Australia: Sucked in - Full Court clarifies unconscionable conduct provisions in the ACL in ACCC v Lux Distributors Pty Ltd

In an important appeal judgment handed down on 15 August 2013, the Full Federal Court has provided guidance on the application of the prohibition against unconscionable conduct contained in s 21(1) of the Australian Consumer Law (ACL) (and its precursor, s 51AB(1) of the Trade Practices Act 1974 (Cth)). The ACCC Chairman, Rod Sims has described the judgment as a "significant decision" which "represents a positive outcome for consumers and serves as a warning for businesses." Corrs Chambers Westgarth acted for the ACCC in the proceeding.

The decision comes at a time when the judicial approach to the statutory concept of unconscionable conduct has been unsettled, with some viewing the Court as being inappropriately influenced by the common law concept of unconscionable conduct in its approach to statutory unconscionable conduct. The decision is of particular significance because it:

  1. makes clear that the Court may find sales tactics that were once regarded as legitimate and commonplace to be unconscionable in contravention of the ACL;
  2. is the first Full Court judgment concerning the application of the ACL's prohibition on unconscionable conduct to transactions involving the making of "unsolicited consumer agreements"; 1
  3. underscores the importance of considering the nature of the respondent's conduct, rather than the consumer's response to that conduct, in determining whether the respondent has engaged in statutory unconscionable conduct. The fact that conduct has come to bear on a defiant or resilient consumer will not necessarily militate against a finding of unconscionable conduct in contravention of the ACL;
  4. puts to rest any argument that a statutory cooling off period which applies to a sale will act to ameliorate unconscionable conduct in securing that sale;
  5. clarifies that the Court's inquiry of "all the circumstances" of the impugned conduct cannot be carried out by considering each circumstance singularly and without also considering its interaction with the other circumstances of the conduct. The individual circumstances of impugned conduct which may not of their own warrant the label of unconscionable, may interact with other circumstances to create a continuum of conduct which does warrant such a characterisation;
  6. establishes that legislation which exists to protect vulnerable consumers may be used as a measure of "societal norms" against which the impugned conduct may be measured; and
  7. makes clear that businesses which engage in sales activities in a consumer's home will be held to a high standard and will risk contravening the prohibition on unconscionable conduct if they fail to act in a manner which is honest and fair and free of deception.

The Full Court's decision has implications for those businesses involved in "door to door" and "in home" sales. The decision also means that risks will arise for any business which uses sales tactics which contravene standards set by consumer protection legislation, even tactics which may have in the past been regarded as conventional.

The decision concerns the ACCC's successful appeal from the trial decision to dismiss the ACCC's case against Lux Distributors Pty Ltd (Lux). We set out below some further detail about the first instance judgment and the ACCC's appeal.


On 10 May 2012, the ACCC commenced a proceeding against Lux in the Federal Court of Australia alleging that Lux had engaged in conduct in relation to the sale of vacuum cleaners to five elderly women in their homes that was, in all the circumstances, unconscionable. At trial, the following key facts were established in relation to Lux's sales tactics:

  • Lux sold its vacuum cleaners in accordance with a standard method, which commenced with a telephone call from one of its representatives to a consumer, who Lux selected from its customer database or a telephone directory.
  • The Lux representatives who conducted the telephone calls followed a script during the call, in which they offered to have a Lux representative attend at the consumer's home to conduct a "free maintenance check" on their vacuum cleaner. During the telephone call, Lux did not disclose that the real purpose of the attendance was to attempt to sell a new Lux vacuum cleaner if the opportunity arose.
  • A Lux representative subsequently attended at the homes of consumers who agreed to Lux's offer of a "free maintenance check".
  • None of the Lux representatives were qualified or equipped to conduct anything more than a cursory maintenance check of vacuum cleaners. None of the Lux representatives stood to earn any remuneration for their attendances unless they sold a vacuum cleaner, which would entitle them to a commission.
  • In the course of the home visits, each of the women agreed to purchase a new Lux vacuum cleaner at a price of $1,999 or more.

For medical reasons, the ACCC did not seek to call evidence from two of the five women who it alleged had been the subject of Lux's conduct and instead relied on the evidence of family members and documents recording Lux's transactions with them. At trial, the trial judge ruled that some of this evidence was inadmissible. This highlights a major evidentiary obstacle faced in establishing unconscionable conduct; vulnerable consumers may, due to illness or frailty, be unable to give critical evidence in relation to impugned conduct.

The evidence in relation to the three women who were able to attend to give evidence at trial established that:

  • Once inside the home, each of the Lux representatives conducted a form of maintenance check of the consumer's existing vacuum cleaners. If the consumer agreed, the Lux representatives then proceeded to conduct a comparison test, using a current model demonstration Lux vacuum cleaner. The comparison test was structured so that the current model Lux vacuum cleaner would outperform the existing vacuum cleaner.
  • During the course of their attendance on the homes of the three women, the Lux representatives contravened obligations imposed on them by relevant State and Commonwealth legislative provisions regulating the making of "unsolicited consumer agreements". For example, one Lux representative was found to have breached s 74 of the ACL, which required him, as soon as practicable (and in any event, before starting to negotiate) to clearly advise the consumer that his purpose was to seek her agreement to a supply of goods, and that he was obliged to leave the premises immediately on request.
  • Although a statutory cooling-off period applied to each of the vacuum cleaner purchases (and was referred to in a written contract signed by each of the consumers), none of the three women were aware of its existence or effect and the Lux sales representatives did not draw it to their attention.
  • Each of the three women was alone with the Lux representative throughout the entire visit, which extended, in each case, for a period of between 1.5 and 2 hours.

On 8 February 2013, the trial judge dismissed the ACCC's proceeding. The trial judge found that the ACCC had failed to establish that Lux had engaged in unconscionable conduct in its dealings with all five women because in His Honour's view, Lux's conduct was in many respects, "quite benign" and did not display the high degree of "moral tainting" or "obloquy" which the Courts have read as implicit in s 51AB of the TPA and now s21 of the ACL. His Honour found that:

  • The consumers were not targeted on the basis of their "age or personal circumstances". In any event, the age of each consumer was not "as such" a "special disadvantage". To the contrary, each consumer, despite her advanced age, impressed the trial judge as being "no-nonsense", "not pliable", "of her own mind", independent in matters of money management, "in reasonable command" of matters and "not an innocent".
  • While it was a substantial purpose of Lux's representatives to make a sale of a new vacuum cleaner, there was also the purpose of first carrying out the promised "free maintenance check".
  • Lux's sales tactics were "conventional and traditional", and the women would have been "aware" of such tactics. Further, the consumers were familiar with the products being offered by Lux; the vacuum cleaners were nothing "new-fangled".
  • A ten day cooling-off period applied to each of the contracts which Lux invited the consumers to make and Lux's conduct should be considered in this context.
  • There was little imbalance of bargaining strength as the consumers' weakness (in being unaware that a sale was being solicited, in being less knowledgeable about vacuum cleaners, etc) was matched by the representatives' increasing need to achieve a sale. Indeed, due in part to the personal conduct of the consumers (such as their tactical "ambling and protesting" or their making of "confronting" observations about Lux vis-ŕ-vis its competitors), the consumers may in fact have been in a stronger bargaining position than Lux's representatives.
  • The length of time that Lux's representatives stayed in the consumers' homes was nothing more than an "irritation" (for the consumer) or a "general" necessity (for the Lux representative); it was not an unfair or pressure sales tactic nor were other sales tactics – such as switching to a sales pitch after having gained entrance to the consumer's home by promising a free maintenance check, evading direct questions about price or offering discounts.
  • The breaches by Lux's representatives of laws regulating door-to-door transactions were unlikely to have affected the "course" or the "dynamics" of the interactions between the representatives and the consumers.


The trial judgment highlighted uncertainty about the scope and operation of the prohibition on unconscionable conduct in the ACL and, in particular, the level of "moral tainting" required for unconscionable conduct. It also raised questions about the extent to which the consumer's response to impugned conduct was relevant to the Court's inquiry into allegations of unconscionable conduct and whether the statute requires a consumer to have suffered something akin to a common law wrong for it to be contravened. Of further concern was the fact that His Honour had given weight to the existence of a statutory cooling off period while giving little weight to Lux's contraventions of the statutory protections which apply to "unsolicited consumer agreements".

The ACCC filed an appeal in relation to the trial judge's findings in respect of Lux's conduct towards the three women who had given evidence at trial.

In a unanimous decision, the Full Court, comprising Allsop CJ, Gordon and Jacobson JJ allowed the ACCC's appeal and made declarations that Lux had engaged in conduct that was in all the circumstances unconscionable. The Court said:

  1. To establish that conduct is unconscionable, what must be shown is something "not done in good conscience... 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." In this case, societal norms required honest and fair conduct free of deception. Lux had failed to meet these norms in its dealings with the three women.
  2. The trial judge failed to give adequate consideration to the deception Lux had engaged in by failing to disclose the primary purpose of the representative's attendance at the women's homes, "it was critical to the creation of the opportunity to sell and was the launching pad for all that followed. This deception tainted all the conduct thereafter" and "deprived each of the women of a meaningful opportunity to decline to have the representative enter her home". In this regard, the Full Court noted that at trial one of the Lux representatives had accepted that when he arrived at a consumer's home he would not tell the consumer that he was there to sell them a vacuum cleaner because, if he did, they would all say "I'm not interested".
  3. The statutes regulating "direct selling" exist "in furtherance of fairness and elimination of aspects of vulnerability". Breaches of such legislation should have been "centrally important" to an assessment of Lux's conduct.
  4. Sales tactics which involved remaining in the women's homes for lengthy periods exerted a subtle pressure on the women. Such tactics should have been regarded as pressure sales tactics in circumstances where the representatives gained entry by deception.
  5. The opportunity to enter and remain in someone's home created "a real position of strength for the seller". Again, the Court considered it relevant that this bargaining strength was obtained through deception.
  6. The trial judge gave too much weight to the existence of the cooling off period. The cooling off period "does not ameliorate or lessen what has gone before".

The Full Court ordered that the ACCC's application for relief in relation to Lux's conduct towards the three women be remitted for hearing by a Federal Court judge.


1Section 69(1) of the ACL defines "unsolicited consumer agreement" as an agreement for the supply of goods to a consumer that is made as a result of negotiations between a dealer and consumer at a place other than the business or trade premises of the supplier of the goods, in circumstances where the consumer did not invite the dealer to come to that place for the purposes of entering into such negotiations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.