Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 19 March 2021
• Neutral Citation: [2021] FCAFC 40
• Date: 19 March 2021

Federal Court of Australia

Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40

Appeal from:	Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (No 2) [2020] FCA 802
File number:	WAD 157 of 2020
Judgment of:	ALLSOP CJ, BESANKO AND MCKERRACHER JJ
Date of judgment:	19 March 2021
Catchwords:	CONSUMER LAW – where company admitted to unconscionable conduct by a system or pattern of behaviour in contravention of s 21 Australian Consumer Law (ACL) – where penalties and declarations agreed with regulator – where primary judge found the majority in Australian Securities and Investments Commission v Kobelt [2019] HCA 18 considered s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) requires exploitation of some disadvantage or vulnerability by a stronger party and therefore s 21 of the ACL also requires those features to be present in the conduct – primary judge not satisfied investors, to whom the company’s conduct was directed, could be characterised as vulnerable or exploited – primary judge found no contravention of s 21 – whether judge found exploitation of a special disadvantage in the equitable sense is required under s 21 – whether Kobelt, precedent or statutory interpretation requires that exploitation or taking advantage of some pre-existing vulnerability, disadvantage, or disability is a necessary element of statutory unconscionability under s 21 ACL – appeal allowed.
Legislation:	Australian Securities and Investments Commission Act 2001 (Cth) ss 12CA, 12CB, 12CC Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 20, 21, 22 Trade Practices Act 1974 (Cth) ss 51AA, 51AB, 51AC, 52A
Cases cited:	Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90; ATPR 42-447 Australian Competition and Consumer Commission v Medibank Private Ltd [2018] FCAFC 235; 267 FCR 544 Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 267 CLR 1 Australian Securities and Investment Commission v National Exchange Pty Ltd [2005] FCAFC 226; 148 FCR 132 Colin R Price & Associates Pty Ltd v Four Oakes Pty Ltd [2017] FCAFC 75; 251 FCR 404 Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; 151 CLR 447 Commonwealth Bank of Australia v Kojic [2016] FCAFC 186; 249 FCR 421 Guy v Crown Melbourne Ltd (No 2) [2018] FCA 36; 355 ALR 420 Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15; 356 ALR 440 Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60; 167 FCR 372 Jenyns v Public Curator (Qld) [1953] HCA 2; 90 CLR 113 Kakavas v Crown Melbourne Ltd [2013] HCA 25; 250 CLR 392 Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia [2002] FCAFC 197; 122 FCR 110 National Australia Bank Ltd v Meeke [2007] WASC 11 Paciocco v Australia & New Zealand Banking Group Ltd [2015] FCAFC 50; 236 FCR 199 PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446 QNI Resources Pty Ltd v Sino Iron Pty Ltd [2016] QSC 62; [2017] 1 Qd R 167 Secure Funding Pty Ltd v Stark [2013] NSWSC 1729 Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58; 224 CLR 193 Tameeka Group Pty Ltd v Landan Pty Ltd (No 3) [2016] FCA 733 The Good Living Company Pty Ltd ATF the Warren Duncan Trust No 3 v Kingsmede Pty Ltd [2019] FCA 2170; 142 ACSR 221 Thorne v Kennedy [2017] HCA 49; 263 CLR 85 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389 Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; 266 FCR 631
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	99
Date of hearing:	1-2 February 2021
Counsel for the Appellant:	Ms N Sharp SC, Ms D Forrester with Mr A Mossop
Solicitor for the Appellant:	Corrs Chambers Westgarth
Counsel for the First Respondent:	The First Respondent did not appear
Counsel for the Second Respondent:	The Second Respondent did not appear
Counsel being Intervener and Contradictor:	Dr R Higgins SC with Mr C Tran
Solicitor for the Intervener and Contradictor:	Australian Government Solicitor

ORDERS

		WAD 157 of 2020
BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Appellant
AND:	QUANTUM HOUSING GROUP PTY LTD (ACN 141 554 798) First Respondent ; CHERYL ANNE HOWE Second Respondent

order made by:	ALLSOP CJ, besanko and MCKERRACHER JJ
DATE OF ORDER:	19 MARCH 2021

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The declaration set out below be read as 4A in the orders made on 9 June 2020 in WAD 229 of 2019.

3. Order 5 of the orders made on 9 June 2020 in WAD 229 of 2019 be amended such that it reads: The second respondent (Ms Howe) was a person knowingly concerned in QHG's contraventions, as declared in paragraphs 1 to 4A.

THE COURT DECLARES THAT:

4. In the period February 2017 to July 2018, in trade or commerce, in connection with the supply or possible supply of services to investors, QHG engaged in an unconscionable system of conduct in contravention of s 21 of the ACL by devising the Roll Up Plan being a plan to encourage investors to transfer the management of properties that qualified for incentives under the National Rental Affordability Scheme (NRAS) to property managers who were related to, or preferred by Mr Fenn, who had a commercial association with QHG, and then implementing it in a planned, deliberate and sustained way including by:

   1. knowingly taking advantage of its superior bargaining position relative to the investors as a result of the investors' reliance on QHG to receive the NRAS incentive and because they could not change to another approved participant;

   2. issuing escalating rounds of letters in which deliberately false representations were made to at least 450 investors and which unduly pressured those investors to switch property managers; and as the rounds of correspondence progressed, the pressure on investors increased;

   3. not disclosing to investors its commercial associations with the...