Australia - SoleNet and Sure Telecom found to have engaged in unconscionable conduct On 20 December 2016, the Federal Court found that 10 corporations trading as SoleNet and Sure Telecom (Harrison Companies) breached section 21 of the Australian Consumer Law (ACL) by engaging in unconscionable conduct in connection with the supply of telecommunications services. Between 2013 and 2015, the Harrison Companies restructured numerous times to avoid regulatory sanctions imposed by the Telecommunications Industry Ombudsman. As part of these restructuring activities, customer contracts were transferred without the customers’ consent from Harrison Companies that ceased trading to new Harrison Companies. The Court determined that in the absence of any contractual term permitting the transfer of customer contracts to the newly established companies, the transfers were invalid. At common law, courts will not infer consent in circumstances where a contract is silent on transfer mechanisms. Due to the lack of contractual relationship between the newly established companies and the customers, subsequent demands for the payment of early termination and cancellation fees, and the methods employed to make such demands, were found to be unconscionable. In its judgment, the Court also considered the significant imbalance in the strength of the parties' respective bargaining positions, the lack of transparency in the transfer process, and the fact that the transfers did not comply with Part 7 of the Telecommunications Consumer Protection Code. Additionally, the Court concluded that the transfer process amounted to undue influence in contravention of section 50 of the ACL. In his role as sole director of the Harrison Companies, Mr Harrison was also found to be a person involved in the contraventions relating to unconscionable conduct. The Court determined that Mr Harrison was well aware of the transfer process and therefore knew there was no legitimate basis to threaten or impose an early termination fee on his customers. This finding will allow the ACCC to recover damages from Mr Harrison as well as from the Harrison Companies. This judgment is a timely reminder that companies who transfer customers as part of a corporate restructure must do so in compliance with the ACL. Submissions on penalty and relief are due to be filed by 10 February 2017. The ACCC media release is available here. A copy of the judgment is available here. For more information, please contact Anne-Marie Allgrove, Toby Patten, Matthew Dempsey or Grace Loukides.