Case: Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226 ; (2005) 148 FCR 132
Outcome: referred to
Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226 ; (2005) 148 FCR 132 at 140 [30] Tamberlin, Finn and Conti JJ said that s 51AC , and its analogue s 12CC of the Australian Securities and Investments Commission Act (ASIC) 2001 (Cth), were not to be read down by limiting its operation only to circumstances where the common law would grant relief in respect of unconscionable conduct. They said that the section was intended to build on, and not be constrained by the common law. Their Honours said ( National Exchange 148 FCR at 140 [33]): '... "[U]nconscionable conduct", on its ordinary and natural interpretation, means doing what should not be done in good conscience'. They said that the question was whether the conduct of the corporation complained of was 'unconscionable' according to the natural and ordinary meaning of that term having regard to the list of statutory considerations in ss 51AC(3) and (4): National Exchange 148 FCR at 142 [39]. And their Honours said that the section was not, of course, intended to protect the reckless or the unreasonable. They approved what Spigelman CJ had said in Attorney General (NSW) v World Best Holdings Ltd [2005] NSWCA 261 ; (2005) 63 NSWLR 557 at 583 [121] that '[u]nconscionability is a concept which requires a high level of moral obloquy'. Tamberlin, Finn and Conti JJ held that the analogue of s 51AC required the Court to focus primarily on the unconscionable conduct of the corporation and to determine whether that conduct was contrary to the norm of conscientious behaviour. They held that the conduct in that case insisted of a carefully formulated and systematic approach which clearly offended against basic notions of good conscience and fair play: National Exchange at 148 FCR at 143 [44]. Although their Honours were speaking of s 12CC of the ASIC Act , their remarks apply equally to the notion of 'unconscionable conduct' in its analogue, s 51AC: Cannon Australia Pty Ltd v Patton [2007] NSWCA 246 at [43] per Campbell JA, with whom Harrison J agreed. Campbell JA had referred ([2007] NSWCA 246 at [40]) to the earlier decision of a Full Court of this Court in Hurley v McDonald's Australia Ltd [1999] FCA 1728 ; (2000) ATPR 41-741 at [21] - [22] . There Heerey, Drummond and Emmett JJ said that for conduct to be regarded at an unconscionable, serious misconduct or something clearly unfair or unreasonable had to be demonstrated. They found that the term carried with it the meaning given by the Shorter Oxford English Dictionary, namely '... actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable', relying on Qantas Airways Ltd v Cameron [1996] FCA 1483 ; (1996) 66 FCR 246 at 262. One purpose of s 51AC(1) was to set a norm of conduct for corporations acting in trade or commerce in the context in which the section operates: cp Compomar Sociedad Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at 85 [103] . The second reading speech stated that this norm of conduct had the purpose of protecting the legal rights of small businesses and ensuring that they could confidently deal with large firms: see National Exchange 148 FCR at 143 [48], 144 [50]. Here the supply or possible supply of services to Hoy Mobile included the rights, benefits and privileges which Allphones had to provide to it under the franchise agreement. That congeries contained an entitlement to be paid all amounts of commission due in accordance with the franchise agreement, as well as other valuable rights, such as Hoy Mobile's right to assign its interest under the franchise agreement with Allphones' consent (cl 8.1).