Australia: An Introduction to Commercial Risk III
Martin Scott KC of List G Barristers provides an introduction to the remedies available to address unconscionable conduct in trade or commerce.
The first article in this series identified that there is a particular and unique risk in trading with, or transacting in, Australia. Part One looked at the statutory claim for misleading and deceptive conduct in trade or commerce, which is actionable regardless of intent. Part Two introduced the statutory claim for unconscionable conduct in trade or commerce, emphasising that the statutory concept will apply much more broadly than the equitable concept, which requires a disability that was evident with the result that there was an absence of a reasonable degree of inequality. It should be remembered that these may be attracted by any conduct in Australia and are not confined to consumer transactions. A six-year limitation period applies.
This part looks at remedies.
Why Australia is Unique (Yet Again)
The Australian Consumer Law provides for damages on a conventional basis involving compensation for loss or damage caused by contravening conduct. The focus is on the remedial purpose of the statute and, although strictly irrelevant, principles drawn from the common law are typically applied.
However, the legislation also provides exceptionally broad, powerful and unconventional remedies for both misleading and deceptive conduct and statutory unconscionable conduct. These remedies are often overlooked.
"The focus is on the remedial purpose of the statute."
The types of remedial orders include:
- declaring the whole or part of a contract void;
- varying a contract;
- refusing to enforce a contract;
- directing refund or return of property;
- monetary compensation;
- repair; and
- provision of services.
This list is not exhaustive.
Significantly, the availability and application of these remedies is a matter of judicial discretion. This is not well understood and, like all exercises of discretion, requires the identification of the principles by which it may be exercised. Somewhat unhelpfully, the cases offer limited guidance beyond quite high-level statements directed to the facts and the statute’s policy. Despite some observations to the contrary, the outcome is inevitably relatively subjective. It is certainly relatively unpredictable. One difficult aspect is that the identified policy guiding the exercise of discretion is the enforcement of norms of conduct. In a sophisticated commercial context, the establishment of those norms is likely to be contestable and a matter of impression.
"The availability and application of these remedies is a matter of judicial discretion."
Another significant aspect is that the assessment is evaluative and concerns the course of conduct as a whole. The result is twofold. First, this means that strict concepts of causation are too narrow. Secondly, the forensic task (especially for unconscionable conduct claims) is materially greater.
Each of the remedies has distinct features by its nature. However, one common theme is that they are not constrained by common law or equitable concept, although these provide guidance. Rescission is an example.
Unlike other aspects of risk, this legislation is not readily susceptible to clear, reliable and in some respects effective allocation. There are no real analogues in other legislation or cases in other jurisdictions, such as the United Kingdom. Several points may be made.
- First, it is not possible to contract out of the legislation. This has been recently confirmed at the intermediate appellate level on the basis of policy.
- Secondly, the enquiry is essentially factual, with the result that standard drafting techniques such as disclaimers and no reliance clauses will not simply be accepted on their face as determinative. Recent authority has confirmed that there is no distinction between misleading and deceptive conduct, which results in a contract containing a disclaimer and contravening conduct that does not – that is, it matters not whether the instrument containing the disclaimer was itself procured by contravening conduct, as the disclaimer will not take effect regardless.
- Thirdly, appropriate drafting of that kind may nevertheless be significant and practically effective as part of the evaluation of the course of conduct as a whole. For example, a disclaimer may establish as a matter of fact that there was no reliance on misleading or deceptive conduct. Or it may have the effect of erasing the conduct. This is more likely where the disclaimer is specific in material respects, as distinct from standard form entire agreement, own enquiry or no reliance provisions.
- Fourthly, there is some scope to allocate risk by compromising claims. However, there are limits. It is not possible to negotiate rights in advance.
List G Barristers
