Australia: Federal Court clarifies unconscionable conduct law

Antitrust, Competition and Trade Regulation Alert
Last Updated: 24 September 2013
Article by Murray Deakin and Sylvia Ng

In an important decision, the Full Federal Court of Australia has held that conduct alleged to be unconscionable is to be assessed against a normative standard of conscience, permeated with accepted and acceptable community values.

This community based standard clarifies the scope of the unconscionable conduct provisions of the Australian Consumer Law. This decision is likely to encourage the Australian Competition and Consumer Commission (ACCC) to maintain unconscionable conduct as an enforcement priority.

The recent Full Federal Court decision in relation to the ACCC's appeal against the judgment of Justice Jessup in ACCC v Lux Distributors Pty Ltd (Lux case), is a significant victory for the ACCC in its fight against businesses engaging in unconscionable conduct.

Background to the Case

The ACCC's action against Lux Distributors Pty Ltd (Lux) involved allegations that between 2009 and 2011, Lux sales representatives engaged in unconscionable conduct in relation to the sale of new vacuum cleaners to five elderly consumers at their homes, under the auspices that they were being offered a free vacuum cleaner maintenance check. Upon entry into their home, the Lux representatives conducted a brief check of the existing vacuum cleaner before showing the elderly women the new model vacuum cleaner and using sales tactics for an extended period to induce them into purchasing the new model, which costed more than if the machine was purchased at retail stores.

The ACCC alleged that Lux contravened section 21 of the Australian Consumer Law (ACL) and its former provision (section 51AB of the Trade Practices Act 1974), which prohibits a person, in trade or commence, in connection with the supply or possible supply of goods or services to another person, from engaging in conduct that is, in all the circumstances, unconscionable.

At first instance, Justice Jessup found that Lux did not engage in unconscionable conduct. His Honour based this view on a number of findings, including that Lux's sales tactics were traditional methods which customers would be expected to be aware of; the Lux sales representatives were entering the houses to complete free maintenance checks; and consumers who may have felt pressured had the benefit of a 10 day cooling-off period.

The ACCC appealed the decision in relation to three of the five consumers who were subject to the sales tactics contending that, amongst other things, His Honour set the bar for unconscionable conduct too high by requiring conduct to have a "moral tainting"; by giving insufficient weight to the primary purpose of the Lux representative's approach, which was to sell a new vacuum cleaner; and by placing too much emphasis upon the existence of a cooling-off period, which should not negate the fundamental unconscionable conduct breach.

The Appeal

On appeal, the Full Federal Court agreed with the ACCC and found Lux engaged in unconscionable conduct in breach of s21 of the ACL. Relevantly, the Full Court found that in assessing whether conduct was "unconscionable" or "not done in good conscience", one does not need to establish a high degree of moral culpability. The conduct in question must be assessed against a normative standard of conscience, which requires:

  • accepted and acceptable community values
  • in the context of consumer dealings, the requirements of honest and fair conduct, free of deception
  • notions of justice and fairness as well as vulnerability, advantage and honesty.

The Full Court also held:

  • the "norms and standards of today require business who wish to gain access to the homes of people for extended selling opportunities to exhibit honesty and openness in what they are doing, not to apply deceptive ruses to gain entry". Despite the trial judge's view that there were no direct lies told by the Lux representatives, the Full Court held that the sales tactics used to gain entry and induce a sale were not justifiable
  • the process of selling under the pretence of a "free maintenance check" was unconscionable. As the Lux representatives gained entry to people's homes by deception and spent time to be "helpful", the Full Court said this created an inequality in bargaining power because the consumer was less inclined to ask the representative to leave
  • the trial judge should have found that the primary purpose of the visit into a home under the guise of a "free maintenance check" was to sell a vacuum cleaner and this deception tainted all conduct thereafter
  • the trial judge failed to give weight to the deception that unfairly deprived each of the women a meaningful opportunity to decline to have the Lux representative enter the home
  • the Lux representatives who were given the opportunity to enter the house obtained a position of strength over the consumer
  • the trial judge did not give sufficient weight to the legislative provisions (namely, Lux's failure to comply with door to door selling provisions) which would otherwise provide fairness in the selling process.

Additionally, the Full Court said the trial judge placed too much significance upon the statutory cooling-off period in dismissing the ACCC's argument of unconscionable conduct. The existence of cooling-off periods would not counter the unconscionable conduct that had taken place.

Lux's conduct was therefore unconscionable having regard to the bargaining strengths between the parties and the deceptive and pressuring sales tactics employed by its sales representatives. The pecuniary penalty to be imposed on Lux is yet to be decided and will be the subject of further submissions.


In a number of earlier cases, a person needed to have a "special disadvantage" in order to be susceptible to unconscionable conduct. This envisaged circumstances which seriously affected the ability of the person to make a judgment as to his or her best interests . However, in the Lux case, the Full Federal Court did not seek to identify whether the elderly consumers suffered from any special disadvantage.

The Full Federal Court instead evaluated the conduct of Lux's sales representatives against a "normative standard of conscience" permeated with "accepted and acceptable community values", which in the circumstances of this case required honesty, fair dealing and no deception.

This renewed emphasis upon the conduct of the alleged perpetrator, rather than whether the alleged victim possessed a special disadvantage, represents an important development in the statutory offence of unconscionable conduct.

Implications for Business

Before this decision, the meaning of the word "unconscionable" was the subject to differing views which resulted in differing judgments. Some cases appeared to require the alleged victim to suffer from a "special disadvantage" and the alleged perpetrator's conduct needed to be unfair or unreasonable, but also involve some moral tainting. However, the court has now provided further clarity by assessing the relevant conduct by reference to the norms and standards of society in terms of honesty and fairness.

Accordingly, businesses should ensure its selling practices and dealings conforms with the community's general standards of fairness. Particular attention should be paid to reviewing systems and the training of sales staff to ensure they are aware of the new context by which their conduct will be measured.

Following this successful appeal and consistent with the ACCC's express enforcement priorities, the ACCC Chairman has alluded to continued enforcement action, especially in cases involving "vulnerable consumers and where there have been other breaches of consumer protection provisions of the ACL".

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.

K&L Gates has been awarded a 2012 EOWA Employer of Choice for Women citation acknowledging our commitment to workplace diversity.

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”

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
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 you may opt out by clicking here

    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.

    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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.

    By clicking Register you state you have read and agree to our Terms and Conditions