial Bank of Australia Ltd v Amadio.29 In that case the Amadios guaranteed their son’s bank overdraft believing that they

were only potentially liable for amounts of up to $50,000 and only for a six-month period. In Amadio, Deane J contemplated setting aside the guarantee only to the extent to which it imposed on the Amadios a liability of up to $50,000 or setting aside the guarantee only on the condition that the Amadios pay the bank the sum of $50,000.30 Deane J noted: Where appropriate, an order will be made which only partly nullifies a transaction liable to be set aside in equity pursuant to the principles of

[page 254] unconscionable dealing … [T]he order will, in an appropriate case, be made conditional upon the party obtaining relief doing equity.31

6.12 Ultimately, the High Court determined that the whole of the guarantee should be set aside because there was evidence that had the Amadios known of their son’s precarious financial position they would never have provided the guarantee at all. Restitution to facilitate return to original position 6.13 In Brown v Smitt, Knox CJ, Gavan Duffy and Starke JJ observed that when a contract has been rescinded ‘(t)he parties being relieved of the contractual obligations, each must give back all that he obtained under the contract’.32 In being returned to the status quo the parties are not entitled to an award of damages in respect of the contract.33 But the court will sometimes order the payment of an indemnity to facilitate a return to the status quo.34 The amount of this indemnity will be the amount required to restore the wronged party ‘in his position so far as regards the rights and obligations which have been created by the contract into which he [or she] has been induced to enter’.35 Examples of orders for the payment of an indemnity can be found in the following paragraphs. Recovery of money

6.14 If money has been paid under the contract it may be recovered under an action for money had and received on the basis that there has been a total failure of consideration.36 Payment of interest may also be ordered, in respect of some or all of the period between completion and rescission of the contract, to restore the wronged party to her or his original position, the wronged party having been deprived of the use of that money over this period. In some cases justice may require an order for compound interest:37 [page 255] see, for example, the Full Federal Court decision of JAD International Pty Ltd v International Trucks Australia Ltd.38 That case involved the rescission of a contract for the sale of a truck some 12 months after the completion of the contract. The court held that the purchaser was entitled to be paid compound interest on the purchase price of the truck because there was evidence that the purchaser had borrowed the money to buy the truck. The court found that the purchaser had ‘incurred the opportunity cost of compound interest foregone by having his own funds tied up in the purchase moneys’.39 The court ordered that compound interest be paid from the date of rescission because it found that, during the 12 months prior to rescission, the purchaser had used the truck in his business. Recovery of property 6.15 If property has been transferred under the contract the act of rescission may re-vest title in the transferor.40 The transferee then holds the property on constructive trust for the transferor.41 The transferor may bring an action for trover to recover the value of chattels transferred under the contract or, in respect of real property, an action for ejectment to recover land given before conveyance.42 6.16 The property transferred under the defunct contract may have been altered after transfer. The plurality in Brown v Smitt43 noted:

But where the property has been improved or deteriorated by the act of the purchaser, and yet remains in substance what it was before the contract, equity adjusts the rights of the parties by awarding money compensation to one or other, and so substantially putting each party in the position which he [or she] occupied before the contract was made. [emphasis added]

[page 256] 6.17 Compensation may be ordered in respect of damage or deterioration to the property caused by the transferee.44 But no compensation will be ordered for damage or deterioration to property caused by someone or something other than the transferee. For example, compensation will not be ordered for a deterioration in the value of a property caused by a fall in property prices.45 Further, it is convenient to note here, that depreciation in the value of property is not, in itself, a bar to rescission.46 6.18 Conversely, a transferor may be required to compensate the transferee for any improvements to the property. For example, if a person is induced by undue influence to transfer a house and that other person has spent money on improving the house the transferor will be required to give credits for the improvements.47 6.19 A transferee may also be ordered to pay the transferor reasonable rental for occupation of the property prior to rescission of the contract.48 Rescission of contract for the sale of a business 6.20 Rescission of a contract for the sale of a business will be conditional on the reassignment of any lease on business premises, payment for any stock that cannot be returned and an account of profits.49

Rescission in consumer protection legislation ACL and ASIC Act — ‘other orders provisions’

6.21 Proof of a contravention of certain provisions of either the ACL or ASIC Act50 is a ‘passport to … extensive relief’.51 This relief includes [page 257] injunctions,52 damages53 and any order, or orders, that the court thinks appropriate against a person who has contravened the legislation54 (other orders provisions). The legislation lists the kinds of orders that a court may make, under the other orders provisions, if it considers appropriate.55 This list includes, among other things, a declaration that a contract (or any part of a contract) is void (either ab initio or from some other date).56 The grant of such relief is discretionary.57 By contrast, rescission at common law is the act of a contracting party.58 6.22 Arguably there are broadly three principles that are applied by the courts in the exercise of the discretion. 6.23 First, the court’s exercise of its discretion to grant rescission is often guided by equitable principles.59 The court typically will only grant the remedy in circumstances where rescission would be available in equity. But although equitable principles guide the discretion they do not dictate or confine it.60 As Gummow J observed in Demagogue Pty Ltd v Ramensky:61 [page 258] The legislation regulates the existence and exercise of what would otherwise be the rights at general law and, in addition, itself creates new rights and remedies. … [It] should be no inhibition to giving effect to what, on its proper construction, is provided for in the legislation, that the result may be to achieve consequences and administer remedies which differ from those otherwise obtaining under the general law.

6.24 Similarly, Northrop J in Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd62 held: Section 87 [of the TPA] confers upon the court a wide discretion to do justice between the

parties. The court should not restrict the exercise of that discretion by imposing upon itself technicalities which might defeat the policy of the section.

6.25 The court’s discretion under the other orders provisions is very wide,63 allowing the court to do justice between the parties.64 The discretion is wider in scope than in equity. Bars to rescission, such as the impossibility of restitutio in integrum and affirmation of the contract or an absence of a notice to rescind, are only discretionary matters that the court will take into account in determining whether to grant relief.65 See, for example, Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd66 in which the New South Wales Court of Appeal refused to uphold the trial judge’s discretion to order the rescission of a contract for the sale of a business under the Trade Practices Act 1974 (Cth) (TPA) (predecessor to the ACL). The court considered rescission to be inappropriate because of the delay by Collins Marrickville Pty Ltd in prosecuting the proceeding and the substantial deterioration of the business in the intervening period as a result of the company’s management of the business. The court also considered that the company’s loss and damage could be adequately compensated by an award of damages. [page 259] 6.26 Further, the court can under the legislation (but not at common law or in equity) undo a chain of transactions because it can make orders against people who are knowingly involved in the contravention of the legislation.67 6.27 Second, the court’s discretion under the other orders provisions is informed by a requirement to compensate for loss. Indeed, proof that loss or damage has been incurred, or is likely68 to be incurred, ‘because of’69 or ‘by’70 conduct in contravention of the legislation is the ‘gateway’ to a grant of rescission.71 Rescission at common law or in equity72 is, by contrast, only concerned with restoring parties to the status quo. As to the meaning of loss or damage ‘because of’ or ‘by’ conduct in contravention of the legislation, see below at 6.42–6.50.

6.28 In Tenji v Henneberry & Associates Pty Ltd, French J observed that ‘(l)oss or potential loss causally linked to contravention conditions the exercise of the remedial powers under s 87 [of the TPA] and their exercise must be directed to compensate for that loss’.73 The legislation expressly provides that the court’s orders must be orders that the court considers will compensate for loss or damage or prevent or reduce the loss or damage suffered.74 To obtain an order under the other orders provisions, actual loss or damage need not be proven.75 The other orders provisions expressly extend to potential loss. Further, the term ‘loss and damage’ cannot be narrowly construed.76 The statutory definition of the term includes a reference to injury.77 It follows that ‘loss and damage’, [page 260] as that term is used in the legislation, is not confined to economic loss.78 For the purposes of the legislation ‘loss or damage’ has been held to include ‘the detriment suffered by being bound to a contract unconscionably induced’.79 But, McHugh, Hayne and Callinan JJ, in Marks v GIO Australia Holdings Ltd,80 qualified that it is only if: … it is shown that party would have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course adopted.81

6.29 Importantly, the other orders provisions (unlike those concerned with awarding damages)82 also extend to potential loss. The possibility of being held to a contract may amount to potential loss.83 An entitlement to damages is not a prerequisite to a grant of rescission under the ACL or ASIC Act.84 6.30 Third, and related to the second principle outlined above, the court must fashion a remedy that both compensates the injured party and is proportionate to the wrong to ‘ensure a fair result’.85 Rescission will not be granted as an ‘automatic response’ to a finding that a

contract was unconscionably induced.86 Both the ACL and ASIC Act offer a ‘remedial smorgasbord’.87 In addition to rescission, the kinds of [page 261] orders that may be made by a court include (but are not limited to):88 an order varying the terms of a contract,89 an order refusing to enforce all or any terms of a contract,90 an order directing the refund of money or return of property,91 an order for damages,92 an order directing the supply of specified services,93 an order that parts be provided for goods or that goods be repaired94 and an order directing that an instrument creating or transferring interests in land be varied or terminated.95 The provision, by using the words ‘as the court thinks appropriate’, makes it explicit that, after determining liability, the court has a discretion to determine what remedy is appropriate in the particular case.96 A judge who does not scan the orders on offer to determine the most appropriate remedy in the circumstances of a particular case will fall into error,97 although this will not require a judge to give evidence of a ‘slavish picking over’ of all the remedies available.98 6.31 To determine the most appropriate remedy a judge ‘must consider all the circumstances before it in the exercise of its discretion’.99 In Demagogue Pty Ltd v Ramensky100 Cooper J suggested that it is: … important to distinguish clearly between the need to establish the factual circumstances necessary to enliven the power of the court to grant relief and the circumstances which are relevant to the nature of the relief which it is appropriate to grant.

[page 262] 6.32 In Awad v Twin Creeks Properties Pty Ltd101 Allsop P observed: Whether or not to grant a form of rescission under s 87, or to limit a plaintiff to damages under s 82, is a question in the nature of a discretion to be approached by reference to the facts of the particular case, the policy and underpinning of the TPA and the evaluative

assessment of what is the appropriate relief to compensate for, or to prevent the likely suffering of, loss or damage ‘by’ the conduct … An approach that is limited mechanically around a but for causation enquiry will be likely not to involve a full evaluative assessment of the appropriate relief.102

6.33 The remedy should be proportionate to the wrong.103 In Akron Securities Ltd v Iliffe,104 Mason P considered that: … a trial judge should in my view scan the range of available remedies, recognising that s 87 [of the TPA] may allow the defendant’s as well as the plaintiff’s interests to be taken into account in moulding a just response to a proven contravention.

6.34 Similarly, in Havyn Pty Ltd v Webster105 Santow JA considered that the breadth of the other orders provisions was ‘for a judge to consider as a matter of judicial discretion in fashioning the best remedy to compensate the injured plaintiff according to the justice of the case’. CRA 6.35 Where a court finds a that a contract or a provision of a contract is unjust the court may do one or more of the following:106 refuse to enforce any or all provisions of the contract; make an order declaring the contract void (in whole or in part); vary any provision of the contract (in whole or in part); make an order requiring the execution of an instrument that varies or terminates a ‘land instrument’ (a land instrument being an instrument that transfers title to land or creates an interest in land).107 [page 263] 6.36 An order for relief does not automatically follow a finding that a contract is unjust. The court’s power is discretionary.108 But this discretion is not at large.109 The court’s powers are ‘neither penal nor disciplinary’110 and are ‘strictly limited to avoiding an unjust

consequence or result of the unjust contract’.111 In Esanda Finance Corporation Ltd v Tong,112 Handley JA observed: Once injustice to the weaker party has been remedied, the Court should not further interfere with the rights of the parties. Interference beyond that point will cause injustice to the other party, and is not authorised by the section.

6.37 In seeking to compensate the parties, the courts have adopted the approach in equity, enunciated by the High Court in Vadasz v Pioneer Concrete (SA) Pty Ltd,113 of preventing one party from obtaining an ‘unwarranted benefit’ at the expense of the other party.114 NCC 6.38 If the court reopens an unjust transaction under the NCC115 the court may do one or more of the following:116 reopen any account already taken between the parties; relieve the debtor and any guarantor from any payment of any amount exceeding an amount the court considers to be reasonably payable; [page 264] set aside (in whole or in part), revise or alter an agreement or mortgage given in connection with the transaction; order the mortgagee to take steps to discharge the mortgage; make orders for such payment as the court thinks is justly due; make orders for the delivery of goods; and/or make ancillary and consequential orders.

Damages 6.39 Rescission and damages are, at common law and in equity, mutually exclusive remedies. As outlined above, rescission typically

involves restoring the parties to the status quo. It follows that there is no scope for an award of damages (as distinct from restitution to facilitate a return to the status quo). It was suggested in the English case of Universe Tankships Inc of Monrovia v International Transport Workers’ Federation117 that duress118 (or the form that the duress takes)119 may be actionable as a tort if it causes loss or damage. But, to date, no Australian case has sought to apply Universe Tankships and award damages for loss or damage caused by duress. 6.40 In contrast to the position at common law or in equity, damages may be awarded under the ACL and ASIC Act either independently of or in addition to a grant of rescission once it has been shown that there has been a breach of certain legislative provisions120 which has caused loss or damage. Damages may also be awarded against a third party who was involved in a party’s conduct.121 Note that retail leases legislation in some states also expressly provides that a court or tribunal may make orders compensating a person who has suffered loss or damage because of the unconscionable conduct of another person.122 [page 265]

Damages under ACL and ASIC Act 6.41 Unlike the other orders provisions, outlined above at 6.21–6.34, the court has no discretion in respect of an award of damages under the damages provisions of the ACL and ASIC Act (damages provisions).123 If an applicant can prove that her or his loss was caused by the respondent’s conduct (in breach of the relevant legislative provisions) the applicant will be entitled to an award of damages.124 On proving an entitlement to damages the applicant will be required to prove the quantum of her or his loss. Determining whether loss caused by contravention of legislation 6.42 The damages provisions provide that an applicant may recover from a respondent the amount of loss or damage suffered ‘because

of’125 or ‘by’126 the respondent’s conduct in breach of the legislation. Although the ACL uses the term ‘because of’,127 and the ASIC Act uses ‘by’, the difference in expression does not appear to give rise to a different meaning.128 6.43 There are two interconnected elements or issues in the determination of causation under consumer protection legislation: factual and normative.129 6.44 First, issues of causation involve matters of fact. The inquiry, as to whether the conduct caused the loss as a matter of fact, is usefully guided [page 266] by common law conceptions of causation.130 In Wardley Australia Ltd v Western Australia131 the High Court considered that loss or damage ‘by’ conduct in contravention of the legislation ‘should be understood as taking up the common law practical or common-sense concept of causation’.132 The common law concept of causation was canvassed in March v E & MH Stramare Pty Ltd133 and simply requires that the conduct in question should have ‘caused or materially contributed to’ the applicant’s loss. The conduct need not be the sole, principal or only cause of the applicant’s loss or damage.134 The existence of other causes will not be fatal to the applicant’s claim for damages, unless ‘in the circumstances of the particular case it is those other causes which are properly to be treated as the real, essential, substantial, direct, or effective cause of the loss or damage’.135 Causation can also be inferred from the likely effect of the conduct and need not be established by direct evidence.136 In determining whether conduct caused the loss, McHugh, Hayne and Callinan JJ, in Marks v GIO Australia Holdings Ltd,137 observed: It follows, then, that a comparison must be made between the position in which the party that allegedly has suffered loss and damage is and the position in which that party would have been but for the contravening conduct. And even this inquiry may not conclude the question. Analysing the question of causation only by reference to what is, in essence, a

‘but for’ test has been found wanting in other contexts and it may well be that it is not an exclusive test of causation in this area either.138

[page 267] 6.45 McHugh, Hayne and Callinan JJ went on to note that a party ‘suffers no prejudice or disadvantage unless it is shown that that party could have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course in fact adopted’.139 6.46 Although the common law provides some useful guidance in determining causation ‘this does not mean that common law conceptions of causation should be rigidly applied without regard to the terms or objects of the Act’.140 The damages provisions apply ‘across a diverse spectrum of legal norms’141 some of which have no analogue at common law or in equity. It follows that common law conceptions of causation cannot dictate causation under the legislation.142 This raises the second issue, referred to above, in determining causation. 6.47 Second, issues of causation involve normative considerations. Gleeson CJ, in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd, observed:143 The relationship between conduct of a person that is in contravention of the statute, and loss or damage suffered, expressed in the word ‘by’, is one of legal responsibility. Such responsibility is vindicated by an award of damages. When a court assesses an amount of loss or damage for the purpose of making an order under s 82 [of the TPA], it is not merely engaged in the factual, or historical, exercise of explaining, and calculating the financial consequences of, a sequence of events, of which the contravention forms part. It is attributing legal responsibility; blame. This is not done in a conceptual vacuum. It is done in order to give effect to a statute with a discernible purpose; and that purpose provides a guide as to the requirements of justice and equity in the case. Those requirements are not determined by a visceral response on the part of the judge assessing damages, but by the judge’s concept of principle and of the statutory purpose.

[page 268]

6.48 Normative considerations in issues of causation are not to be determined in isolation from factual considerations.144 As Allsop P explained, in Bullabidgee Pty Ltd v McCleary,145 it is the normative considerations that provide the lens through which the factual considerations are examined. Allsop P said: In all casual inquiries, the legal framework that gives rise to the question is critical … The legal context and relevant rule of responsibility direct one to the relevant legal policy and purpose of the causal question, thus affecting the evaluation of the extent of the required factual involvement of the impugned act or omission in assessing legal responsibility for the loss.146

6.49 It follows that normative considerations in issues of causation do not provide judges with an invitation to ‘engage in value judgments at large’.147 Instead, the court must apply the legislative norms to be found in the relevant Act.148 McHugh J, in Henville v Walker,149 observed: [T]he objects of the [TP] Act indicate that a court should strive to apply s 82 [of the TPA] in a way that promotes competition and fair trading and protects consumers. The width of the potential application of s 82 and the objects of the Act tell against a narrow, inflexible construction of the section.150

6.50 Or, as Allsop P puts it, ‘(t)he inquiry is for a sufficient and direct link between the conduct and the consequences … in order that the purpose and policy of the legislation be vindicated’.151 Determining the quantum of damages to be awarded 6.51 After proving causation the applicant must also prove the quantum of her or his loss.152 [page 269] 6.52 The stated purpose of the damages provisions is compensatory. It follows that in assessing damages under the damages provisions the measure of damages in tort will be ‘helpful’153 or ‘an appropriate guide’.154 But the court is not confined by the measure of damages in contract, tort or equity.155 Common law or equitable analogues are ‘a

servant not a master’156 in the assessment of damages under the damages provisions. The court’s task is simply to ‘ascertain the loss suffered by the contravening conduct and assess the amount necessary to compensate for that loss’.157 6.53 The damages provisions do not state any limitation on the kinds of loss that may be compensated for.158 Loss is defined broadly in the legislation to include ‘injury’.159 Further, for unconscionable conduct claims, a respondent is responsible for all of the applicant’s loss. But there are two different kinds of limitations on the damages that can be awarded under the damages provisions in unconscionable conduct claims. 6.54 First, damages for death or personal injury may not be recovered by an applicant under the ACL in respect of conduct consisting of harassment and coercion in breach of s 80 of the ACL.160 But it does seem possible to obtain damages for a personal injury in respect of unconscionable [page 270] conduct in breach of s 20 or s 21 of the ACL.161 In principle damages may also be recovered for mental stress and emotional suffering (‘anxiety damages’) as a consequence of unconscionable conduct.162 Anxiety damages may also be available under the other orders provisions.163 6.55 Second, it is not possible to be awarded punitive damages. Punitive or exemplary damages serve to punish the respondent rather than compensate the applicant. For that reason such damages are not available under the damages provisions (or the other orders provisions).164

Enforcement of consumer protection legislation by regulators 6.56 The consumer protection legislation embodies important norms

of business conduct which are enforced by Commonwealth and state and territory regulators. Under the legislation these regulators may, among other things, commence proceedings against parties who have engaged in conduct in breach of the legislation to enforce the legislation. Regulators may seek a range of orders under the legislation to deter further breaches of the legislation by the respondent (‘specific deterrence’) and to deter others from engaging in similar conduct (‘general deterrence’). Orders typically sought by regulators in respect of unconscionable conduct include orders for: a declaration that the respondent’s conduct has breached the legislation;165 an injunction restraining the respondent from engaging in further conduct in breach of the legislation;166 [page 271] adverse publicity conduct;167

informing

consumers

of

the

respondent’s

compliance programs in which the respondent is required to undertake training;168 compensation for wronged parties (not a party to the proceeding) who have suffered;169 and civil monetary penalties.170 6.57 Note that conduct amounting to undue harassment and coercion is also a criminal offence171 of strict liability172 for which a conviction may be recorded and a fine imposed.173

Declarations of wrongdoing 6.58 A bare declaration that past conduct is unlawful may be thought to be futile or unwarranted.174 A declaration of this kind arguably does not involve any statement of the parties’ rights. But Hill J, in Tobacco

Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2),175 observed: There can be little doubt that a declaration might be obtained by a regulatory authority that a particular conduct is in breach of a statutory provision, whether or not injunctive relief is appropriate … It has never been suggested that no power exists to grant such declaratory relief merely because the consequence of a declaration is to declare the existence of a wrong. The declaration that an offence has been committed is the concomitant of the non-existence of a right. Semantically, it may be said to be a declaration of a negative right. It is appropriate, in my view, to refer to it as a declaration of right.176

[page 272] 6.59 Further, the courts have consistently held that in cases involving public interest, declarations serve broadly five different functions. First, declarations serve to show that particular conduct is in breach of a statutory provision and, in doing so, clarify the law.177 Second, declarations provide a vehicle for the court to express disapproval of the contravening conduct.178 Third, declarations assist in educating the public about the contravening conduct and the law.179 Fourth, declarations help to deter others from breaching the legislation.180 Finally, declarations serve to vindicate the regulator’s claim that the respondent has breached the legislation and provide some assistance to the regulator in carrying out its statutory duties.181 6.60 The Federal Court of Australia has a wide discretionary power under the Federal Court of Australia Act 1976 (Cth) to make [page 273] declarations.182 But there are three preconditions to the exercise of the power: the question must be a real and not a hypothetical one; the applicant must have a real interest in raising it; and

there must be a proper contradictor.183 6.61 Otherwise in determining whether a declaration is warranted or appropriate, the court will take into account any delay in bringing the proceedings, the nature and strength of the evidence and the public interest.184 6.62 The declaration itself must identify the ‘gist’ of the court’s factual findings without recording in summary form the conclusions reached in the decision.185

Injunctions 6.63 The court has a ‘broad’186 power to grant an injunction on such terms as it considers appropriate if the court is satisfied that a person has engaged, or is proposing to engage, in conduct in breach of the legislation. Under the ACL, this may include an order to do something such as refund money, transfer property, honour a promise or destroy or [page 274] dispose of goods.187 The court’s power to order an injunction may even be exercised: whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct in breach of the legislation; whether or not the person has previously engaged in conduct in breach of the legislation; and whether or not there is an imminent danger of substantial damage to any other person if the person engages in conduct of that kind.188 6.64 Although the primary purpose of an injunction is to prevent repetition of the contravening conduct, the courts have recognised that an injunction can be granted when it is in the public interest to do so,

such as to mark the court’s disapproval of the respondent’s behaviour189 or to reinforce to the marketplace that the impugned conduct is unacceptable.190 6.65 Although the statutory power is broad it is subject to the following three limitations: (i)

the power is limited by reference to the scope and purpose of the legislation and should be designed to prevent a repetition of the conduct for which the relief is sought;

(ii) because the jurisdiction to grant an injunction is enlivened by an alleged contravention of certain provisions of the legislation there must be a ‘sufficient nexus or relationship’ between the contravention and the injunction; and (iii) the Federal Court exercises judicial power under Ch III of the Constitution in respect of ‘matters’ so the injunction must be related to the case or controversy the subject of the proceeding.191 [page 275] 6.66 Further, there are practical issues to be considered in the formulation of an injunction. In Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc,192 French J noted that the breach of an injunction is enforceable by proceedings for contempt and so such orders must ‘be formulated with precision so that they are capable of being readily obeyed’.193 Conversely, such orders must not ‘involve vague evaluative judgements or significant debates on their interpretation’.194 An injunction should also not require the ongoing supervision of the court.195 6.67 The principles governing the court’s discretion to grant an injunction were helpfully summarised by Beach J in Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2)196 and adopted by Middleton

J in Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union (No 4)197 as follows: (1) First, injunctive relief will not automatically follow in the event of contravening conduct, and is only one weapon in the discretionary armoury; (2) Second, the likelihood of future contravention is an important relevant factor to be taken into account;198 (3) Third, many contraventions will simply not justify injunctive relief, and it is for the applicant to demonstrate that the injunction sought will serve a purpose;199 and (4) Fourth, a declaration may achieve the same result sought to be achieved by an injunction, being the marking of the Court’s disapproval of a respondent’s conduct.200

[page 276]

Compliance programs 6.68 Like an injunction, the primary purpose of a compliance program is to prevent a repetition of the contravening conduct albeit indirectly.201 A compliance program is a program that typically requires the respondent to:202 engage a compliance advisor to provide training in respect of compliance with the legislation and to undertake an audit of the respondent’s business to identify any risks of future non-compliance; develop a compliance policy; develop a complaints handling system; and have the compliance program reviewed or audited periodically and provide a copy of that audit to the regulator.203 6.69 The court’s discretion to order a compliance program (essentially a mandatory injunction) is confined in much the same way as the court’s discretion to order a restraining injunction. There are, broadly, four limitations on this power. First, a court will not order a compliance program where ‘there is no clear benefit that might be delivered in terms of future behaviour by the respondent because this would amount to a punitive order’.204 For example, Finn J refused to order a compliance

program in Australian Competition and Consumer Commission v Harbin Pty Ltd205 because the respondent had breached the legislation only once, unintentionally, and had demonstrated a preparedness to change its procedures. 6.70 Second, the compliance program should be in ‘clear and unambiguous terms’ so that the respondent is not left to wonder whether their conduct fulfills the requirements of the compliance program.206 [page 277] 6.71 Third, there must be a ‘sufficient nexus’ between the compliance program ordered and the conduct found to be in contravention of the legislation. That is, the program must be limited to those provisions of the legislation the respondent has breached and cannot extend to compliance with the legislation generally or a provision unrelated to the contravening conduct.207 6.72 Fourth, the compliance program should not require ongoing supervision by the court or a third party. It is convenient to note here that there are a number of cases in which the court has expressed doubt as to whether the legislation empowers the court to order a respondent to engage an auditor to audit a compliance program and provide the regulator with copies of audit reports.208 In Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd209 North J reviewed these cases and concluded that the court could appoint an auditor if that auditor has ‘a specific and defined role’ and where the auditor ‘is not required to measure performance of the obligations imposed by the Court, but rather is required to make a report on a factual matter’.210 North J went on to observe that a regulator could receive copies of audit reports without having to supervise a respondent’s compliance. A regulator could simply bring proceedings for contempt if a regulator received information which suggested that

the respondent had failed to comply with a court order (like any other litigant).211

Adverse publicity orders 6.73 A publicity order consists of an order, or orders, that an advertisement (as described in the order) be published (whether in print or to the internet) or mailed out or posted to the front of the respondent’s business premises. [page 278] 6.74 In Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2),212 Murphy J sifted through the authorities to identify the rationale behind publicity orders to include: alert consumers to the fact that there has been a breach of the legislation;213 protect the public interest by dispelling any incorrect or false impressions that may have been created by the conduct;214 and support the primary orders and assist in preventing repetition of the contravening conduct.215

Civil monetary penalties Primary object of penalty 6.75 The primary object of the penalty provisions the ACL and ASIC Act is deterrence: specific and general. The Full Federal Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission observed that:216 There may be room for debate as to the proper place of deterrence in the punishment of some kinds of offences, such as crimes of passion; but in relation to offences of calculation by a corporation where the only punishment is a fine, the punishment must be fixed with a view to ensuring that the penalty is not such as to be regarded by that offender or others as an acceptable cost of doing business. … [T]hose engaged in trade and commerce must

be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention.

6.76 Unsurprisingly, the courts are guided by the primary objective of the penalty provisions when determining the amount of penalty to impose.217 [page 279] The matters that are taken into account by a court in determining the amount of a penalty are set out in the Act and the relevant authorities as outlined below. Relevant matters in determination of penalty 6.77 The ACL and ASIC Act require a court to have regard to the following three matters in determining a penalty:218 the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and the circumstances in which the act or omission took place; and whether the person has previously been found by a court in proceedings under the legislation to have engaged in any similar conduct. 6.78 The established principles applied by the court in determining pecuniary penalties under s 76 of the TPA, for breaches of Pt IV of that Act, have been held to be broadly applicable to determining penalties under s 224 (and its predecessor s 76E).219 French J (as he then was) enunciated these principles in Trade Practices Commission v CSR Ltd.220 They are as follows: the nature and extent of the contravening conduct; the amount of loss or damage caused; the circumstances in which it took place;

the size of the contravening company; the degree of power it has, as evidenced by its market share and ease of entry into the market; the deliberateness of the contravention and the period over which it extended; whether the contravention arose out of the conduct of senior management or at a lower level; whether the company has a corporate culture conducive to compliance with the Act evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and [page 280] whether the company has shown disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention. 6.79 These considerations have been approved and expanded upon by the Full Court of the Federal Court to include:221 whether the respondent has engaged in similar conduct in the past; effect on the functioning of the market and other economic effects of the conduct; the financial position of the contravening company; and whether the conduct was systematic, deliberate or covert. 6.80 There are a further three separate principles taken into account by the courts in determining an appropriate penalty. First, the court takes into account what is referred to as the ‘totality principle’. This principle requires that the total penalty for related contraventions should not exceed what is proper for the entire contravening conduct involved.222 Second, the court is concerned to ensure that the penalty is

not so high as to be oppressive. In Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) Merkel J considered that ‘a penalty that is no greater than is necessary to achieve the object of general deterrence, will not be oppressive’.223 Finally, the courts are concerned to consider the ‘parity principle’, that is that, all other things being equal, similar contraventions should incur similar penalties.224 6.81 In Markarian v R225 the High Court considered the process to be applied in assessing penalties in criminal sentencing (supply of heroin). This process has been held to be equally applicable to the assessment of pecuniary penalties.226 [page 281] 6.82 In Markarian, Gleeson CJ, Gummow, Hayne and Callinan JJ held:227 (a) the court’s assessment of the appropriate penalty is a discretionary judgment based on all relevant factors;228 (b) ‘[C]areful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick’;229 (c) it will rarely be appropriate for a court to start with the maximum penalty and proceed by making a proportional deduction from that maximum;230 (d) the court should not adopt a mathematical approach of increments or decrements from a predetermined range, or assign specific numerical or proportionate value to various relevant factors;231 (e) it is not appropriate to determine an ‘objective’ sentence and then adjust it by some mathematical value given to one or more factors

such as a plea of guilty or assistance to authorities;232 (f)

the court ‘may not add and subtract item by item from some apparently subliminally derived figure’233 to determine the penalty to be imposed; and

(g) since the law strongly favours transparency, accessible reasoning is necessary in the interests of all, and, while there may be occasions where some indulgence in an arithmetical process will better serve the end, it does apply where there are numerous and complex considerations that must be weighed.234 Determining penalty — a case study 6.83 Although Australian Competition and Consumer Commission v TPG Internet Pty Ltd concerned misleading and deceptive conduct, and not unconscionable conduct, it provides an excellent example of [page 282] the application of the principles on fixing penalties outlined above. The principles themselves were not contested between the courts but the application of them differed widely. 6.84 It is important to first provide a brief description of the contravening conduct because how each court approached the conduct had a significant impact on the penalty each court arrived at. 6.85 The contravening conduct: TPG Internet Pty Ltd (TPG) is a member of the TPG Telecom Ltd group of companies that carry on a business of providing telephone and internet services. One of the services provided by TPG is an asymmetric digital subscriber line (‘ADSL’) broadband service known as ADSL2+. From late September 2010 to early November 2011 TPG engaged in a multi-media advertising campaign. The advertisements prominently displayed TPG’s offer to supply consumers with unlimited ADSL2+ for the low price of $29.99 per month. Less prominently TPG qualified the offer as only

being available when bundled with a home telephone service for an additional $30 per month. In taking up the offer the consumer was also liable to pay a setup fee of $129.95 plus a deposit for telephone charges of $20. The advertising was conducted in two phases. The first phase advertisements were published between 25 September 2010 and about 7 October 2010 in four different kinds of media: television, radio, print and the web. After a complaint by the Australian Competition and Consumer Commission (ACCC), TPG modified the advertisements and, in the second phase of advertising (7 October 2010 to 4 November 2011), not only published them far more widely in the four different media used previously but also extended the advertising to include billboards. 6.86 Decision at first instance: Murphy J found that TPG’s advertisements had breached ss 52, 53(e) and (g) and 53C of the TPA.235 In a separate decision Murphy J made orders, among others, requiring TPG to pay a penalty of $2 million.236 In determining the penalty Murphy J considered that TPG’s conduct was ‘seriously misleading’ and ‘involved a deliberate marketing strategy’.237 Murphy J held that such behaviour indicated a risk that TPG might repeat the contravening conduct and that, as such, the penalty needed to be ‘sizeable for TPG’.238 [page 283] 6.87 Murphy J began his assessment of penalty by grouping TPG’s contraventions into nine classes representing the different media in which the advertisements were published for each phase of the campaign.239 Murphy J considered that the advertisements for each of the media and in each phase were different enough to amount to a separate contravention. 6.88 In applying the principles on penalty Murphy J examined the nature and extent of the contravening conduct. He concluded that TPG’s campaign (costing $8.9 million) was of ‘medium intensity’ but of

long duration and, consequently, it had had a substantial impact on consumers.240 While noting that the ACCC had not given any evidence of any loss or damage caused by TPG’s contraventions, Murphy J nonetheless concluded that, since the number of TPG customers had swelled that year,241 it was likely that TPG’s competitors had suffered some material loss or damage.242 6.89 Further factors taken into account by Murphy J as weighing against TPG in assessing penalty was the fact that TPG had given an enforceable (s 87B) undertaking to the ACCC with respect to past similar conduct243 and the fact that the present contravening conduct was at the direction of senior management.244 Had a low-level employee initiated the conduct it might have been said that the conduct did not reflect TPG’s true or considered position and/or was the result of a low-level error.245 6.90 Also weighing against TPG was the company’s size and position within the industry. Murphy J noted that TPG was the largest subsidiary of TPG Telecom Ltd and that it was in a sound financial position. TPG’s revenue in the 2010 financial year was $508 million which increased to $574.5 million in 2011.246 Murphy J held that the size and financial position of TPG was relevant to the size of the penalty. Referring to the relevant authorities, he noted that any penalty must be large enough so that TPG would realise the seriousness of its conduct. Further, he held that the profit garnered by TPG from its contravention was also relevant to determining the size of the penalty to ‘make it clear to TPG and to the market that the cost of risking a contravention cannot be [page 284] regarded as merely an acceptable cost of business’.247 Further, Murphy J noted that TPG was the third largest provider of digital subscriber line broadband internet services and ‘(i)ts importance in the sector feeds into

the question of general deterrence and calls for a penalty which is large enough to send that message’.248 6.91 Against these factors, Murphy J was not persuaded that the fact that TPG had successfully resisted an injunction application brought by the ACCC249 and had relied on positive legal advice in any way entitled it to a discount in penalty. He considered that a favourable interlocutory decision did not give TPG any kind of ‘indemnity’ for its contraventions.250 Further, Murphy J considered the fact that TPG had received positive legal advice was irrelevant to the assessment of penalty and cited Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission in which the Full Court held, inter alia, that: The fact that legal advice was obtained by one of the parties is also of little consequence. It illustrates that risk was appreciated. However, legal advice is obtained for the benefit of the company and only for the benefit of the company. It is not a discounting factor. If legal advice is wrong, that is a matter between the company and the legal adviser.251

6.92 Murphy J, however, did consider that the fact that TPG cooperated with the ACCC promptly to remove the first phase advertising was a factor that did operate in its favour but did not consider it to be worthy of ‘huge weight’.252 6.93 Finally, Murphy J applied the parity principle253 and the totality principle254 in assessing penalty. In applying the parity principle, however, he noted the principle was ‘difficult to apply’ and that he had ‘not derived much assistance from the cases put forward by the parties as their inevitable differences to the facts and circumstances of this case mean that they provide a guide only’.255 [page 285] 6.94 Full Federal Court decision: The Full Federal Court overturned Murphy J’s carefully reasoned assessment of penalty on appeal and reduced the penalty to a total of $500,000.256

6.95 The court began its assessment of penalty with a different number of contraventions from Murphy J. The court set aside all save three of Murphy J’s findings that TPG had engaged in misleading conduct. Further, the court considered that it was more appropriate to categorise the contraventions by the type of message advertised (three in total)257 rather than the type of media in which it was advertised.258 The court also considered that while there were two phases to the advertising campaign there really was only one advertising campaign.259 6.96 The court also differed in its approach to two of the factors relevant to assessing penalty: similar past conduct and the amount of loss and damage incurred. The court held that the s 87B undertaking given by TPG ought to have been taken into account when assessing penalty.260 Although TPG acknowledged in the undertaking that it ‘may have’ engaged in conduct that contravened the TPA it did not admit, and was never found, to have actually engaged in such conduct.261 Similarly, the court considered that there was no evidence that TPG’s conduct caused any loss or damage and that it was not open to Murphy J to infer that such existed.262 6.97 The court held Murphy J’s calculation of penalty to be opaque and otherwise ‘outside the appropriate range of penalties’.263 The court considered that all of TPG’s contraventions could be viewed as being of the same quality, inviting the same penalty. The court also considered that the contraventions were at the lower range of serious conduct and that TPG had not acted in any deliberate or covert way in breach of the TPA. The court held a penalty of $250,000 was appropriate for each of the contraventions, a total of $750,000, but, having regard to the principle of totality, that the sum of $500,000 was a more appropriate total penalty.264 [page 286] 6.98 High Court decision: The High Court overturned the Full Federal

Court’s decision and restored Murphy J’s decision both on liability and penalty.265 6.99 The High Court held that the Full Federal Court erred in two respects. First, it erred in failing to recognise that Murphy J was entitled to have regard to the fact that TPG communicated its three different messages through a number of different media.266 Second, it erred in failing to appreciate the significance of TPG’s s 87B undertaking in determining a penalty that achieved the object of special deterrence. The High Court observed that: The fact that the undertaking had not been sufficient to secure TPG’s adherence to the requirements of the TPA indicated that a more severe penalty was necessary to accomplish the task of securing that adherence.267

6.100 The High Court did, however, appear to agree with the Full Federal Court that there was no evidence that TPG’s conduct caused its competitors loss.268 Nonetheless, the High Court considered that the penalty fixed by Murphy J ‘did not exceed that which might reasonably be thought appropriate to serve as a real deterrent both to TPG and to its competitors’.269

DEFENCES 6.101 There a few defences available to respondents to resist relief being awarded to the applicant. These defences consist primarily of affirmation, defences in equity (chief among them the defence of laches) and time limitations prescribed under consumer legislation.

Affirmation 6.102 Contracts procured by duress, undue influence or unconscionable conduct are voidable not void. As outlined above the wronged or weaker party may choose to elect to rescind or affirm the contract after the duress or influence has ceased to operate.270 [page 287]

6.103 A party may expressly elect to affirm a contract or may be found to have made an election to affirm if that party acted ‘under such a contract with full knowledge of the circumstances after escaping from the duress and taking no steps to set aside the transaction’.271 But as Priestly JA observed, in Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd,272 ‘affirmation’ is not ‘an intelligible legal category in its own right … but rather covers situations governed by two particular legal theories, election and estoppel’.273 6.104 The onus of proving affirmation falls on the party asserting that the contract has been affirmed.274

Equitable defences 6.105 Rescission in equity is a discretionary remedy. Rescission in equity may be denied if the respondent has an equitable defence. In claims of undue influence and unconscionable conduct, a respondent is most likely to claim one or more of three kinds of defences. 6.106 First, a respondent might resist the applicant’s claim for rescission if the respondent can show that the applicant has affirmed the contract. This defence is outlined above. 6.107 Second, a respondent might resist the applicant’s claim if the applicant has acted unconscientiously during the proceeding brought by the applicant for relief.275 Such unconscientious conduct may include, for example, discontinuing the business, the subject of the impugned transaction, without first allowing the respondent to resume control leading to a deterioration in the business.276 6.108 Third, rescission may also be denied if the applicant’s delay in seeking relief has caused prejudice to the respondent or a third party.277 [page 288] This is the equitable doctrine of laches. The respondent bears the onus

of proof on laches.278 6.109 In Orr v Ford,279 Deane J observed that the ‘ultimate test’ of laches remains that enunciated by the Privy Council in Lindsay Petroleum Co v Hurd:280 … whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable or unreasonable ‘to place him if the remedy were afterwards to be asserted’.281

6.110 Laches apply where there has been some kind of detrimental reliance282 or where ‘it would be practically unjust to give a remedy’.283 Laches may apply where there has been ‘mere delay’ where it is substantially equitable.284 But note that laches, based on mere delay, is unlikely to apply in cases involving undue influence or unconscionable conduct. There are a number of cases of undue influence or unconscionable conduct in which a delay of many years has been held to be insufficient to raise the defence.285

Time limits under consumer protection legislation 6.111 A claim for compensation under the ACL and ASIC Act (in respect of the other orders provisions or the damages provisions) must be brought within six years after the conduct complained of has occurred (being conduct either in contravention of the ACL or relying on or purporting to rely on an unfair term).286 Claims for damages for death or personal injury must be brought within three years from the date of death or discovery of injury.287 [page 289] 6.112 Relief from an unjust contract under the CRA must be sought either:288 within two years after the contract was made; or either three months before or two years after the exercise of a

power, performance of an obligation or the occurrence of any activity contemplated by the contract; or within the pendency of any proceedings arising out of the contract. 6.113 Relief from an unjust contract under the NCC must be sought within two years after the contract comes to an end.289 Relief from unconscionable interest or other charges must also be sought within two years after the fee is charged.290

1.

Contained in Sch 2 to the Competition and Consumer Act 2010 (Cth).

2.

McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476–7 per Dixon J; Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 283 per Fisher, Gummow and Lee JJ. See also A Bates, ‘Rescission’ (1955) Conveyancer & Property Lawyer 116–20 for a description of the multiple meanings of ‘rescission’ in the law.

3.

Brown v Smitt (1924) 34 CLR 160 at 169 per Isaacs and Rich JJ. See also McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476–7 per Dixon J and Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 283 per Fisher, Gummow and Lee JJ.

4.

The difference between rescission, termination and repudiation is outlined in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476–7 per Dixon J and Shevill v Builders Licensing Board (1982) 149 CLR 620 per Gibbs CJ.

5.

Abram Steamship Co Ltd (in liq) v Westville Shipping Co Ltd (in liq) [1923] AC 773 at 781 per Lord Atkinson; Alati v Kruger (1955) 94 CLR 216 at 224 per Dixon CJ.

6.

Newbigging v Adam (1886) 34 Ch D 582 at 592 per Bowen LJ: ‘[W]hen it [the contract] is set aside it is treated both at law and in equity as non-existing.’ See also Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at 153 per McLelland AJA: ‘[T]he parties will be treated in equity as if the transaction had never been effected …’; Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76 at [538]: ‘When such a rescission occurs, the transaction is treated as if has never been effected …’.

7.

[2001] NSWCA 177.

8.

ibid, at [39]–[40] per Mason P (Davies and Ipp AJJA agreeing).

9.

Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55 per Kitto J (Taylor and Menzies JJ agreeing). See also Clough v London & North Western Railway Co (1871) LR Ex 26 at 34; Scarf v Jardine (1882) 7 App Cas 345 at 360; Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 656 per Mason J.

10.

Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 646 per Stephen J (McTiernan ACJ agreeing) and at 655 per Mason J; Hancock Family Memorial Foundation Ltd v Porteous [2000] WASCA 29 at [190] per Ipp, Owen and McKechnie JJ.

11.

Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 646 per Stephen J (McTiernan ACJ agreeing). Conversely, an election against rescission can be made by any act consistent only with with the continuance of the contract: Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55 per Kitto J (Taylor and Menzies JJ agreeing).

12.

Hyde v Watts (1843) 152 ER 1193 at 1200 per Parke B; Clough v London and North Western Railway Co (1871) LR 7 Ex 26 at 36; Capel & Co v Sim’s Ships Compositions Co Ltd (1888) 58 LT 807 at 811; Nicholas v Thompson [1924] VLR 554 at 582 per McArthur J (Cussen CJ agreeing); Alati v Kruger (1955) 94 CLR 216 at 222 per Dixon CJ, Webb, Kitto and Taylor JJ; Coastal Estates Pty Ltd v Melevende [1965] VR 433 at 439 per Scholl J; Hunter BNZ Finance Ltd v CG Maloney Pty Ltd (1989) 18 NSWLR 420; Baird v BCE Holdings Pty Ltd (1996) 40 NSWLR 374 at 378 per Young J; Cockerill v Westpac Banking Corporation (1996) 142 ALR 227 at 288 per Cooper J (this issue not raised in subsequent appeal: Westpac Banking Corporation v Cockerill (1998) 152 ALR 267).

13.

See, for example, Hancock Family Memorial Foundation Ltd v Porteous [2000] WASCA 29 at [190] per Ipp, Owen and McKechnie JJ. In that case the Full Supreme Court of Western Australia found that the equitable relief sought was consistent with maintaining the loan contracts.

14.

Academy of Health and Fitness Pty Ltd v Power [1973] VR 254 at 259 per Crockett J.

15.

ibid.

16.

Scarf v Jardine (1882) 7 App Cas 345 at 361 per Lord Blackburn; Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 655–66 per Mason J. Communication to the contracting party’s agent, rather than to the contracting party personally, will be sufficient: Ivanof v Philip M Levy Pty Ltd [1971] VR 167 at 169 per McInerney J.

17.

[1965] 1 QB 525.

18.

Clough v London and North Western Railway Co (1871) LR 7 Ex 26 at 35 per Mellor J; R v Paulson [1921] 1 AC 271 at 284; Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55 per Kitto J (Taylor and Menzies JJ agreeing); Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 656 per Mason J; Baird v BCE Holdings Pty Ltd (1996) 40 NSWLR 374 at 378 per Young J.

19.

(1974) 131 CLR 634 at 656.

20.

Reese River Silver Mining Co v Smith (1869) LR 4 HL 64 at 74; Abram Steamship Co Ltd (in liq) v Westville Shipping Co Ltd (in liq) [1923] AC 773 at 781; Alati v Kruger (1955) 94 CLR 216 at 224 per Dixon CJ, Webb, Kitto and Taylor JJ; Horsler v Zorro [1975] Ch 302 at 310; Johnson v Agnew [1980] AC 367 at 392; Gutnick v Indian Farmers Fertiliser Cooperative Ltd [2016] VSCA 5 at [23] per Warren CJ, Santamaria and Beach JJA; Nadinic v Drinkwater [2017] NSWCA 114 at [28] per Leeming JA (Beazley P and Sackville AJA agreeing).

21.

Abram Steamship Co Ltd (in liq) v Westville Shipping Co Ltd (in liq) [1923] AC 773 at 781; Alati v Kruger (1955) 94 CLR 216 at 224 per Dixon CJ, Webb, Kitto and Taylor JJ; Cockburn v GIO Finance Ltd (No 2) [2001] NSWCA 177 at [38]–[39] per Mason P (Davies and Ipp AJJA agreeing); Gutnick v Indian Farmers Fertiliser Cooperative Ltd [2016] VSCA 5 at [23] per Warren CJ, Santamaria and Beach JJA.

22.

Nadinic v Drinkwater [2017] NSWCA 114 at [32] per Leeming JA (Beazley P and

Sackville AJA agreeing). 23.

Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1278 per Lord Blackburn; Brown v Smitt (1924) 34 CLR 160 at 169 per Issacs and Rich JJ; Gutnick v Indian Farmers Fertiliser Cooperative Ltd [2016] VSCA 5 at [23] per Warren CJ, Santamaria and Beach JJA.

24.

Brown v Smitt (1924) 34 CLR 160 at 169 per Issacs and Rich JJ; McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 512 per Dixon J; Alati v Kruger (1955) 94 CLR 216 at 223 per Dixon CJ, Webb, Kitto and Taylor JJ; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 586 per Brennan CJ, Deane, Gaudron and McHugh JJ; Gutnick v Indian Farmers Fertiliser Cooperative Ltd [2016] VSCA 5 at [24] per Warren CJ, Santamaria and Beach JJA.

25.

Senanayake v Cheng [1966] AC 63 at 83 per Lord Morris.

26.

Alati v Kruger (1955) 94 CLR 216 at 223–4 per Dixon CJ, Webb, Kitto and Taylor JJ.

27.

Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 at 112 per Deane, Dawson, Toohey, Gaudron and McHugh JJ.

28.

ibid, at 114 per Deane, Dawson, Toohey, Gaudron and McHugh JJ.

29.

(1983) 151 CLR 447.

30.

ibid, at 481.

31.

ibid, citing Bank of Victoria Ltd v Mueller [1925] VLR 642 at 659 per Cussen J. See also Maguire v Makaronis (1997) 188 CLR 449 at 475 per Brennan CJ, Gaudron, McHugh and Gummow JJ: parties should not be ‘left with the fruits of the transaction of which they compain’.

32.

(1924) 34 CLR 160 at 164.

33.

JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 392 per Keely, Hill and Drummond JJ; Perpetual Trustees Victoria Ltd v Burns [2015] WASC 234 at [247] per EM Heenan J.

34.

ibid.

35.

ibid, citing Newbigging v Adam (1886) 34 Ch D 582 at 592–3 per Bowen LJ.

36.

Coastal Estates Pty Ltd v Melevende [1965] VR 433 at 439 per Sholl J; Nadinic v Drinkwater [2017] NSWCA 114 at [28] per Leeming JA (Beazley P and Sackville AJA agreeing).

37.

President of India v La Pintada Compania Navigacion SA [1985] AC 104 at 116; Hungerfords v Walker (1989) 171 CLR 125 at 148 per Mason CJ and Wilson J.

38.

(1994) 50 FCR 378 at 392–3.

39.

ibid, at 392.

40.

Clough v London and North Western Railway Co (1871) LR 7 Ex 26 at 36–7 per Mellor J; Alati v Kruger (1955) 94 CLR 216 at 224 per Dixon CJ, Webb, Kitto and Taylor JJ; Kramer v McMahon [1970] 1 NSWR 194 at 206–7 per Helsham J; Ivanof v Philip M Levy Pty Ltd [1971] VR 167 at 171 per McInerney J; Hunter BNZ Finance Ltd v CG Maloney Pty Ltd (1989) 18 NSWLR 420 at 433 per Giles J; Gutnick v Indian Farmers Fertiliser Cooperative Ltd [2016] VSCA 5 at [25]–[26] per Warren CJ, Santamaria and Beach JJA; Nadinic v Drinkwater [2017] NSWCA 114 at [28] per Leeming JA (Beazley P

and Sackville AJA agreeing). 41.

Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at 153 per McLelland AJA (Priestly and Meagher JJA agreeing), Gutnick v Indian Farmers Fertiliser Cooperative Ltd [2016] VSCA 5 at [25] per Warren CJ, Santamaria and Beach JJA; Addenbrooke Pty Ltd v Duncan [2017] FCAFC 76 at [538] per Gilmour and White JJ.

42.

Hunter BNZ Finance Ltd v CG Maloney Pty Ltd (1989) 18 NSWLR 420 at 433 per Giles J.

43.

(1924) 34 CLR 160 at 164 per Knox CJ, Gavan Duffy and Starke JJ.

44.

Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 370 per Mason P (Priestly JA agreeing).

45.

Balfour v Hollandia Ravensthorpe (NL) (1978) 18 SASR 240 at 255 per Bray CJ; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 370 per Mason P (Priestly JA agreeing).

46.

Addie v Western Bank of Scotland (1867) LR 1 Sc & Div 145 at 166 per Lord Cranworth; Balfour v Hollandia Ravensthorpe (NL) (1978) 18 SASR 240 at 255 per Bray CJ (Hogarth and Zelling JJ agreeing).

47.

O’Sullivan v Management Agency & Music Ltd [1985] QB 428.

48.

Balfour v Hollandia Ravensthorpe (NL) (1978) 18 SASR 240 at 255 per Bray CJ (Hogarth and Zelling JJ agreeing).

49.

Alati v Kruger (1955) 94 CLR 216 at 224–5 per Dixon CJ, Webb, Kitto and Taylor JJ; Kramer v McMahon [1970] 1 NSWR 194 at 206–7 per Helsham J.

50.

Relevantly here these provisions include those in respect of: harrassment and coercion (ACL s 50 and ASIC Act s 12DG, see Chapter 2), unfair contract terms (ACL s 23 and ASIC Act s 12BF, see Chapter 5), unconscionable conduct under the unwritten law (ACL s 20 and ASIC Act s 12CA, see Chapter 4) and unconscionable conduct (ACL and ASIC Act s 12CB, see Chapter 5).

51.

Farrow Mortgage Services Pty Ltd (in liq) v Edgar (1993) 114 ALR 1 at 6 per Lockhart, Gummow and Lee JJ.

52.

ACL s 232; ASIC Act s 12GD.

53.

ACL s 236; ASIC Act s 12GF.

54.

ACL s 237; ASIC Act s 12GM.

55.

ACL s 243; ASIC Act s 12GM(7).

56.

ACL ss 16, 237 and 243(a); ASIC Act s 12GM(7)(a).

57.

Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 298 per Brennan CJ, Deane, Dawson, Gaudron and McHugh JJ; Tenji v Henneberry [2000] FCA 550 at [19] per French J; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [1] per Gleeson CJ. See also Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 564 per Lockhart J (Burchett J agreeing). Lockhart J seemed to sugget that the review of a statutory discretion should be treated differently, perhaps more robustly, than other ordinary discretionary decisions.

58.

David Wright, Remedies Under the Trade Practices Act, Oxford University Press, South

Melbourne, 2006, at 122. 59.

Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 564–5 per Lockhart J (Burchett J agreeing) and at 570 per Foster J; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 367 per Mason P (Priestly JA agreeing); Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [24] per McHugh, Hayne and Callinan JJ and at [116] per Gummow J.

60.

Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 288 per Fisher, Gummow and Lee JJ: ‘[T]he equitable principles concerning rescission give safe, if not necessarily exclusive, guidance.’ See also Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 564 per Lockhart J (Burchett J agreeing); Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [24] per Gaudron J and at [116] per Gummow J; Tenji v Henneberry & Associates Pty Ltd (2000) 98 FCR 324 at [19] per French J and at [114] per Carr J (Whitlam J agreeing); Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 at [60] per Allsop P (Basten and Young JJA agreeing); Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 at [43] per Allsop P (Macfarlan JA and Sackville AJA agreeing).

61.

(1992) 39 FCR 31 at 37–8.

62.

(1981) 36 ALR 23 at 56.

63.

Kizbeau Pty Ltd v WG & B Ltd (1995) 184 CLR 281 at 298 per Brennan CJ, Deane, Dawson, Gaudron and McHugh JJ; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 364–7 per Mason P; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [19] per Gleeson CJ and at [106] per McHugh J; Rafferty v Madgwicks (2012) 287 ALR 437 at [233] per Kenny, Stone and Logan JJ.

64.

Rapid Roofing Pty Ltd v Natalise Pty Ltd [2007] QCA 94 at [81] per Keane JA (Williams JA and Atkinson J agreeing).

65.

ER Squibb & Sons Pty Ltd v Tully Corp Pty Ltd (1986) 6 IPR 489; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 564–71 per Lockhart J (Burchett J agreeing); Creative’s Landscape Design Centre Pty Ltd v Platz (1989) ATPR 40-980; Tenji v Henneberry & Associates Pty Ltd (2000) 98 FCR 324 at [19] per French J and at [114] per Carr J (Whitlam J agreeing); I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [106] per McHugh J.

66.

(1988) 39 FCR 546.

67.

The term ‘involved’ is defined in ACL s 2. See also York v Lucas (1985) 158 CLR 661 at 670. Note that relief may also be obtained under the ACL against a credit provider if there is a ‘linked credit contract’: ACL s 278.

68.

Western Australia v Wardley Australia Ltd (1991) 30 FCR 245 at 261 per Spender, Gummow and Lee JJ: ‘… the expression “likely to be suffered” … should at least mean “a real chance or possibility” that loss or damage be suffered …’.

69.

ACL s 237(1).

70.

ASIC Act s 12GM(1).

71.

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [43] and [45] per McHugh, Hayne and Callinan JJ. See also I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [20] per Gleeson J and at [52] and [54] per

Gaudron, Gummow and Hayne JJ. 72.

Tenji v Henneberry & Associates Pty Ltd (2000) 98 FCR 324 at [20] per French J: ‘Rescission in equity transcends compensation.’

73.

(2000) 98 FCR 324 at [19].

74.

ACL s 237(2); ASIC Act s 12GM(1).

75.

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [45] per McHugh, Hayne and Callinan JJ and at [93] per Gummow J.

76.

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [46] per McHugh, Hayne and Callinan JJ; Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at [45] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ.

77.

ACL s 13.

78.

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [46] per McHugh, Hayne and Callinan JJ; Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at [45] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ.

79.

Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 33 per Black CJ and at 43 per Gummow J.

80.

(1998) 196 CLR 494 at [48].

81.

See also Seven Network News Ltd v News Ltd [2007] FCA 1062 at [3146] per Sackville J.

82.

Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527 per Mason CJ, Dawson, Gaudron and McHugh JJ.

83.

Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 44 per Gummow J.

84.

Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527 per Mason CJ, Dawson, Gaudron and McHugh JJ; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 364 per Mason P (Priestly JA agreeing); Collings Construction Co Pty Ltd v Australian Competition and Consumer Commission (1998) 43 NSWLR 131 at 149 per Cole JA (Stein JA and Sheppard AJA agreeing). Nor is the entitlement to damages a prerequisite to the making of other orders under s 237 of the ACL or s 12GM of the ASIC Act: see, for example, Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 at 299 per Brennan CJ, Deane, Dawson, Gaudron and McHugh JJ.

85.

Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 at 298 per Brennan CJ, Deane, Dawson and Gaudron JJ.

86.

Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 368 per Mason P (Priestly JA agreeing); Metz Holdings Pty Ltd v Simmac Pty Ltd (No 2) [2011] FCA 981 at [867] per Barker J.

87.

ibid, at 366 per Mason P (Priestly JA agreeing).

88.

Explanatory memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) at [15.82]: ‘Section 243 sets out a non-exhaustive list of orders of redress that can be made, but does not limit the types of orders that can be made under section 237 or 238.’

89.

ACL s 243(b); ASIC Act s 12GM(7)(b).

90.

ACL s 243(c); ASIC Act s 12GM(7)(c).

91.

ACL s 243(d); ASIC Act s 12GM(7)(d).

92.

ACL ss 236 and 243(e); ASIC Act ss 12GF and 12GM(7)(e).

93.

ACL s 243(g); ASIC Act s 12GM(7)(f).

94.

ACL s 243(f).

95.

ACL s 243(h); ASIC Act s 12GM(7)(g).

96.

Trade Practices Commission v Milreis Pty Ltd (1977) 29 FLR 144 at 168 per Deane J; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 367 per Mason P (Priestly JA agreeing).

97.

See, for example, Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 368 per Mason P (Priestly JA agreeing).

98.

Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 367 per Mason P (Priestly JA agreeing); Metz Holdings Pty Ltd v Simmac Pty Ltd (No 2) [2011] FCA 981 at [867] per Barker J.

99.

Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 564–5 per Lockhart J (Burchett J agreeing).

100. (1992) 39 FCR 31 at 46. 101. [2012] NSWCA 200. 102. ibid, at [43] (Macfarlan JA and Sackville AJA agreeing). See also Henderson v McSharer [2015] FCA 396 at [880]–[881] per Gilmour J. 103. Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 33 per Black CJ; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 368 per Mason P (Priestly JA agreeing). 104. (1997) 41 NSWLR 353 at 368. 105. [2005] NSWCA 182 at [115] (Tobias JA and Brownie AJA agreeing). 106. CRA s 7(1). 107. CRA s 4. 108. Abram v Bank of New Zealand [1996] ATPR 41-507 at 42,346 per Hill, Tamberlin and Sundberg JJ; Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 at [34] per Spigelman CJ (Handley JA agreeing) and at [109] per Basten JA. Note that it follows that any appeal of a decision in respect of relief must be in accordance with the principles set out in House v R (1936) 55 CLR 499 at 504–5. 109. First Mortgage Managed Investments Pty Ltd v Pittman [2014] NSWCA 110 at [168] per Sackville AJA (Beazley P and Gleeson JA agreeing). 110. Esanda Finance Corporation Ltd v Tong (1997) 41 NSWLR 482 at 489 per Handley JA (Santow and Simos AJJA agreeing). 111. SH Lock (Australia) Ltd v Kennedy (1988) 12 NSWLR 482 at 492 per Priestly JA, see also at 487 per Samuels JA. 112. (1997) 41 NSWLR 482 at 489 (Santow and Simos AJJA agreeing). 113. [1995] 184 CLR 102 at 114 per Deane, Dawson, Toohey, Gaudron and McHugh JJ. 114. See, for example, Collier v Morlend Finance Corporation (Victoria) Pty Ltd (1989) 6

BPR 13,337 at 13,342 per Meagher JA; Esanda Finance Corporation Ltd v Tong (1997) 41 NSWLR 482 at 489–90 per Handley JA (Santow and Simos AJJA agreeing); Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413 at [98]–[110] per Santow JA (Campbell AJA agreeing); First Mortgage Managed Investments Pty Ltd v Pittman [2014] NSWCA 110 at [167]–[181] per Sackville AJA (Beazley P and Gleeson JA agreeing). 115. NCC s 76. See Chapter 5, 5.125–5.152. 116. NCC s 77. 117. [1983] 1 AC 366 (‘Universe Tankships’). 118. Universe Tankships, at 400 per Lord Scarman. 119. Universe Tankships, at 385 per Lord Diplock. Note Lord Diplock was skeptical that duress (as distinct from the form that the duress might take) would give rise to a tortious claim. 120. Relevantly here these provisions include provisions in respect of: harrassment and coercion (ACL s 50 and ASIC Act s 12DG, see Chapter 2), unfair contract terms (ACL s 23 and ASIC Act s 12BF, see Chapter 5), unconscionable conduct under the unwritten law (ACL s 20 and ASIC Act s 12CA, see Chapter 4) and unconscionable conduct (ACL and ASIC Act s 12CB, see Chapter 5). 121. The term ‘involved’ is defined in ACL s 2. See also York v Lucas (1985) 158 CLR 661 at 670. Note that relief may also be obtained under the ACL against a credit provider if there is a ‘linked credit contract’: ACL s 278. 122. Retail Leases Act 1994 (NSW) s 72AA; Retail Leases Act 2003 (Vic) s 80; Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) s 15F. A general power to make orders compensating parties is provided in Business Tenancies (Fair Dealings) Act (NT) s 102(a)(i). 123. ACL s 236; ASIC Act s 12GF. 124. Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [109] per Gummow J; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [106] per McHugh J. 125. ACL s 236. 126. ASIC Act s 12GF. 127. Note that ss 82 and 87 of the TPA (the statutory predecessor to ss 236, 237 and 243 in the ACL) used the term loss or damage ‘by’ conduct. 128. QNI Resources Pty Ltd v Sino Iron Pty Ltd (2017) 1 Qd R 167 at [88] per Jackson J; Robinson v 470 St Kilda Road Pty Ltd [2018] FCAFC 84 at [102]–[103] per Rangiah J. 129. Travel Compensation Fund v Tambree (2005) 224 CLR 627 at [28]–[29] per Gleeson CJ and Callinan J at [80]; Havyn Pty Ltd v Webster [2005] NSWCA 182 at [116](e) per Santow JA (Tobias JA and Brownie AJA agreeing); Unit 11 Pty Ltd v Sharpe Partners Pty Ltd (2006) 150 FCR 405 at [70] per Tamberlin J and at [111] per Dowsett J; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653 at [15]–[18] per Giles JA and at [174] per Ipp JA (Hodgson JA agreeing); Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 at [67] per Allsop P (Basten and

Young JJA agreeing). 130. Henville v Walker (2001) 206 CLR 459 at [18] per Gleeson J: ‘[T]hey may provide useful guidance for the reason that they have had to respond to the problems of the same nature as the problems which arise in the application of the Act … they represent an accumulation of valuable insight and experience which may well be useful in applying the Act.’ 131. (1992) 175 CLR 514 at 525 per Mason CJ, Dawson, Gaudron and McHugh JJ and citing March v E & MH Stramare Pty Ltd (1991) 171 CLR 506. 132. See also Henville v Walker (2001) 206 CLR 459 at [59]–[61] per Gaudron J and at [95] per McHugh J (Gummow J agreeing); Travel Compensation Fund v Tambree (2005) 224 CLR 627 at [55] per Kirby J and at [79]–[80] per Callinan J. 133. (1991) 171 CLR 506 at 514 per Mason CJ. 134. Gould v Vaggelas (1985) 157 CLR 215 at 236 per Wilson J; Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 419 per Gummow J; Henville v Walker (2001) 206 CLR 459 at [14] per Gleeson CJ, at [60] per Gaudron J, at [107] per McHugh J and at [163] per Hayne J; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [33] per Gleeson CJ and at [57] per Gaudron, Gummow and Hayne JJ; Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 at [66] per Allsop P (Basten and Young JJA agreeing). 135. ibid. 136. Hanave Pty Ltd v LFOT Pty Ltd (1999) 43 IPR 545 at 555–6 per Kiefel J; Havyn Pty Ltd v Webster [2005] NSWCA 182 at [116](g) per Santow JA (Tobias JA and Brownie AJA agreeing). 137. (1998) 196 CLR 494. 138. ibid, at [42]. 139. ibid, at [48]. 140. Henville v Walker (2001) 206 CLR 459 at [96] per McHugh J. 141. Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [100] per Gummow J. 142. Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (No 2) (1987)16 FCR 410 at 419 per Gummow J; Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 at 529–30 per Lockhart J; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [100] per Gummow J; Henville v Walker (2001) 206 CLR 459 at [18] per Gleeson CJ, at [66] per Gaudron J and at [96] per McHugh J; Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 at [70] per Allsop P (Basten and Young JJA agreeing). 143. (2002) 210 CLR 109 at [26]. 144. Travel Compensation Fund v Tambree (2005) 224 CLR 627 at [81] per Gummow J (Kirby J agreeing): ‘Value judgments may sometimes be inescapably involved, but that they may, does not justify the division of the question into a “but for” test and a further inquiry whether a defendant should in law be held responsible for a plaintiff’s damage.’ 145. [2011] NSWCA 259. 146. ibid, at [67] (Basten and Young JJA agreeing). 147. Travel Compensation Fund v Tambree (2005) 224 CLR 627 at [29] per Gleeson CJ and

see also at [49] per Gummow and Hayne JJ. 148. ibid. 149. (2001) 206 CLR 459 at [96]. 150. Henville v Walker (2001) 206 CLR 459 at [96] per McHugh J. Footnotes ommitted. 151. Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 at [71]. 152. Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Ltd (2015) 326 ALR 556 at [133] per Beazley P (Gleeson and Leeming JJA agreeing). 153. Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at [44] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ. 154. Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 526 per Mason CJ, Dawson, Gaudron and McHugh JJ. See also Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 14 per Mason, Wilson and Dawson JJ; Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 at 290 per Brennan CJ, Deane, Dawson, Gaudron and McHugh JJ; Henville v Walker (2001) 206 CLR 459 at [18] per Gleeson CJ and at [130] per McHugh J (Gummow J agreeing). 155. Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 14 per Mason, Wilson and Dawson JJ; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 526 per Mason CJ, Dawson, Gaudron and McHugh JJ; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [34] per McHugh, Hayne and Callinan JJ and at [103] per Gummow J; Henville v Walker (2001) 206 CLR 459 at [18] per Gleeson CJ, at [66] per Gaudron J and at [130] per McHugh J (Gummow J agreeing); Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at [44] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ. 156. Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [103] per Gummow J. 157. Henville v Walker (2001) 206 CLR 459 at [66] per Gaudron J and see at [18] per Gleeson CJ and at [131] per McHugh J. See also Havyn Pty Ltd v Webster [2005] NSWCA 182 at [116] per Santow JA (Tobias JA and Brownie AJA agreeing); Robinson v 470 St Kilda Road Pty Ltd [2018] FCAFC 84 at [103]–[109] per Rangiah J. 158. Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [34] per McHugh, Hayne and Callinan JJ. 159. ACL s 13, includes bodily and personal injury: explanatory memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (Cth) No 2, 2010, [2.57]–[2.58]. 160. CCA s 137C, excludes recovery of an amount for loss or damage that results from death or personal injury in respect of an action based on conduct in contravention of a provision of Pt 2-1 or Pt 3-1 of the ACL. 161. These provisions are to be found in Pt 2-2 of the ACL and so are not caught by s 137C of the ACL. But note claims for damages for death or injury must be brought under CCA Pt VIB. 162. See Steiner v Magic Carpet Tours Pty Ltd (1984) ATPR 40-490 at 45,642; Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 145 per Hill J; Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445 at 467–9; Aldersea v Public Transport Corporation (2001) 3 VR 499 at [39]–[42] per Ashley J; Crystal Auburn Pty Ltd v IL Wollermann Pty Ltd [2004] FCA 821 at [162] per Goldberg J; Walker v Citigroup

Gobal Markets Pty Ltd (2005) 226 ALR 114 at [135] per Kenny J; Shahid v Australasian College of Dermatologists [2008] FCAFC 72 at [232] and [251] per Jessup J (Branson and Stone JJ agreeing). 163. Collings Construction Co Pty Ltd v Australian Competition and Consumer Commission (1998) 43 NSWLR 131 at 155 per Cole JA (Stein JA and Sheppard AJA agreeing); Shahid v Australasian College of Dermatologists [2008] FCAFC 72 at [232] and [251] per Jessup J (Branson and Stone JJ agreeing). 164. Musca v Astle Corp Pty Ltd (1988) 80 ALR 251; Nixon v Philip Morris (Aust) Ltd (1999) 95 FCR 453. 165. In respect of unfair contract terms see ACL s 250 and ASIC Act s 12GND. Generally see, for example, Federal Court of Australia Act 1976 (Cth) s 21. 166. ACL s 232; ASIC Act s 12GD. 167. ACL s 247; ASIC Act s 12GLB. 168. ACL s 246; ASIC Act s 12GLA. 169. ACL s 239; ASIC Act s 12GNB. 170. ACL s 224(3) item 2 provides for a pecuniary penalty not exceeding $1.1 million for a body corporate and $220,000 for a natural person and the ASIC Act s 12GBA(3) item 1 provides for a penalty not exceeding $10,000 for a body corporate and $2,000 for a natural person. 171. ACL s 168; ASIC Act s 12GB(3). 172. ACL s 168(2); ASIC Act s 12DJ(2). 173. ACL s 168 provides for a penalty of $1.1 million for a body corporate and $220,000 for a natural person and the ASIC Act s 12GB(1) provides for a fine of $10,000 for a body corporate and $2,000 for a natural person. 174. See, for example, Minister for Immigration and Ethnic Affairs v Ozmanian (1996) 71 FCR 1 at 32 per Kiefel J. In that case a declaration that the rules of natural justice had been breached in respect of a decision made under the Migration Act 1958 (Cth) was held not to be appropriate. 175. (1993) 41 FCR 89. 176. ibid, at 110. See also Shepherd J at 98 (Foster J agreeing). 177. See Australian Competition and Consumer Commission v IMB Group Pty Ltd [1999] FCA 313 at [21] per Drummond J; Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801 at [34] per Carr J; Australian Competition and Consumer Commission v Eurong Beach Resort Ltd [2005] FCA 1134 at [5] per Kiefel J; Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730 at [6] per Nicholson J; Alinta Asset Management Pty Ltd v Essential Services Commission (No 3) [2007] VSC 353 at [11]– [13] per Hollingworth J. 178. See Australian Competition and Consumer Commission v Chen [2003] FCA 897 at [48]; Australian Competition and Consumer Commission v Eurong Beach Resort Ltd [2005] FCA 1134 at [5] per Kiefel J; Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730 at [6] per Nicholson

J; Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) (2008) ATPR 42-212 at [48] per French J; Cousins v Merrington Pty Ltd (No 2) [2008] VSC 340 at [45]–[46] and [66] per Hansen J. 179. See Australian Competition and Consumer Commission v Chen [2003] FCA 897 at [48]; Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212 at [146]–[151] per Lander J; Australian Competition and Consumer Commission v Eurong Beach Resort Ltd [2005] FCA 1134 at [5] per Kiefel J; Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730 at [6] per Nicholson J. 180. See Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd [2004] FCA 693 at [22] per Lee J; Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730 at [6] per Nicholson J; Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) (2008) ATPR 42-212 at [48] per French J. 181. Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801 at [34] per Carr J; Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212 at [146] per Lander J; Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2006] FCA 1730 at [6] per Nicholson J; Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) (2008) ATPR 42-212 at [48] per French J. 182. Forster v Jodoex Australia Pty Ltd (1972) 127 CLR 421 at 437–8 per Gibbs J; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581–2 per Mason CJ, Dawson, Toohey and Gaudron JJ; Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 90 and 99 per Sheppard J (Foster J agreeing); Director of Consumer Affairs Victoria v Daiso Industries (Australia) Pty Ltd (No 2) [2017] FCA 720 at [74] per Moshinsky J; Director of Consumer Affairs Victoria v Fletcher & Parker (Balwyn) Pty Ltd [2017] FCA 1521 at [81] per Murphy J. 183. Forster v Jodoex Australia Pty Ltd (1972) 127 CLR 421 at 437–8 per Gibbs J; Director of Consumer Affairs Victoria v Daiso Industries (Australia) Pty Ltd (No 2) [2017] FCA 720 at [76] per Moshinsky J; Director of Consumer Affairs Victoria v Manningham Property Group Pty Ltd [2017] FCA 1448 at [75] per Murphy J; Director of Consumer Affairs Victoria v Fletcher & Parker (Balwyn) Pty Ltd [2017] FCA 1521 at [81] per Murphy J. 184. Australian Competition and Consumer Commission v Eurong Beach Resort Ltd [2005] FCA 1134 at [5] per Kiefel J. 185. Warramunda Village Inc v Pryde (2001) 105 FCR 437 at [8] per Gray, Branson and North JJ; Australian Competition and Consumer Commission v Unique International College (No 7) [2017] FCA 1289 at [19]–[22] per Perram J; Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union (No 4) [2018] FCA 684 at [80] per Middleton J. 186. Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1 at [72] per Kiefel J; Australian Competition and Consumer Commission v Sensaslim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 at [54] per

Yates J. 187. ACL s 232(6). 188. ACL s 232(4) and (7) and ASIC Act s 12GD(5) and (6). 189. Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 300 per Toohey J; Australian Competition and Consumer Commission v Sensaslim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 at [55] per Yates J. 190. Australian Competition and Consumer Commission v 4WD Systems Pty Ltd (2003) 200 ALR 491 at [217] per Selway J; Dynamic Supplies Pty Ltd v Tonnex International Pty Ltd (No 2) [2011] FCA 675 per Yates J; Australian Competition and Consumer Commission v Sensaslim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 at [55] per Yates J. 191. Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 2003–4 per Merkel J. See also Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1 at [72] per Gordon J; Australian Competition and Consumer Commission v Sensaslim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 at [54] per Yates J; Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2017] FCA 1251 at [67]. 192. (1999) 161 ALR 79. 193. ibid, at [26]. 194. ibid. 195. ibid. 196. [2016] FCA 698 at [88]. 197. [2018] FCA 684 at [83]. 198. Note that an injunction may be appropriate where future breaches of the legislation are expected because of ‘deficient systemic controls’ rather than deliberate conduct: Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd [2010] FCA 423 at [41] per Perram J. 199. See further Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146 at [111] and [114] per Moore, Dowsett and Greenwood JJ. 200. See also Unilever Australia Ltd v Goodman Fielder Consumer Foods Pty Ltd [2009] FCA 1305 at [56] per Buchanan J. 201. Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 204 per Merkel J. 202. See, for example, Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd; Director of Consumer Affairs Victoria v Manningham Property Group Pty Ltd [2017] FCA 1448. See also Australian Standard AS 3806-2006. 203. The regulator could bring contempt proceedings against the respondent if the respondent fails to comply: Australian Competition and Consumer Commission v ACN 117 3 72 915 Pty Ltd [2015] FCA 1087. 204. Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union (No 4) [2018] FCA 684 at [89] per Middleton J. See also Australian Competition and Consumer Commission v 4WD Systems Pty Ltd [2003] FCA 850 at

[214] per Selway J. 205. [2008] FCA 1792. 206. Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 204 per Merkel J. 207. Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 at 204 per Merkel J; Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union (No 4) [2018] FCA 684 at [89] per Middleton J. 208. See BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452 at [42]–[52] per Gray, Goldberg and Weinberg JJ; Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [50] per Lee J; Australian Competition and Consumer Commission v Humax Pty Ltd [2005] FCA 706 at [13]–[16] per Merkel J; Australian Competition and Consumer Commission v Harbin Pty Ltd [2008] FCA 1792 at [18] per Finn J; Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd [2015] FCA 1087 at [28]–[40] per North J. 209. [2015] FCA 1087 at [28]–[43]. 210. ibid, at [42]. 211. ibid. 212. [2012] FCA 629 at [143]. See also Director of Consumer Affairs Victoria v Manningham Property Group Pty Ltd [2017] FCA 1448 at [81] per Murphy J; Director of Consumer Affairs Victoria v Fletcher & Parker (Balwyn) Pty Ltd [2017] FCA 1521 at [83] per Murphy J. 213. Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [22] per French J; Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [53] per Stone J. 214. Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635 at 641 per Tamberlin J; Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [49] per Stone J. 215. Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 at [49] per French J. 216. (2012) 287 ALR 249 at [62]–[63] and cited with approval by the High Court in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476 at [110]. 217. NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (‘NW Frozen Foods’) at 294–5; Australian Competition and Consumer Commission v Skippy Australia Pty Ltd [2006] FCA 1343 at [15]; Australian Competition and Consumer Commission v Gourmet Goody’s Family Restaurant Pty Ltd [2010] FCA 1216 at [6]. 218. ACL s 224(2); ASIC Act s 12GBA(2). 219. TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 190 at [139].

220. (1991) ATPR 41-076. 221. NW Frozen Foods at 290, 292–4 per Burchett and Kiefel JJ; J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 at [158] and [163]. 222. TPC v Stihl Chain Saws (Aust) Pty Ltd (1995) ATPR 41-375 at 40,169 per Burchett J. This approach was adopted by Mansfield J in Australian Competition and Consumer Commission v Rural Press Ltd (2001) 23 ATPR 41-833 at [19] and Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2010] FCA 929 at [22]. 223. (2005) 215 ALR 281 at [9]. 224. NW Frozen Foods, at 295. 225. (2005) 228 CLR 357 (‘Markarian’). 226. Australian Competition and Consumer Commission v Liquorland (Aust) Pty Ltd (2005) ATPR 42-070 at [68]. 227. As cited by the Full Federal Court in TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at [146]. 228. Markarian, at [27]. 229. Markarian, at [31]. 230. Markarian, at [31]. 231. Markarian, at [37] citing Wong v R (2001) 207 CLR 584 at [74]–[76] per Gaudron, Gummow and Hayne JJ. 232. Markarian, at [37] citing Wong as above. 233. Markarian, at [39]. 234. Markarian, at [39]. 235. ACCC v TPG Internet Pty Ltd [2011] FCA 1254. 236. ACCC v TPG Internet Pty Ltd (No 2) [2012] FCA 629 (‘ACCC v TPG’). 237. ACCC v TPG, at [69]. 238. ACCC v TPG, at [69]. 239. ACCC v TPG, at [71]–[78]. 240. ACCC v TPG, at [82]–[83]. 241. The subscribers to TPG’s broadband internet service grew from 9,000 in July 2010 to 107,000 people by July 2001: ACCC v TPG, at [88]. 242. ACCC v TPG, at [92]. 243. ACCC v TPG, at [108]–[109]. 244. ACCC v TPG, at [121]–[122]. 245. ACCC v TPG, at [122]. 246. ACCC v TPG, at [113]. 247. ACCC v TPG, at [116].

248. ACCC v TPG, at [129]. 249. The injunction application was with respect to the second phase of advertising and was heard by Ryan J on 22 December 2010. 250. ACCC v TPG, at [97]. 251. ACCC v TPG, at [100] citing Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529 at [309]. 252. ACCC v TPG, at [121]–[122]. 253. ACCC v TPG, at [130]–[137]. 254. ACCC v TPG, at [138]–[139]. 255. ACCC v TPG, at [137]. 256. TPG v ACCC (2012) 210 FCR 277 (‘TPG v ACCC’) at [151]. 257. Being: (i) the ‘no bundling condition’; (ii) the no set-up fee in the initial advertisements; and (iii) the failure to prominently display the single price in the initial advertisements. 258. TPG v ACCC, at [151]. 259. TPG v ACCC, at [152]. 260. TPG v ACCC, at [158]. 261. TPG v ACCC, at [156]. 262. TPG v ACCC, at [160]–[162]. 263. TPG v ACCC, at [163]. 264. TPG v ACCC, at [163]. 265. ACCC v TPG Internet Pty Ltd [2013] HCA 54 (‘ACCC v TPG (HC)’). 266. ACCC v TPG (HC), at [61]. 267. ACCC v TPG (HC), at [64]. 268. ACCC v TPG (HC), at [65]. 269. ACCC v TPG (HC), at [66]. 270. North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 at 720 per Mocatta J; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 304 per Priestley JA (Handley JA agreeing); Allcard v Skinner (1887) 36 Ch D 145. 271. Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 304 per Priestley JA (Handley JA agreeing). 272. (1991) 22 NSWLR 298 at 304 (Handley JA agreeing). 273. ibid. As to estoppel, see further above. 274. Coastal Estates Pty Ltd v Melevende [1965] VR 433 at 435 per Herring CJ. 275. Alati v Kruger (1955) 94 CLR 216 at 225 per Dixon CJ, Webb and Taylor JJ; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 586 per Brennan CJ, Deane, Gaudron and McHugh JJ. 276. ibid.

277. Note that Lord Blackburn, in Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1279, famously said ‘And a Court of Equity requires those who come to it to ask its active interposition to give them relief, should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by.’ 278. Gillespie v Gillespie [2013] QCA 99 at [84] per Wilson J (McMurdo P and White JA agreeing). 279. (1989) 167 CLR 316 at 341. 280. (1874) 5 PC 221 at 239–40. 281. See also Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1279; Hourigan v Trustees Executors & Agency Co Ltd (1934) 51 CLR 619 at 629–30 per Rich J; Gillespie v Gillespie [2013] QCA 99 at [84] per Wilson J (McMurdo P and White JA agreeing). 282. Fisher v Brooker [2009] 1 WLR 1764 at 1781 per Lord Neuberger. 283. Lindsay Petroleum Co v Hurd (1874) 5 PC 221 at at 239–40. 284. See Lindsay Petroleum Co v Hurd (1874) 5 PC 221 at at 239–40; Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1279–80 per Lord Blackburn; Fysh v Page (1956) 96 CLR 233 at 243–4 per Dixon CJ, Webb and Kitto JJ. 285. See, for example, Allcard v Skinner (1887) 36 Ch D 145 (six years — but not all property); Bullock v Lloyds Bank Ltd [1955] Ch 317 (four years); Gillespie v Gillespie [2013] QCA 99 (10 years). 286. ACL ss 236(2) and 237(3); ASIC Act ss 12GF(2) and 12GM(5). 287. ACL s 87F(1). 288. CRA s 16. 289. NCC s 80. 290. NCC s 80.

Index References are to paragraphs

A Account early contract remedy …. 1.4 Addison, C G …. 1.28 Affirmation bar to rescission …. 6.8, 6.25, 6.106 defence of …. 6.101–6.104 election …. 6.4, 6.103 rescind or affirm …. 6.4, 6.102 estoppel …. 6.103 onus of proof …. 6.104 Agent undue influence by …. 3.85, 3.94–3.95 action imputed to principal …. 3.94 husband procuring wife’s guarantee …. 3.95 setting aside transaction …. 3.85, 3.86 Agreement element of contract …. 1.79–1.82 offer and acceptance …. 1.80–1.82 Assumpsit contract remedy …. 1.5–1.8

deceit, with …. 1.7 indebitatus assumpsit …. 1.7 non-feasance, for …. 1.6 Slade’s Case …. 1.8, 1.9 trespass, matter of …. 1.5, 1.6 Atiyah, P S …. 1.9, 1.11, 1.12 Australian Consumer Law (ACL) coercion …. 2.74–2.79, 2.84–2.90 duress, amounting to …. 2.74 intimidation …. 2.85 meaning …. 2.78 prohibition …. 2.74, 2.76 repetition not required …. 2.84 threat of illegal act not necessary …. 2.79 undue, whether must be …. 2.85–2.88 verbal abuse and threats …. 2.88 consumer protection legislation …. 2.73 criminal offences …. 2.93, 6.57 duress, conduct amounting to …. 2.74–2.79 coercion …. 2.74–2.79, 2.84–2.90 defences …. 2.91 former TPA provisions …. 2.77 harassment …. 2.74–2.83 physical violence …. 2.74 enforcement by regulators …. 6.56 remedies see Remedies under ACL and ASIC Act unconscionable conduct see Statutory unconscionable conduct

undue harassment …. 2.74–2.83 duress, amounting to …. 2.74 intimidation …. 2.81 meaning …. 2.78, 2.80 persistent disturbance or torment …. 2.83 prohibition …. 2.74, 2.76 repetition required …. 2.84 threat of illegal act not necessary …. 2.79 undue, must be …. 2.80, 2.83 Australian Securities and Investments Commission (ASIC) Act 2001 criminal offences …. 2.93, 6.57 duress, conduct amounting to …. 2.74–2.79 coercion …. 2.74–2.79, 2.84–2.90 financial services, in relation to …. 2.75 harassment …. 2.74–2.83 remedies see Remedies under ACL and ASIC Act unconscionable conduct see Statutory unconscionable conduct

B Bank officer unconscionable conduct …. 4.28 undue influence …. 3.84 Bigwood, Rick …. 1.42 legal contractual exploitation …. 1.42, 1.51–1.58 legal neighbourhood, concept of …. 1.56, 1.57 liberal individualism …. 1.51–1.56

C

Certainty essential terms …. 1.87, 1.88 Civil monetary penalties ACL and ASIC Act, under …. 2.93, 6.75–6.100 determining, case study …. 6.83–6.100 deterrence as object …. 6.75 oppressive, not to be …. 6.80 parity principle …. 6.80, 6.93 primary object …. 6.75, 6.76 relevant matters …. 6.77–6.82 amount of loss or damage …. 6.77, 6.78, 6.96 circumstances …. 6.77, 6.78 corporate culture …. 6.78 degree of power of company …. 6.78, 6.90 deliberateness of contravention …. 6.78 nature and extent of conduct …. 6.77, 6.78, 6.87 similar past conduct …. 6.77, 6.79, 6.89, 6.96 totality principle …. 6.80, 6.93 Coercion Australian Consumer Law …. 2.74–2.79, 2.84–2.90 damages see Damages prohibition …. 2.74, 2.76 remedies see Remedies under ACL and ASIC Act criminal offence …. 2.93, 6.57 duress, amounting to …. 2.74, 2.84–2.90 freedom as non-domination and …. 1.69 intimidation …. 2.85

letters to debtors …. 2.89, 2.90 meaning …. 2.78 pecuniary penalties …. 2.93 personally abusive or obscene language …. 2.85 prohibition …. 2.74, 2.76 repetition not required …. 2.84 threat of illegal act not necessary …. 2.79 undue, whether must be …. 2.85–2.88 verbal abuse and threats …. 2.88 Coercive modifications …. 2.54–2.56 Common law damages …. 6.39 equity and …. 1.94–1.100 amalgamation …. 1.95–1.97 distinction …. 1.94 fusion fallacy …. 1.97–1.100 Judicature Act, effect of …. 1.93, 1.95, 1.97–1.99 separate administration historically …. 1.93 rescission of contract …. 6.8, 6.9 ability to return to original position …. 6.9 act of contracting party …. 6.8, 6.21 damages mutually exclusive …. 6.39 election …. 6.4–6.7 restoring to status quo …. 6.9, 6.27 Compliance programs court’s discretion to order …. 6.69 definition …. 6.68 limitations on power to order …. 6.69–6.72

clear and unambiguous terms …. 6.70 no clear benefit …. 6.69 ongoing supervision not required …. 6.72 punitive order …. 6.69 sufficient nexus with contravention …. 6.71 purpose …. 6.68 Consent contract law, touchstone of …. 1.14 impairment of duress see Duress unconscionable conduct see Unconscionable conduct undue influence see Undue influence will theory see Will theory Consideration adequacy …. 1.84 economic duress and …. 2.54 element of contract …. 1.79, 1.83 valuable …. 1.83 Consumer contracts definition …. 5.165 unfair terms see Unfair contract terms Contract elements of see Elements of contract freedom of see Freedom of contract rescission see Rescission of contract unjust see Unjust contracts Contract law

changing nature of …. 1.2 common law …. 1.3 liberalism see Liberalism modern, beginning of, …. 1.9–1.12 origins of …. 1.3–1.13 unconscionable conduct in …. 1.1, 1.2 will theory see Will theory Contracts Review Act 1980 (NSW) unjust contracts see Unjust contracts Corporation statutory unconscionable conduct …. 5.84–5.89 acting through natural persons …. 5.85 aggregation of knowledge …. 5.87, 5.88 state of mind of directors, employees or agents …. 5.84 Covenant early contract remedy …. 1.4 Credit contracts Code see National Credit Code (NCC) definition …. 5.111 unconscionable interest see Unconscionable interest and other charges unjust see Unjust contracts

D Damages ACL or ASIC Act …. 6.40–6.55 anxiety damages …. 6.54 causation …. 6.42–6.50 compensatory …. 6.52

court may order …. 6.30 death, not recoverable for …. 6.54 entitlement to …. 6.41 in addition to rescission …. 6.40 independently of rescission …. 6.40 limitation of actions …. 6.111 loss, definition …. 6.53 not discretionary …. 6.41 personal injury …. 6.54 punitive damages …. 6.55 quantum, determining …. 6.51–6.55 third party, against …. 6.40 anxiety damages …. 6.54 causation …. 6.42–6.50 common law conceptions …. 6.44, 6.46 elements of …. 6.43 factual …. 6.44–6.46 normative …. 6.47–6.50 common law …. 6.39 equity …. 6.39 punitive damages …. 6.55 quantum, determining …. 6.51–6.55 rescission and …. 6.39, 6.40 tort …. 6.39 Debt early contract remedy …. 1.4 Debt collection undue harassment …. 2.81

Declarations of wrongdoing ACL and ASIC Act, under …. 6.58–6.62 determining whether warranted …. 6.61 Federal Court discretionary power …. 6.60 functions of …. 6.58, 6.59 identifying gist of court findings …. 6.62 public interest cases …. 6.59 Defences affirmation …. 6.101–6.104 bar to rescission …. 6.8, 6.25, 6.106 election …. 6.4, 6.102, 6.103 onus of proof …. 6.104 delay …. 6.108–6.110 equitable …. 6.105–6.110 laches …. 6.108–6.110 delay in seeking relief …. 6.108 detrimental reliance …. 6.110 ultimate test …. 6.109 limitation of actions …. 6.111–6.113 ACL and ASIC Act …. 6.111 unjust contracts, CRA …. 6.112 unjust contracts, NCC …. 6.113 overview …. 6.101 unconscientious conduct by applicant …. 6.107 Detention of goods duress …. 2.46–2.47 actual or threatened …. 2.46 fear of …. 2.46

illegitimate pressure …. 2.43, 2.47 Detinue early contract remedy …. 1.4 Doctor and patient presumed relationship of influence …. 3.40 Domestic agreement court’s refusal to enforce …. 1.25 presumption that not legally binding …. 1.25 public/private dichotomy …. 1.23–1.26 Duress ASIC Act 2001 …. 2.73 conduct amounting to duress …. 2.74, 2.75 financial services, in relation to …. 2.75 remedies see Remedies Australian Consumer Law see also Australian Consumer Law (ACL) coercion …. 2.74–2.79, 2.84–2.90 conduct amounting to duress …. 2.74, 2.76 pecuniary penalties …. 2.93 remedies see Remedies undue harassment …. 2.74–2.83 Bigwood’s exploitation theory and …. 1.42 characteristics of threatened party …. 2.27 coercive modifications …. 2.54–2.56 common law doctrine …. 1.90, 2.1 compulsion of the will …. 2.6, 2.20–2.23 involuntary act …. 2.20 objective test …. 2.6

reasonable fear of harm …. 2.21 consumer protection legislation …. 2.73–2.93 damages see Damages defences …. 2.91 description of doctrine …. 2.2 doctrine of …. 1.90, 2.1–2.4 economic duress …. 2.52, 2.69–2.71 doctrine of …. 2.70 freedom of contract and …. 1.90 lawful act …. 2.69–2.71 non-performance of contractual obligations …. 2.52–2.56 elements of …. 2.5 freedom of contract and …. 1.33, 1.90 Fried’s promise theory and …. 1.49 illegitimate pressure …. 2.38–2.72 lawful acts …. 2.65–2.72 types of …. 2.39 unlawful acts …. 2.41–2.64 imprisonment, threats of, …. 2.44–2.45 improper use of legal process …. 2.48–2.51 agreement to stifle prosecution …. 2.48 bona fide threat not duress …. 2.50 illegitimate pressure by …. 2.43 malicious prosecution …. 2.48 third party application …. 2.51 threatened proceedings …. 2.48 winding up petition, threatened …. 2.49 independent advice …. 2.36

indicia of …. 2.26–2.36 no other practical choice …. 2.33–2.35 protest …. 2.28–2.32 steps to avoid …. 2.37 invalid law, money paid under …. 2.57, 2.61–2.64 additional rent …. 2.64 illegitimate pressure …. 2.43 involuntarily paid …. 2.61, 2.62 permit fees …. 2.62, 2.63 proof of all elements of duress …. 2.57 proof of compulsion required …. 2.61 threat of interference with legal right …. 2.63 lawful act …. 2.65–2.72 economic duress …. 2.69–2.71 illegitimate pressure, whether …. 2.40, 2.65, 2.66, 2.71 Karam, rejection in …. 2.65, 2.71, 2.72 law prior to Karam …. 2.66–2.70 threat of economic pressure …. 2.69, 2.70 threat of reporting crime to police …. 2.66–2.68 unconscionable conduct …. 2.66 no other practical choice …. 2.33–2.35 non-performance of contractual obligations …. 2.52–2.56 actual or threatened …. 2.52, 2.53 coercive modifications …. 2.54–2.56 consideration, role of …. 2.54 deliberate threat …. 2.52 illegitimate pressure by …. 2.43, 2.52 pre-existing duty doctrine …. 2.53, 2.55

unlawful act …. 2.52 overborne will theory …. 2.7, 2.8 English cases …. 2.7 rejection in Australia …. 2.8 pecuniary penalties …. 2.93 personal circumstances of threatened party …. 2.27 physical violence, threats of …. 2.44–2.45 duress to the person …. 2.45 illegitimate pressure by …. 2.43 prenuptial agreement …. 1.113–1.116 pressure applied …. 2.9–2.12 absence or delay of …. 2.30, 2.32 express or implicit threat …. 2.13 illegitimate …. 2.38–2.72 protest …. 2.28–2.32 payment made under …. 2.31 presence or absence of …. 2.29 time of payment, at …. 2.29 total absence of …. 2.30 public official demanding money …. 2.57–2.60 demand under colour of office …. 2.58 extortion …. 2.58 licence fee …. 2.60 not lawfully entitled …. 2.58, 2.59 proof of compulsion not necessary …. 2.57 rationale of doctrine …. 2.1 reasonable fear of harm …. 2.21–2.25 sole inducement, need not be …. 2.24

remedies see Remedies rescission see Rescission of contract seizure, detention or interference with goods …. 2.46–2.47 actual or threatened …. 2.46 fear of …. 2.46 illegitimate pressure by …. 2.43, 2.47 steps to avoid …. 2.36, 2.37 threats of violence calculated to cause fear of death or bodily harm …. 2.15 contracting party, by …. 2.14–2.18 employee, against …. 2.19, 2.45 express or implicit …. 2.13 physical violence or imprisonment, …. 2.44–2.45 relative, against …. 2.19, 2.45 stranger, by …. 2.17, 2.18 third party, against …. 2.19 third party taking benefit, by …. 2.14–2.18 unconscionable conduct distinguished …. 1.112–1.119 overlap with …. 1.108, 2.3 undue influence distinguished …. 1.108–1.119, 3.1 overlap with …. 1.108, 2.3 unlawful act …. 2.41–2.64 definition …. 2.42 external standard, by …. 2.42 illegitimate pressure by …. 2.41–2.64 improper use of legal process …. 2.48–2.51

invalid law, money paid under …. 2.57, 2.61–2.64 non-performance of contractual obligations …. 2.52–2.56 physical violence or imprisonment …. 2.44–2.45 public official demanding money …. 2.57–2.60 seizure or detention of property …. 2.46–2.47 what constitutes …. 2.43 vitiating factor …. 1.90 voidable contract …. 6.4

E Economic duress see also Duress doctrine of …. 2.70 freedom of contract and …. 1.90 lawful act …. 2.69–2.71 non-performance of contractual obligations …. 2.52–2.56 Elements of contract agreement …. 1.80–1.82 certainty of terms …. 1.87–1.88 consideration …. 1.83–1.84 four main elements …. 1.79 intention to create legal relations …. 1.85–1.86 modern contract law …. 1.79 offer and acceptance …. 1.80–1.82 Equity common law and …. 1.94–1.100 amalgamation …. 1.95–1.97 distinction …. 1.94

fusion fallacy …. 1.97–1.100 Judicature Act, effect of …. 1.93, 1.95, 1.97–1.99 separate administration historically …. 1.93 Courts of Chancery …. 1.92, 1.93 damages …. 6.39 defences …. 6.25, 6.105–6.110 history of …. 1.92 laches …. 6.108–6.110 modern contract law, in …. 1.93 rescission of contract …. 6.8, 6.9 damages mutually exclusive …. 6.39 defences …. 6.25, 6.105–6.110 discretionary remedy …. 6.105 restoring substantially to status quo …. 6.9, 6.28 timely, just and fair …. 6.9 Exploitation active or passive …. 1.55, 4.35–4.37 legal contractual (Bigwood’s theory) …. 1.42, 1.51–1.58 unconscionable conduct …. 4.29–4.42 immoral or dishonest motive not required …. 4.38–4.40 improvidence of transaction …. 4.34 matters to be considered …. 4.32–4.42 onus of proof …. 4.30, 4.31 passive …. 4.35, 4.36 permissible inference …. 4.31 predatory state of mind …. 4.29 receipt and retention of benefit …. 4.41, 4.42 relationship between parties …. 4.33

special disability, of …. 4.29–4.42 wrongful utilisation of weaker party …. 1.55

F Fifoot, C H S …. 1.9, 1.10 Freedom as non-domination …. 1.66–1.73 arbitrary interference …. 1.70 capacity of government …. 1.69 definition of domination …. 1.69–1.71 interference with choices …. 1.71 domination, definition …. 1.69–1.71 freedom as non-interference compared …. 1.73 Pettit …. 1.69, 1.70 republican theory …. 1.66–1.73 subjectivity of domination …. 1.72 Freedom as non-interference …. 1.13, 1.16–1.18 Bigwood …. 1.52, 1.57, 1.58 constitutionally poor definition …. 1.30, 1.32 criticism of concept …. 1.30–1.33 freedom as non-domination compared …. 1.73 Kimel’s criticism …. 1.59 public/private dichotomy …. 1.57 sociologically poor definition …. 1.31, 1.33 unintentional interference …. 1.31 Freedom as personal autonomy …. 1.60, 1.62–1.64 Kimel …. 1.60–1.64 Raz …. 1.60–1.62 Freedom of contract

basic principle …. 1.75, 1.76 concept of …. 1.17 constitutional weakness …. 1.32 duress and …. 1.33, 1.90 freedom as non-domination …. 1.66–1.73 freedom as non-interference …. 1.13, 1.16–1.18 Bigwood …. 1.52, 1.57, 1.58 criticism of concept …. 1.30–1.33, 1.59 freedom as personal autonomy …. 1.60, 1.62–1.64 government role …. 1.60 Kimel …. 1.59–1.62 liberal view see Liberalism modern contract law …. 1.74–1.78 perfectionist conception …. 1.60, 1.62, 1.63 Raz …. 1.60–1.62 republican theory …. 1.66–1.73 sociological weakness …. 1.32 teleological or target based …. 1.61, 1.62, 1.65 unconscionable conduct and …. 1.33, 4.5 undue influence and …. 1.33 will theory see Will theory Fried, Charles …. 1.42, 1.44–1.50 promise theory …. 1.42, 1.44–1.50

G Gilmore, Grant …. 1.9, 1.11 Good faith meaning …. 5.50

statutory unconscionable conduct consideration in determining …. 5.32, 5.49–5.51 corporation officers …. 5.84 normative standard …. 5.52, 5.57 obligation to act in …. 5.50, 5.51 Guarantee partial rescission …. 6.10–6.12 wife as guarantor for husband unconscionable conduct …. 3.97–3.110 Yerkey v Jones principle …. 3.96–3.112 Guardian and ward presumed relationship of influence …. 3.40

H Harassment see Undue harassment History of contract law agreement as basis for obligation …. 1.8 assumpsit …. 1.5–1.8 beginning of modern law, …. 1.9–1.12 Gilmore, Atiyah and Horowitz’s view …. 1.9, 1.11 Simpson and Fifoot’s view …. 1.9, 1.10 early remedies …. 1.4 account …. 1.4 assumpsit …. 1.5–1.8 covenant …. 1.4 debt …. 1.4 detinue …. 1.4 English common law …. 1.3

liberalism …. 1.12, 1.13, 1.15, 1.16 Slade’s Case …. 1.8, 1.9 Horowitz, Morton …. 1.9, 1.11

I Implied terms construction contract …. 1.32 presumed intention of parties …. 1.32 sale of goods contract …. 1.32 Improper use of legal process duress …. 2.48–2.51 agreement to stifle prosecution …. 2.48 bona fide threat not duress …. 2.50 illegitimate pressure …. 2.43 malicious prosecution …. 2.48 third party application …. 2.51 threatened proceedings …. 2.48 winding up petition, threatened …. 2.49 Inequality of bargaining power special disability …. 4.10–4.12 false assumption as to …. 4.9 not necessarily amounting to …. 4.10 statutory unconscionable conduct …. 5.32, 5.46–5.48 Inequality of information special disability …. 4.13 Injunctions civil penalty where resisted …. 6.91 court’s power to grant …. 6.63

limitation on power to grant …. 6.65 ‘matter’, related to …. 6.65 nexus with contravention …. 6.65 scope and purpose of legislation …. 6.65 practical issues …. 6.66 principles governing discretion …. 6.67 public interest …. 6.64 purpose of …. 6.64 Intention of parties implied terms to fill gaps …. 1.32 objective construction of contract …. 1.32 Intention to create legal relations element of contract …. 1.79, 1.85 objective determination …. 1.85 presumptions …. 1.86 Interference with goods duress …. 2.46–2.47 actual or threatened …. 2.46 fear of …. 2.46 illegitimate pressure …. 2.43, 2.47 Invalid law duress where money paid under …. 2.57, 2.61–2.64 additional rent …. 2.64 illegitimate pressure …. 2.43 involuntarily paid …. 2.61, 2.62 permit fees …. 2.62, 2.63 proof of all elements of duress …. 2.57

proof of compulsion required …. 2.61 threat of interference with legal right …. 2.63

K Kimel, Dori …. 1.42, 1.58–1.66 freedom as personal autonomy …. 1.60, 1.62–1.64 libertarian contract law …. 1.59–1.66 perfectionist conception of freedom …. 1.60, 1.62, 1.63, 1.65 promise/contract distinction …. 1.62, 1.64 Raz’s liberalism …. 1.60–1.62 reformulation of will theory …. 1.58 teleological liberalism …. 1.61, 1.62, 1.65

L Laches delay in seeking relief …. 6.108 detrimental reliance …. 6.110 equitable defence …. 6.108–6.110 ultimate test …. 6.109 Late payment fees statutory unconscionable conduct …. 5.58 unfair contract terms …. 5.188 Lawful-act duress …. 2.65–2.72 economic duress …. 2.69–2.71 illegitimate pressure, whether …. 2.40, 2.65, 2.66, 2.71 Karam, rejection in …. 2.65, 2.71, 2.72 law prior to Karam …. 2.66–2.70 threat of economic pressure …. 2.69, 2.70

threat of reporting crime to police …. 2.66–2.68 unconscionable conduct …. 2.66 Lawyers presumed undue influence …. 3.66–3.69 rebutting presumption …. 3.66–3.69 relationship of influence with client …. 3.40 Legal contractual exploitation Bigwood’s theory …. 1.42, 1.51–1.58 Legal neighbourhood Bigwood’s concept of …. 1.56, 1.57 Legally binding contract agreement …. 1.80–1.82 certainty of terms …. 1.87–1.88 consideration …. 1.83–1.84 four main elements …. 1.79 intention to create legal relations …. 1.85–1.86 offer and acceptance …. 1.80–1.82 vitiating factors …. 1.89–1.91 Liberalism see also Will theory abstract individual …. 1.19–1.22 criticism of concept …. 1.34–1.38 communitarian liberalism …. 1.42 contract law and …. 1.12, 1.13, 1.15, 1.16 freedom as non-interference …. 1.13, 1.16–1.18, 1.20 Bigwood’s theory …. 1.52, 1.57, 1.58 criticism of concept …. 1.30–1.33

minimum area of freedom …. 1.23 public/private dichotomy …. 1.23, 1.24 freedom of contract …. 1.17, 1.21 individuals inherently equal …. 1.19 liberal individualism, 1.51–1.58 public/private dichotomy …. 1.23, 1.24 criticism of concept …. 1.39–1.40 weaknesses …. 1.29 Limitation of actions compensation under ACL or ASIC Act …. 6.111 death or personal injury claim …. 6.111 defence …. 6.111–6.113 unjust contract claim CRA …. 6.112 NCC …. 6.113 Loan agreement unfair contract terms …. 5.182 unjust contracts …. 5.151, 5.152

M Moral obloquy meaning …. 5.66–5.73 statutory unconscionable conduct …. 5.66–5.73

N National Credit Code (NCC) commencement …. 5.106 contracts regulated by …. 5.109–5.119, 5.129

amount of credit …. 5.110 credit contract …. 5.111, 5.112, 5.129 exclusions …. 5.114 guarantee …. 5.113 instalment payments …. 5.113 mortgage …. 5.113 purpose of credit, determining …. 5.116–5.119 rebuttable presumption of application …. 5.115 rent-to-buy goods lease …. 5.113 credit contract application to …. 5.112 meaning …. 5.111 unjust see Unjust contracts credit, definition …. 5.109 limitation of actions …. 6.113 remedies under …. 6.38 unconscionable interest and other charges …. 5.3, 5.120–5.124 annulment by court …. 5.123 application for relief …. 5.107 contracts covered …. 5.109–5.119 establishment fee …. 5.124 interest rate changes …. 5.120 reduction of amount by court …. 5.123 review by court …. 5.107 time limit for claim …. 5.107 unjust contracts provision not applicable …. 5.132 Uniform Consumer Credit Code (former) contracts under, NCC covering …. 5.106

NCC replacing …. 5.106 unjust contracts see Unjust contracts Non-performance of contractual obligations economic duress …. 2.52–2.56 actual or threatened …. 2.52, 2.53 coercive modifications …. 2.54–2.56 consideration, role of …. 2.54 deliberate threat …. 2.52 illegitimate pressure …. 2.43, 2.52 pre-existing duty doctrine …. 2.53, 2.55 unlawful act …. 2.52

O Offer acceptance …. 1.80, 1.82 communication of …. 1.82 revocation of offer before …. 1.82 communication of …. 1.81 element of contract …. 1.79, 1.80 express or implied …. 1.81 promise …. 1.81 revocation before acceptance …. 1.82

P Parent and child presumed undue influence …. 3.71 independent advice …. 3.71, 3.72 rebutting presumption …. 3.71

relationship of influence …. 3.40 Yerkey v Jones principle …. 3.112 Performance legally binding contract requiring …. 1.89 non-performance see Non-performance of contractual obligations Physical violence duress where threats of …. 2.44–2.45 duress to the person …. 2.45 illegitimate pressure by …. 2.43 Prenuptial agreement duress …. 1.113–1.116 unconscionable conduct …. 1.113, 1.116–1.119, 4.28 undue influence …. 1.113, 1.116–1.119 Presumed undue influence see also Undue influence abuse of authority …. 3.38 actual relationship of influence …. 3.39, 3.45–3.50 examination of facts required …. 3.48 matters court will have regard to …. 3.23–3.30, 3.50 proof of actual domination …. 3.46 relation of confidence …. 3.47 source of power …. 3.45 bank officers …. 3.84 examples …. 3.82–3.84 fiduciary relationship …. 3.49 illiterate person …. 3.70, 3.82 independent advice …. 3.71–3.81

absence of …. 3.75, 3.76 circumstances of transaction and …. 3.78 complexity of transaction and …. 3.76 minimum required to rebut …. 3.79, 3.80 purpose of …. 3.78 rebutting presumption, significance …. 3.71–3.81 size of transaction and …. 3.76 inexplicably conferring benefit …. 3.34 lawyer and client …. 3.66–3.69 presumed relationship of influence …. 3.40 rebutting presumption …. 3.66–3.69 manifest disadvantage …. 3.51–3.61 Australian law unclear …. 3.55–3.61 criticism of requirement …. 3.54 onus of rebutting …. 3.35, 3.61 parent and child …. 3.40, 3.71 presumed relationship of influence …. 3.39–3.44 classes not closed …. 3.42, 3.43 common characteristics …. 3.41 common experience, arising from …. 3.43 doctor and patient …. 3.40 engaged couples, historically …. 3.42 guardian and ward …. 3.40 lawyer and client …. 3.40 mutability …. 3.43 parent and child …. 3.40 priest and penitent …. 3.40 trustee and beneficiary …. 3.40

public policy behind preventing exploitation of power …. 3.36 preventing persons from being influenced …. 3.37 rebutting presumption …. 3.62–3.81 characteristics of parties …. 3.66 how intention formed …. 3.64 illiterate or weak-minded person …. 3.70 independent advice …. 3.71–3.81 kind of influence applied …. 3.77 lawyer and client …. 3.66–3.69 onus of proof …. 3.35, 3.61, 3.62 parent and child …. 3.71 question of fact …. 3.65 stronger party, onus on …. 3.62, 3.63 weaker party’s knowledge and understanding …. 3.70 relationship of influence …. 3.34, 3.39–3.50 actual …. 3.39, 3.45–3.50 presumed …. 3.39–3.44 religious influence …. 3.40, 3.77, 3.83 substantial benefit to stronger party …. 3.51 Australian law unclear …. 3.55–3.61 benefit, meaning …. 3.51 criticism of requirement …. 3.54 disadvantage to weaker party …. 3.51–3.61 inexplicably conferred …. 3.34 unfair advantage …. 3.51, 3.58 weak-minded person …. 3.70 Priest and penitent

presumed undue influence …. 3.77 rebutting presumption …. 3.77 relationship of influence …. 3.40 Promise theory …. 1.42, 1.44–1.50 criticism of …. 1.47–1.49, 1.59 duress and …. 1.49 Kimel’s criticism …. 1.59 legal principles filling gaps …. 1.46 morals underlying contract law …. 1.45, 1.47 restatement of liberal theory …. 1.44 unconscionable conduct and …. 1.49 Public interest declarations of wrongdoing …. 6.59 injunctions, grant of …. 6.64 procedurally unjust contracts …. 5.140–5.142 Public official demanding money duress …. 2.57–2.60 demand under colour of office …. 2.58 extortion …. 2.58 licence fee …. 2.60 not lawfully entitled …. 2.58, 2.59 proof of compulsion not necessary …. 2.57 Public/private dichotomy criticism of concept …. 1.39–1.40 domestic agreement presumed not legally binding …. 1.25 legal contractual exploitation …. 1.57 legal neighbourhood …. 1.57

liberalism …. 1.23, 1.24 will theory …. 1.25, 1.26

R Raz, Joseph …. 1.42, 1.60–1.62 freedom as personal autonomy …. 1.60–1.62 Religious advisers presumed undue influence …. 3.77, 3.83 rebutting presumption …. 3.77 relationship of influence …. 3.40 Remedies ACL or ASIC Act see Remedies under ACL and ASIC Act Contracts Review Act …. 6.35–6.37 compensation …. 6.37 discretionary power …. 6.36 orders available …. 6.35 damages see Damages defences see Defences duress …. 2.92, 2.93, 6.1 early contract remedies …. 1.4 account …. 1.4 assumpsit …. 1.5–1.8 covenant …. 1.4 debt …. 1.4 detinue …. 1.4 equitable …. 4.73 limitation of actions …. 6.111–6.113 overview …. 6.1

rescission see Rescission of contract unconscionable conduct …. 1.103, 4.47, 6.1 undue influence …. 6.1 unjust contracts Contracts Review Act …. 6.35–6.37 National Credit Code …. 6.38 Remedies under ACL or ASIC Act adverse publicity orders …. 6.73, 6.74 civil monetary penalties …. 2.93, 6.75–6.100 determining, case study …. 6.83–6.100 deterrence as object …. 6.75 primary object …. 6.75, 6.76 relevant matters …. 6.77–6.82 compensation …. 6.27–6.30 detriment suffered …. 6.28 economic loss …. 6.28 limitation of actions …. 6.111 loss or damage …. 6.27, 6.28 potential loss …. 6.29 proportionate to wrong …. 6.30 compliance programs …. 6.68–6.72 criminal offences …. 2.93, 6.57 damages see Damages declarations of wrongdoing …. 6.58–6.62 determining appropriateness …. 6.31–6.34 enforcement by regulators …. 6.56 injunctions …. 6.63–6.67 limitation of actions …. 6.111

orders available …. 6.30, 6.56 orders sought by regulators …. 6.56 general deterrence …. 6.56 specific deterrence …. 6.56 overview …. 2.92, 2.93, 6.21 proportionality …. 6.33 rescission …. 2.93, 6.21–6.34 chain of transactions, undoing …. 6.26 compensation …. 6.27–6.30 damages in addition or independently …. 6.40 determining appropriateness …. 6.31–6.34 discretion of court …. 6.21–6.25, 6.32 equitable principles …. 6.23 principles …. 6.22–6.25 proportionate to wrong …. 6.30, 6.33 time limits …. 6.111 Republicanism …. 1.42, 1.67 freedom as non-domination …. 1.66–1.73 Rescission of contract ACL or ASIC Act …. 2.93, 6.21–6.34 chain of transactions, undoing …. 6.26 compensation …. 6.27–6.30 damages in addition or independently …. 6.40 determining appropriateness …. 6.31–6.34 discretion of court …. 6.21–6.25, 6.32 equitable principles …. 6.23 principles …. 6.22–6.25 proportionate to wrong …. 6.30, 6.33

affirmation see also Affirmation bar to rescission …. 6.8, 6.25, 6.106 election …. 6.4, 6.102, 6.103 commencement of legal proceedings …. 6.5 common law …. 6.8, 6.9 ability to return to original position …. 6.9 act of contracting party …. 6.8, 6.21 damages mutually exclusive …. 6.39 election …. 6.4–6.7 restoring to status quo …. 6.9, 6.27 communication to other party …. 6.6 compensation ACL or ASIC Act …. 6.27–6.30 damaged or deteriorated property …. 6.17 improvements to property …. 6.18 constructive trust over transferred property …. 6.15 damages and …. 6.39, 6.40 defences see Defences duress …. 2.92, 6.4 effect …. 6.3 election …. 6.4–6.7 communication to other party …. 6.6 irrevocable …. 6.7 equity …. 6.8, 6.9 bars to rescission …. 6.25 damages mutually exclusive …. 6.39 defences …. 6.105–6.110 discretionary remedy …. 6.105

equitable defence, where …. 6.8 restoring substantially to status quo …. 6.9, 6.28 timely, just and fair …. 6.9 failure to communicate …. 6.6 interest on payment of money …. 6.14 meaning …. 6.2 partial rescission …. 6.10–6.12 recovery of money …. 2.92, 6.14 recovery of property …. 6.15–6.19 rental for property …. 6.19 restitutio in integrum …. 6.9 impossibility of …. 6.9, 6.25 restitution facilitating return to status quo …. 6.9 sale of business contract …. 6.20 unconscionable conduct …. 1.103, 6.4 undue influence …. 6.4 unequivocal words or conduct …. 6.5 void ab initio …. 6.3, 6.21 Retail leases legislation unconscionable conduct see also Statutory unconscionable conduct prohibition …. 5.2, 5.8 scope of prohibition …. 5.9, 5.30 state and territory legislation …. 5.2, 5.8

S Seizure of goods duress …. 2.46–2.47 actual or threatened …. 2.46

fear of …. 2.46 illegitimate pressure …. 2.43, 2.47 Simpson, W B …. 1.9, 1.10 Small business contracts definition …. 5.166 unfair terms see Unfair contract terms Standard form contracts definition …. 5.167 unfair terms see Unfair contract terms Statutory unconscionable conduct aggregation of knowledge …. 5.87, 5.88 ASIC Act 2001 …. 4.58, 5.2 financial services, application to …. 4.62 limits of prohibition …. 5.21–5.30 prohibition under s 12CA …. 4.58, 5.2, 5.7 purpose of s 12CA …. 4.60 scope of prohibition …. 4.59, 5.9–5.20 Trade Practices Act provisions mirrored in …. 5.6 unconscionable, meaning …. 4.68–4.75 assessing conduct …. 5.75–5.89 conscious conduct …. 5.82–5.89 equity informing technique …. 5.75–5.80 evaluative normative standard …. 5.38–5.74 primary focus on stronger party …. 5.81 Australian Consumer Law (ACL) …. 4.58, 5.2 exercise of statutory duty excluded …. 4.67 financial services, not applicable to …. 4.62

legislative boundaries …. 4.61–4.67 limits of prohibition …. 5.21–5.30 prohibition under s 20 …. 4.58, 5.2, 5.7 purpose of s 20 …. 4.60 scope of prohibition …. 4.59, 5.9–5.20 trade or commerce, conduct in …. 4.64–4.67, 5.23–5.27 Trade Practices Act provisions duplicated …. 5.5 unconscionable, meaning …. 4.68–4.75 conduct, limited to …. 5.21, 5.22 conscious conduct …. 5.82–5.89 consumer protection legislation …. 4.58–4.75 Contracts Review Act see Unjust contracts corporation …. 5.84–5.89 acting through natural persons …. 5.85 aggregation of knowledge …. 5.87, 5.88 state of mind of directors, employees or agents …. 5.84 credit contracts see also National Credit Code interest see Unconscionable interest and other charges damages see Damages deliberate conduct …. 5.82 determining …. 4.68–4.75, 5.31–5.38 dispute resolution process, not extending to …. 5.29 door-to-door sales …. 5.55, 5.56 engaging in conduct, requirement …. 4.63, 5.22 equitable doctrine compared …. 5.82, 5.83 equitable remedies …. 4.73 equity informing evaluation of …. 5.75–5.80

evaluative normative standard …. 5.38 applying …. 5.75–5.89 defining …. 5.39–5.74 industry codes …. 5.32, 5.60 matters for consideration …. 5.43–5.51 meaning of unconscionable …. 5.39–5.74 moral obloquy …. 5.66–5.73 normative standard …. 5.52–5.61 examples …. 5.90–5.105 false representations to serve commercial interests …. 5.90–5.94 good faith …. 5.32, 5.49–5.52 consideration in determining …. 5.32, 5.49–5.51 corporation officers …. 5.84 meaning …. 5.50 normative standard …. 5.52, 5.57 obligation to act in …. 5.50, 5.51 goods or services, in connection with supply or acquisition of …. 5.23–5.26 history of …. 5.4–5.6 inequality of bargaining power …. 5.32, 5.46–5.48, 5.100 knowledge of circumstances …. 5.83 aggregation of knowledge …. 5.87, 5.88 corporation …. 5.84–5.88 late payment fees …. 5.58 legal principles applicable …. 5.37 legislative boundaries …. 4.61–4.67 limits of prohibition …. 5.21–5.30 matters court may have regard to …. 5.31–5.35

ACL and ASIC Act …. 5.32 conduct or circumstances before commencement of provisions …. 5.35 court to consider all …. 5.43 evaluative standard, defining …. 5.43–5.51 good faith …. 5.32, 5.49–5.51, 5.57 industry codes …. 5.32, 5.60 manner of performance …. 5.34 non-disclosure …. 5.32 relative bargaining positions …. 5.32, 5.46–5.48 retail leases legislation …. 5.33 right to vary terms …. 5.32 terms of contract …. 5.34 understanding of customer …. 5.32 undue influence …. 5.32 unforeseeable circumstances excluded …. 5.36 matters court may not have regard to …. 5.36 moral obloquy …. 5.66–5.73 National Credit Code …. 5.3, 5.106–5.124 application for relief …. 5.108 contracts regulated by …. 5.109–5.119 review of contract …. 5.107 unconscionable interest and other charges …. 5.120–5.124 negligence insufficient …. 5.82 normative standard …. 5.52–5.61 accepted community values …. 5.53 values and conceptions …. 5.52 one-off transactions excluded …. 4.66

pattern of behaviour …. 5.11–5.20 price increase, hiding reasons for …. 5.102–5.105 prohibition …. 4.58, 5.2, 5.7 publicly listed companies excluded …. 5.28 reckless conduct …. 5.82 relative bargaining positions …. 5.32, 5.46–5.48 remedies …. 2.92, 2.93, 6.21 damages see Damages determining appropriateness …. 6.31–6.34 orders available …. 6.30 proportionality …. 6.33 rescission see Rescission of contract retail leases legislation …. 5.2, 5.8 matters court may have regard to …. 5.32, 5.33 scope of prohibition …. 5.9, 5.30 state and territory legislation …. 5.2, 5.8 scope of prohibition …. 4.59, 5.9–5.20 beyond unwritten law …. 5.9 system of conduct or pattern of behaviour …. 5.11–5.20 unwritten law …. 5.10 shortcomings of common law and equity, redressing …. 5.1 supply or acquisition of goods or services, in connection with …. 5.23–5.26 in connection with, meaning …. 5.25, 5.26 system of conduct …. 5.11–5.20 cases illustrating …. 5.17–5.20 deliberately adopted …. 5.15 exploiting vulnerability …. 5.20

identification of group targeted …. 5.16 targeting disadvantaged people …. 5.18 unfair tactics …. 5.19 third parties excluded …. 5.23 trade or commerce, conduct in …. 4.64–4.67, 5.23–5.27 Trade Practices Act 1974 …. 5.4 ACL duplicating provisions of …. 5.5 unconscionable, meaning …. 4.68–4.75, 5.31–5.73 definitive definition not possible …. 5.63 determined by statute …. 5.39–5.42 dictionary definition …. 5.65 moral obloquy …. 5.66–5.73 more than unfair or unreasonable …. 5.62, 5.66 synonyms …. 5.63–5.74 undue influence as consideration …. 5.32 unjust contracts see Unjust contracts unnecessary conditions …. 5.32, 5.95–5.101 unwritten law …. 5.10 beyond …. 5.9 values and norms relevant …. 5.37, 5.64

T Transparency meaning …. 5.189 unfair contract terms and …. 5.189–5.191, 5.201 Trespass assumpsit …. 1.5, 1.6 Trustee and beneficiary

presumed relationship of influence …. 3.40

U Unconscionable conduct ACL and ASIC Act see Statutory unconscionable conduct bank officer …. 4.28 Bigwood’s exploitation theory and …. 1.42 catching bargains …. 4.2 caution in use of term …. 1.104–1.107 concept of unconscionability …. 1.101–1.107, 4.68–4.75 conscious conduct …. 4.21 consumer protection legislation see Statutory unconscionable conduct contract law, in …. 1.1, 1.2 damages see Damages definition …. 1.101–1.107 dishonest motive not required …. 4.38–4.40 doctrine of …. 4.1–4.6 duress distinguished …. 1.112–1.119 overlap with …. 1.108, 2.3 elements of …. 4.7 equitable defences …. 6.105–6.110 equitable doctrine …. 1.91, 1.102, 1.103, 4.1, 4.4 statutory compared …. 5.82, 5.83, 5.83 equitable remedies …. 4.73 examples …. 4.48–4.57 excuse not to perform contract …. 1.1 exploitation of disability …. 4.29–4.42

active or passive …. 4.35–4.37 immoral or dishonest motive not required …. 4.38–4.40 improvidence of transaction …. 4.34 matters to be considered …. 4.32–4.42 onus of proof …. 4.30, 4.31 passive …. 4.35, 4.36 permissible inference …. 4.31 predatory state of mind …. 4.29 receipt and retention of benefit …. 4.41, 4.42 relationship between parties …. 4.33 fee for information and technology training …. 4.50 finance transaction …. 4.49 freedom of contract and …. 1.33, 4.5 Fried’s promise theory and …. 1.49 history of doctrine …. 4.2 immoral motive not required …. 4.38–4.40 improvidence as indicator but not requirement of …. 4.34 independent advice, effect …. 4.44 interest see Unconscionable interest and other charges knowledge of special disability …. 4.21–4.28 actual or constructive …. 4.25 constructive notice …. 4.26 objective determination …. 4.23 legislation see Statutory unconscionable conduct prenuptial agreement …. 1.113, 1.116–1.119, 4.28 purpose of doctrine …. 4.3, 4.4 rebutting presumption of …. 4.43–4.46 effect of special disability neutralised …. 4.44

proof that bargain fair, just and reasonable …. 4.43 reasonableness of conduct …. 4.45 receipt and retention of benefit …. 4.41, 4.42 relationship between parties …. 4.33 remedies see Remedies rescission see Rescission of contract setting aside contract …. 1.103 special disability …. 4.7–4.19 age …. 4.15 circumstances amounting to …. 4.8 constitutional …. 4.16 emotional dependence …. 4.49 examination of situation to determine …. 4.18 exploitation of …. 4.29–4.42 false assumption as to …. 4.9 inability to read or comprehend English …. 4.14 inequality of bargaining power …. 4.10–4.12 inequality of information …. 4.13 knowledge of …. 4.21–4.28 lack of understanding of transaction …. 4.56 physical frailty …. 4.15 proof of interplay of dominant and subordinate position …. 4.19 situational …. 4.16 special disadvantage in dealing with other party …. 4.17 taking advantage of …. 4.20–4.42, 4.51 unawareness of …. 4.27 specific elements …. 4.6, 4.7 statutory see Statutory unconscionable conduct

unconscientiously taking advantage …. 4.20–4.42, 4.51 exploitation …. 4.29–4.42 knowledge of special disability …. 4.21–4.28 undue influence distinguished …. 1.108–1.119, 3.1, 4.1, 4.44 overlap with …. 1.108, 2.3 victimisation by stronger party, preventing …. 4.4 vitiating factor …. 1.91 voidable contract …. 6.4 Unconscionable interest and other charges annulment by court …. 5.123 application for relief …. 5.107 establishment fee …. 5.124 interest rate changes …. 5.120 limitation of actions …. 6.113 National Credit Code …. 5.3, 5.120–5.124 contracts regulated by …. 5.109–5.119 rebuttable presumption of application …. 5.115 remedies under …. 6.38 review under s 78 …. 5.107 reduction of amount by court …. 5.123 review by court …. 5.107 time limit for claim …. 5.107 unjust contracts provision not applicable …. 5.132 Undue harassment Australian Consumer Law …. 2.74–2.83

damages see Damages prohibition …. 2.74, 2.76 criminal offence …. 2.93, 6.57 debt collection …. 2.81 defences …. 2.91 duress, amounting to …. 2.74–2.83 intimidation …. 2.81 meaning …. 2.78, 2.80 pecuniary penalties …. 2.93 persistent disturbance or torment …. 2.83 prohibition …. 2.74, 2.76 remedies …. 2.92, 2.93 threat of illegal act not necessary …. 2.79 undue, must be …. 2.80, 2.83 Undue influence absence of …. 3.4 actual …. 3.6, 3.7–3.33 act as result of …. 3.24 affirmative proof required …. 3.7 benefit to stronger party not necessary …. 3.13 characteristics of weaker party …. 3.29, 3.32 circumstances surrounding transaction …. 3.27, 3.28 direct evidence …. 3.6 elements to be proved …. 3.8, 3.9 examples …. 3.31, 3.32 harm to weaker party not necessary …. 3.18 improvidence of transaction …. 3.25–3.26 lack of understanding of transaction …. 3.27

manifest disadvantage …. 3.19–3.22 matters court will have regard to …. 3.23–3.30 mental and physical abuse by husband …. 3.31 not a free act …. 3.10–3.12 openness of transaction …. 3.28 propriety of transaction …. 3.25–3.26 relationship between parties …. 3.30 unconscionable conduct …. 3.15, 3.32 undue …. 3.13–3.23 agent …. 3.94–3.95 Bigwood’s exploitation theory and …. 1.42 damages see Damages definition, lack of …. 3.5 doctrine of …. 3.1, 3.3 duress distinguished …. 1.108–1.119, 3.1 overlap with …. 1.108, 2.3 equitable defences …. 6.105–6.110 equitable doctrine …. 1.91, 3.1 establishing …. 3.6 freedom of contract and …. 1.33 husband and wife …. 3.97–3.110 agency …. 3.95 not presumed relationship of influence …. 3.98 wife as guarantor for husband …. 3.95, 3.97–3.110 Yerkey v Jones principle …. 3.96–3.112 manifest disadvantage actual presumed influence …. 3.19–3.22

presumed undue influence …. 3.51–3.61 matters court will have regard to …. 3.23–3.30, 3.50 notice of …. 3.85, 3.89–3.93 constructive notice …. 3.89–3.93 setting aside transaction …. 3.85–3.88 third party …. 3.89–3.93 prenuptial agreement …. 1.113, 1.113–1.119 presumed see Presumed undue influence rationale of doctrine …. 3.2 rebutting presumption of see Presumed undue influence remedies see Remedies rescission see Rescission of contract third parties …. 3.85–3.112 agent …. 3.94–3.95 notice …. 3.89–3.93 transaction procured by …. 3.85 volunteer …. 3.87, 3.88 Yerkey v Jones principle …. 3.96–3.112 unconscionable conduct actual undue influence …. 3.15, 3.32 distinguished …. 1.108–1.119, 3.1, 4.1, 4.44 overlap with …. 1.108, 2.3 statutory, consideration in …. 5.32 undue, meaning …. 3.13–3.23 vitiating factor …. 1.91 voidable contract …. 6.4 volunteer …. 3.87, 3.88

joint recipient of property …. 3.88 setting aside transaction …. 3.85–3.88 wife as guarantor for husband …. 3.106–3.108 Yerkey v Jones principle …. 3.96–3.112 agency and …. 3.95 enunciation of principle …. 3.98 extension to other relationships …. 3.96, 3.111, 3.112 Garcia, restatement in …. 3.99 husband and wife relationship …. 3.97, 3.98 independent adviser not ensuring wife understood …. 3.110 requirements to establish case …. 3.101 third party creditor knowing wife married to debtor …. 3.109 third party creditor not ensuring wife understood …. 3.110 wife as guarantor for husband …. 3.97–3.110 wife as volunteer …. 3.106–3.108 wife not understanding guarantee …. 3.98, 3.101, 3.103–3.105 Unfair contract terms ACCC booklets …. 5.196 ACT and ASIC Act …. 5.153 consumer contracts …. 5.158, 5.165 contract as a whole …. 5.192 contract binding if operates without unfair term …. 5.164 cost to community …. 5.157 detriment requirement …. 5.169, 5.186–5.188 onus of proof …. 5.187 examples …. 5.193–5.196, 5.200–5.224 ACCC booklets …. 5.196 case law …. 5.200–5.224

legislation, in …. 5.193–5.195 excluded contracts …. 5.199 excluded terms …. 5.197–5.198 definition of subject matter …. 5.197 expressly required or permitted by law …. 5.198 upfront price …. 5.197, 5.198 harsh or unconscionable terms …. 5.154 late payment fees …. 5.188 legitimate interest, whether necessary to protect …. 5.169, 5.184–5.185 rebuttable presumption against …. 5.185, 5.224 loan agreement …. 5.182 refund clause …. 5.202–5.206 retail leases legislation …. 5.154 significant imbalance …. 5.169, 5.175–5.183 5.209 example …. 5.209–5.223 lack of negotiation not relevant …. 5.177 measurement of (im)balance …. 5.181 onus of proof …. 5.176 parties’ rights and obligations, in …. 5.175 significant, meaning …. 5.180 small business contracts …. 5.158, 5.166 standard form contracts …. 5.153, 5.160 meaning …. 5.167 preventing abuse of …. 5.159 substantively unfair terms …. 5.160 statutory examples …. 5.193–5.195 substantive unfairness …. 5.160

test of unfairness …. 5.169–5.174 each limb must be satisfied …. 5.170 evaluative nature …. 5.171, 5.172 legitimate interest …. 5.169, 5.184–5.185 no precise or universal test …. 5.172, 5.173 significant imbalance …. 5.169, 5.175–5.183, 5.209–5.223 time contract made, at …. 5.174 transparency, lack of …. 5.189–5.191, 5.201, 5.206 UK regulations …. 5.155, 5.173, 5.178 unconscionability compared …. 5.171 Unfair Contract Terms Law (UCTL) …. 5.153 application …. 5.158 exclusions …. 5.197–5.199 Fair Trading Act 1999 (Vic), based on …. 5.155, 5.161 legislative history …. 5.155–5.158 outline …. 5.161–5.196 Productivity Commission recommendations …. 5.156 rationale …. 5.159 terms, not conduct, concerned with …. 5.174 unfair, meaning …. 5.169–5.196 void …. 5.162 ab initio …. 5.163 waste management services contract …. 5.207–5.224 Unjust contracts all circumstances, consideration of …. 5.137 consumer contracts …. 5.130 Contracts Review Act 1980 (NSW) …. 5.125 application …. 5.130

exclusions …. 5.130 limitation of actions …. 6.112 purpose …. 5.126 remedies …. 6.35–6.37 court process in determining …. 5.133–5.135 decision whether to grant relief …. 5.135 findings of fact …. 5.133, 5.134 credit contracts …. 5.129 discretion to grant relief …. 5.133, 5.135 evaluative normative standard …. 5.137 examples …. 5.148–5.152 foreseeability …. 5.146 identifying …. 5.136–5.139 innocently, parties acting …. 5.147 intelligibility of contract …. 4.143 knowledge …. 5.146 limitation of actions …. 6.112, 6.113 loans …. 5.151, 5.152 matters to be considered …. 5.140–5.147 National Credit Code …. 5.125 application …. 5.129 contracts regulated by …. 5.109–5.119, 5.129 exclusions …. 5.132 limitation of actions …. 6.113 matters to be considered …. 5.143, 5.144 remedies …. 6.38 procedurally unjust …. 5.138 public interest …. 5.140–5.142

relative bargaining power …. 5.143 release from liability …. 5.149 remedies …. 6.35–6.38 scope of legislation …. 5.129–5.132 consumers and farmers …. 5.130 contracts, not investments …. 5.131 credit contracts …. 5.129 serious inequality …. 5.150 special vulnerability …. 5.150 statutory unconscionable conduct compared …. 5.127 substantively unjust …. 5.138 time limit for claim …. 5.128 unconscionable, harsh or oppressive …. 5.136 unfair pressure or undue influence …. 5.143 unjust, meaning …. 5.136–5.139 unreasonable conditions …. 5.143 Unlawful act definition …. 2.42 duress …. 2.41–2.64 external standard, by …. 2.42 illegitimate pressure …. 2.41–2.64 improper use of legal process …. 2.48–2.51 invalid law, money paid under …. 2.57, 2.61–2.64 non-performance of contractual obligations …. 2.52–2.56 physical violence or imprisonment …. 2.44–2.45 public official demanding money …. 2.57–2.60 seizure or detention of property …. 2.46–2.47 what constitutes …. 2.43

V Vitiating factors duress see Duress equitable principles …. 1.91 performance required unless …. 1.89 unconscionable conduct see Unconscionable conduct undue influence see Undue influence Volunteer undue influence by third party …. 3.85, 3.87, 3.88 joint recipient of property …. 3.88 setting aside transaction …. 3.85–3.88 wife as guarantor for husband …. 3.106–3.108

W Wife guarantor for husband not understanding guarantee …. 3.98, 3.101, 3.103–3.105 unconscionable conduct …. 3.97–3.110 volunteer …. 3.106–3.108 Yerkey v Jones principle …. 3.96–3.112 Will theory see also Liberalism abstract individual …. 1.19–1.22 criticism of concept …. 1.34–1.38 Bigwood …. 1.42, 1.51–1.58 consent and contract law …. 1.14 contract law and …. 1.12, 1.14 criticisms of …. 1.27, 1.29–1.40

domestic agreement presumed not legally binding …. 1.25 freedom as non-domination …. 1.66–1.73 freedom as non-interference …. 1.13, 1.16–1.18 Bigwood …. 1.52, 1.57, 1.58 criticism of concept …. 1.30–1.33, 1.59 freedom as personal autonomy …. 1.60, 1.62 freedom of contract …. 1.17 Fried …. 1.42, 1.44–1.50 Kimel …. 1.42, 1.58–1.66 legal contractual exploitation …. 1.42, 1.51–1.58 liberal individualism …. 1.51–1.58 liberalism and …. 1.12, 1.13, 1.42 modern contract law …. 1.74–1.78 promise theory …. 1.42, 1.44–1.50 public/private dichotomy …. 1.25–1.26 criticism of concept …. 1.39–1.40 Raz …. 1.60 realm of private agreement …. 1.25 reformulations …. 1.27, 1.41–1.78 republican theory …. 1.42, 1.66–1.73 sanctity of contract …. 1.17 strengths …. 1.28 weaknesses …. 1.29–1.40

Y Yerkey v Jones principle agency and …. 3.95 domestic relationships, application to …. 3.96, 3.111

enunciation of principle …. 3.98 extension to other relationships …. 3.111, 3.112 Garcia, restatement in …. 3.99 husband and wife relationship …. 3.97, 3.98 independent adviser not ensuring wife understood …. 3.110 requirements to establish case …. 3.101 third party creditor knowing wife married to debtor …. 3.109 not ensuring wife understood …. 3.110 undue influence …. 3.96–3.112 wife as guarantor for husband …. 3.97–3.112 wife as volunteer …. 3.106–3.108 wife not understanding guarantee …. 3.98, 3.101, 3.103–3.105

Related LexisNexis Titles Beatty & Smith, Annotated National Credit Code, 5th edition, 2014 Bolitho, Howell & Paterson, Duggan & Lanyon’s Consumer Credit Law, 2018 Bruce, Australian Competition Law, 3rd edition, 2018 Bruce, Consumer Protection Law in Australia, 2nd edition, 2013 Carter, Carter’s Guide to Australian Contract Law, 3rd edition, 2015 Carter, Contract and the Australian Consumer Law: A Guide, 2011 Coorey, Australian Consumer Law, 2015 Lockhart, The Law of Misleading or Deceptive Conduct, 5th edition, 2018 Steinwall, Annotated Competition and Consumer Legislation, 2018 edition