Background

On 10 May 2012 the ACCC had initiated proceedings in the Federal Court alleging unconscionable conduct on the part of Lux Distributors Pty Ltd (Lux).

The allegations concerned the sale of Lux vacuum cleaners to five elderly consumers, where sales representatives attended under the premise of a free vacuum cleaner maintenance check. It was alleged that the sales representatives used unfair and pressure sales tactics in order to get the consumers to purchase vacuum cleaners for a price of $1999 or above.

Federal Court hearing

Justice Jessup referred to numerous previous decisions with respect to “unconscionable conduct”, where the meaning of the phrase included (but was not limited to):

  • serious misconduct
  • clearly unfair or unreasonable conduct
  • conduct showing no regard for conscience
  • conduct irreconcilable with what is right or reasonable
  • conduct importing a pejorative moral judgment
  • demonstrating high level of moral obloquy
  • highly unethical conduct

Further, Justice Jessup noted that the range of unconscionable conduct is wide and can include bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of a vulnerability or lack of understanding, trickery or misleading conduct.

In this case, Justice Jessup analysed each of the five cases and the conduct of the sales representatives in each instance. Whilst the ACCC submitted that there was an imbalance in the relationship between the parties, it appears that Justice Jessup either dismissed the notion or placed relatively little weight on that point.

In addition, there was some debate regarding whether the consumer had overpaid for the vacuum cleaner, as similar vacuum cleaners were approximately half the price. On this point, regard was had to the use and meaning of “equivalent” in the legislation. Justice Jessup also considered the conduct of each of the sales representatives in the context of what would be expected of a sales representative, and that it would be expected that they would use “puffery”.

Appeal

The ACCC’s appeal relates to 3 of the 5 consumers. It alleges that the primary purpose of the Lux sales representatives was to sell the consumers a vacuum cleaner. In each instance the consumer was alone and the representative remained at their house for at least one and a half hours. On this point, the ACCC submits that the Court ought to have found that the consumers’ bargaining position was weaker than the sales representatives’ and that it ought to have found that unfair and pressure sales tactics were used.

In each instance, the ACCC alleges that the consumer was not informed that a 10 day cooling off period applied to their purchase and that the sales representatives allegedly breached door-to-door trading provisions. The ACCC alleges that the Court did not place enough emphasis on this point in its findings.

Summary

Having regard to the ACCC’s recently released Compliance and Enforcement Policy for 2013, it considers the areas of unconscionable conduct, as well as door to door sales, as matters of priority. In this instance much emphasis is being placed by the ACCC on the perceived vulnerability of the consumers. Given that the ACCC’s appeal relates to both fact and law, it has the potential to provide some further guidance and clarification on “unconscionable conduct”.