Australia: Unconscionable conduct bringing experienced commercial parties down to earth in Ipstar Australia Pty Ltd V APS Satellite Ptd Ltd [2018] NSWCA 15

In the recent decision of Ipstar Australia Pty Ltd V APS Satellite Pty Ltd [2018] NSWCA 15 the New South Wales Court of Appeal (NSWCA) has developed the meaning of unconscionable conduct pursuant to Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL), particularly as it applies to relations between 'experienced commercial parties'.


The Appellant, Ipstar Australia Pty Ltd (Ipstar), is a wholesaler of satellite broadband services and the Respondent, APS Satellite Pty Ltd (APS) (formerly known as SkyMesh Pty Ltd) was at the time of the events subject to this decision, a licensed telecommunications carrier.

In 2007, Ipstar and APS entered into a supply contract under which Ipstar sold bandwidth to APS at a price per megabyte per second per month. After entering into that contract, APS was flooded with complaints from its customers regarding faulty equipment and unreliable internet connections. These complaints included but were not limited to what was described by the court at first instance as the "water ingress problem" resulting from inadequate seals on the outdoor units, and what Bathurst CJ coined the "firmware problem", that is, that some modems were prone to "drop out", "freezing" and "hang" issues which prevented the equipment from accessing the Ipstar network.1

APS incurred substantial costs funding the necessary service calls and replacement of faulty hardware with new and often equally faulty Ipstar equipment without any particular reimbursement from Ipstar. APS advised Ipstar of the complaints it was receiving and of its intention to seek indemnification for such costs outlaid in response to customers who asserted a statutory warranty through either a contractual warranty or statutory warranty pursuant to the ACL. The claim recovery process was made difficult, if not impossible. Despite considerable efforts by APS, Ipstar rejected all APS' statutory warranty claims and refused reimbursement or indemnification.

While the warranty issue remained in dispute, the supply contract between the parties fell due for renewal and without explanation, Ipstar proposed to significantly raise its bandwidth pricing. APS was offered a new contract initially at 20% above its previous supply cost; while APS' direct competitors cost was unchanged. Unknown and undisclosed to APS, Ipstar had calculated the full cost of satisfying its hardware statutory warranty commitments and was attempting to pass on that cost of 'doing business' to APS by simply increasing their bandwidth pricing. Although having been able to negotiate a slightly lower price increase, APS was left with no choice but to accept the imposition of supply costs on it which were significantly higher than those imposed upon its competitors, also supplied by Ipstar. This was because of the extortionate costs associated with APS changing suppliers.

In the initial hearing Justice Rein found that Ipstar had acted unconscionably in raising its price for the future supply of broadband services to recoup losses it anticipated in fulfilling its previous statutory warranty obligations.


The NSW Court of Appeal (NSWCA) held that while in isolation the way APS conducted its business and the fact that it had no contractual right to bandwidth did not make it unconscionable for Ipstar to use its superior bargaining position to achieve its legitimate commercial interests, the conduct of imposing the price rise needed to be considered in all of the circumstances of the case. Accordingly, it was held that Ipstar had acted unconscionably in imposing a price increase on APS based on an estimated accrued liability while concurrently taking steps to avoid payment of such liabilities in rejecting known valid claims and refusing to consider claims it was obliged to assess.

Implications when Considering Unconscionable Conduct

The NSWCA reviewed previous cases characterising the term "unconscionable conduct" including conduct against conscience by reference to the norms of society, the requirement for a "high level of moral obloquy", "moral tainting" and "doing what should not be done in good conscience". Interestingly, there was a distinct shift away from these previous attempts to use alternative tests and terms to explain what "unconscionable" truly means.

While acknowledging that these notions may be of assistance Bathurst CJ (Beazley and Leeming JJA agreeing) emphasised that whether certain conduct is unconscionable involves a consideration of all the circumstances to conclude whether or not that conduct falls below acceptable norms, standards or values such as to warrant it being determined unconscionable.

As such, the NSWCA was of the view that the preferred starting point is to understand what acceptable community values, standards and norms prevalent in society are, and then ask whether there has been a departure from such standards to objectively be seen against good conscience.

The Court confirmed that the following considerations should be taken into account to determine the standard against which the impugned conduct is to be assessed:

  1. The terms of Part 2.2 of the ACL and specifically the factors set out in s 22;
  2. The approach taken by the courts in cases regarding the unwritten law on unconscionability;
  3. Judgments in other common law areas involving a 'want of good faith';
  4. That good faith in the context of contractual powers means "compliance with honest standards of conduct"; and
  5. All the circumstances surrounding the transaction including (as per Leeming JA at [270]):
    1. The communications between the parties;
    2. The market conditions under which the parties are operating; and
    3. The matters which were motivating the parties.

Implications for Business

While manufacturers and suppliers are prohibited from contracting out of liability for statutory warranties under the ACL, taking steps to protect against any future accrued liability, for example by setting a price that recoups such costs even those incurred under a previous contract, is alone likely to be found not unconscionable. Also, parties are not prevented from taking advantage of their commercial position to protect legitimate interests and drive an advantageous bargain. However, while parties are entitled to exercise their superior bargaining power without automatically being deemed unconscionable, it will be unconscionable if in all of the circumstances the business is conducted outside acceptable community norms, standards or values. In this case Ipstar went too far in pricing in (for this customer alone) a past liability for consumer claims while refusing to meet that liability.


1 Ipstar Australia Pty Ltd V APS Satellite Pty Ltd [2018] NSWCA 15, [21]-[22].

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.

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”

Related Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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