Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd

HIGH COURT OF AUSTRALIA

GLEESON CJ,
GUMMOW, KIRBY, HAYNE AND CALLINAN JJ

AUSTRALIAN COMPETITION AND

CONSUMER COMMISSION   APPELLANT

AND

CG BERBATIS HOLDINGS PTY LTD & ORS   RESPONDENTS

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd

[2003] HCA 18

9 April 2003
P64/2002

ORDER

Appeal dismissed with costs.

On appeal from the Federal Court of Australia

Representation:

N W McKerracher QC with E C Gordon for the appellant (instructed by Australian Government Solicitor)

D F Jackson QC with P G Clifford for the first to sixth respondents (instructed by Haydn Robinson)

N C Hutley SC with N Perram for the seventh and eighth respondents (instructed by Julian Johnson)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd

Trade practices – Unconscionable conduct – Trade Practices Act 1974 (Cth), s 51AA(1) – Where conduct was in a commercial context – Condition for renewal of lease – Required by lessor – Lessees to abandon legal claims against lessor – Whether conduct of lessor unconscionable.

Equity – Unconscionable conduct – Where conduct was in a commercial context – Condition for renewal of lease – Required by lessor – Lessees to abandon legal claims against lessor – Whether unconscientious exploitation of special disadvantage of another – Relevance of inequality of bargaining power to finding of special disadvantage.

Words and phrases – "unconscionable within the meaning of the unwritten law", "special disadvantage".

Trade Practices Act 1974 (Cth), s 51AA(1).

1. GLEESON CJ. The facts are set out in the reasons for judgment of Gummow and Hayne JJ. The case concerns the application of s 51AA of the Trade Practices Act 1974 (Cth) ("the Act") to those facts.

2. The specific question is whether the lessors of premises in a shopping centre engaged in conduct that was "unconscionable within the meaning of the unwritten law" in stipulating, as a condition of their consent to a proposed renewal or extension of a lease, in contemplation of its assignment, a requirement that the lessees would abandon certain claims against them.  The lessees were in a difficult bargaining position.  They had no option to renew their lease.  Their prospects of making an advantageous sale of their business depended upon the co-operation of the lessors, which they were not obliged to give.  Considered objectively, and with the benefit of hindsight, the claims that the lessees agreed to abandon were of little value (less than $3,000).  They regarded them as more valuable, but considered that in the circumstances, they had no choice but to give them up.  The principal reason why they had no such choice was that they had no option to renew their lease.  They could not offer a purchaser of their business a worthwhile tenure unless the lessors agreed to an extension or renewal of the lease and an assignment.  The lessors were willing to give such agreement only on the condition already mentioned.

3. It may be noted that, although the appellant, the Australian Competition and Consumer Commission, claims that the lessors' conduct was unconscionable, the lessees never sought to have the deed they entered into with the lessors set aside.  That would have been the last thing they wanted.  Whether they might have had cl 14 of the deed set aside, assuming there had been unconscionable conduct on the part of the lessors, is a question that does not arise[1].  The issue is whether the conduct of the lessors was unconscionable.  French J held that it was[2].  The Full Court of the Federal Court (Hill, Tamberlin and Emmett JJ) reversed that decision[3].  For the reasons that follow, I consider that the Full Court was correct.

   [1]cf Bridgewater v Leahy (1998) 194 CLR 457 at 472-474 [50]-[56].

   [2]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2000) ATPR ¶41-778.

   [3]C G Berbatis Holdings Pty Ltd v Australian Competition and Consumer Commission (2001) 185 ALR 555.

4. It was not contended that the proper course for the lessors to follow, consistently with their obligations under the Act, was simply to have no dealings at all with the lessees, but to allow their lease to expire and to find a new tenant. That would have been an unwelcome (and costly) outcome for the lessees. It would be surprising if it were the policy of the Act to require the lessors to take that course, to the minor disadvantage of the lessors and the major disadvantage of the lessees. The practical consequence of the argument for the appellant is that the lessors, having been requested to agree to something they were entitled to refuse, were acting in contravention of the Act by imposing a condition upon their agreement. Yet if that be correct, it seems to mean that the lessors, if well advised, should simply have refused to discuss the matter of a renewal or extension of the lease.

5. Although he was concerned to make the point that ss 51AB and 51AC of the Act have a wider operation than s 51AA, senior counsel for the appellant argued the case on the basis that the relevant form of unconscionable conduct in question was "the knowing exploitation by one party of the special disadvantage of another." He said that, by special disadvantage, he meant "a disabling circumstance seriously affecting the ability of the innocent party to make a judgment in [that party's] own best interests." Applied to a case such as the present, that approach is consistent with what the Act calls the unwritten law concerning unconscionable conduct, bearing in mind that the Act also allows for development of the law from time to time. It is also consistent with the legislative history of s 51AA. In the Second Reading speech when the legislation was introduced, it was said[4]:

   "Unconscionability is a well understood equitable doctrine, the meaning of which has been discussed by the High Court in recent times. It involves a party who suffers from some special disability or is placed in some special situation of disadvantage and an 'unconscionable' taking advantage of that disability or disadvantage by another. The doctrine does not apply simply because one party has made a poor bargain. In the vast majority of commercial transactions neither party would be likely to be in a position of special disability or special disadvantage, and no question of unconscionable conduct would arise. Nevertheless, unconscionable conduct can occur in commercial transactions and there is no reason why the Trade Practices Act should not recognise this."

   [4]Australia, House of Representatives, Parliamentary Debates (Hansard), 3 November 1992 at 2408.

6. The Explanatory Memorandum referred to the decisions of this Court in Blomley v Ryan[5] and Commercial Bank of Australia Ltd v Amadio[6].  Those decisions were considered more recently in Bridgewater v Leahy[7].

   [5](1956) 99 CLR 362.

   [6](1983) 151 CLR 447.

   [7](1998) 194 CLR 457.

7. These decisions mark out the area of discourse involved, and explain the approach of the appellant, which was accepted by the respondent. It was also the approach taken by French J, and by the Full Court. In the context of s 51AA, with its reference to the unwritten law, which is the law expounded in such cases as those mentioned above, unconscionability is a legal term, not a colloquial expression. In everyday speech, "unconscionable" may be merely an emphatic method of expressing disapproval of someone's behaviour, but its legal meaning is considerably more precise.

8. In Blomley v Ryan[8], Fullagar J, after pointing out that the circumstances of disability or disadvantage that can be involved in unconscionable conduct are of great variety and are difficult to classify, gave, as examples, "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary."  The common characteristic of such circumstances is that they place one party at a serious disadvantage in dealing with the other.

   [8](1956) 99 CLR 362 at 405.

9. In the present case, French J said that the lessees suffered from a "situational" as distinct from a "constitutional" disadvantage, in that it did not stem from any inherent infirmity or weakness or deficiency.  That idea was developed somewhat in a joint judgment, to which French J was a party, in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd[9], where it was said that, under the rubric of unconscionable conduct, equity will set aside a contract or disposition resulting from the knowing exploitation by one party of the special disadvantage of another, and then it was said:

   "The special disadvantage may be constitutional, deriving from age, illness, poverty, inexperience or lack of education:  Commercial Bank of Australia Ltd v Amadio.  Or it may be situational, deriving from particular features of a relationship between actors in the transaction such as the emotional dependence of one on the other:  Louth v Diprose; Bridgewater v Leahy".

   [9](2002) 117 FCR 301 at 318.

10. While, with respect to those who think otherwise, I would not assign the facts of Bridgewater v Leahy to such a category, the reference to emotional dependence of the kind illustrated by Louth v Diprose[10] as a form of special disadvantage described as "situational" rather than "constitutional" is understandable and acceptable, provided that such descriptions do not take on a life of their own, in substitution for the language of the statute, and the content of the law to which it refers. There is a risk that categories, adopted as a convenient method of exposition of an underlying principle, might be misunderstood, and come to supplant the principle. The stream of judicial exposition of principle cannot rise above the source; and there is nothing to suggest that French J intended that it should. A problem is that the words "situation" and "disadvantage" have ordinary meanings which, in combination, extend far beyond the bounds of the law referred to in s 51AA; and, it may be added, far beyond the bounds of what was explained to Parliament as the purpose of the section.

    [10](1992) 175 CLR 621.

11. One thing is clear, and is illustrated by the decision in Samton Holdings itself.  A person is not in a position of relevant disadvantage, constitutional, situational, or otherwise, simply because of inequality of bargaining power.  Many, perhaps even most, contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advantages, or neglect their own interests.

12. In Amadio, Mason J[11] said that the point of using the qualifying word "special" before "disadvantage" in this context is "to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests".  It was the inability of a party to judge his or her own best interests that was said by McTiernan J in Blomley v Ryan[12], and again by Deane J in Amadio[13], to be the essence of the relevant weakness.

    [11](1983) 151 CLR 447 at 462.

    [12](1956) 99 CLR 362 at 392.

    [13](1983) 151 CLR 447 at 476-477.

13. The adjective "special" was also used by Kitto J in Blomley v Ryan[14] when he referred to the "well-known head of equity" invoked in that case.  He said:

    "It applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands."

    [14](1956) 99 CLR 362 at 415.

14. Unconscientious exploitation of another's inability, or diminished ability, to conserve his or her own interests is not to be confused with taking advantage of a superior bargaining position. There may be cases where both elements are involved, but, in such cases, it is the first, not the second, element that is of legal consequence. It is neither the purpose nor the effect of s 51AA to treat people generally, when they deal with others in a stronger position, as though they were all expectant heirs in the nineteenth century, dealing with a usurer[15].

    [15]cf Snell's Equity, 30th ed (2000) at 621-622.

15. In the present case, there was neither a special disadvantage on the part of the lessees, nor unconscientious conduct on the part of the lessors.  All the people involved in the transaction were business people, concerned to advance or protect their own financial interests.  The critical disadvantage from which the lessees suffered was that they had no legal entitlement to a renewal or extension of their lease; and they depended upon the lessors' willingness to grant such an extension or renewal for their capacity to sell the goodwill of their business for a substantial price.  They were thus compelled to approach the lessors, seeking their agreement to such an extension or renewal, against a background of current claims and litigation in which they were involved.  They were at a distinct disadvantage, but there was nothing "special" about it.  They had two forms of financial interest at stake:  their claims, and the sale of their business.  The second was large; as things turned out, the first was shown to be relatively small.  They had the benefit of legal advice.  They made a rational decision, and took the course of preferring the second interest.  They suffered from no lack of ability to judge or protect their financial interests.  What they lacked was the commercial ability to pursue them both at the same time.

16. Good conscience did not require the lessors to permit the lessees to isolate the issue of the lease from the issue of the claims.  It is an everyday occurrence in negotiations for settlement of legal disputes that, as a term of a settlement, one party will be required to abandon claims which may or may not be related to the principal matter in issue.  French J spoke of the lessors using "[their] bargaining power to extract a concession [that was] commercially irrelevant to the terms and conditions of any proposed new lease."  A number of observations may be made about that.  Parties to commercial negotiations frequently use their bargaining power to "extract" concessions from other parties.  That is the stuff of ordinary commercial dealing.  What is relevant to a commercial negotiation is whatever one party to the negotiation chooses to make relevant.  And it is far from self-evident that when a landlord is considering a tenant's request to renew a lease, the existence of disputes between the parties about the current lease is commercially irrelevant to a decision as to whether, and on what terms, the landlord will agree to the request.  The reasoning of French J appears to involve a judgment that it was wrong for the lessors to relate the matter of the lessees' claims to the matter of their request for a renewal of the lease.  Why this is so was not explained.  It formed a crucial part of the reasoning of French J and, in my view, cannot be sustained.

17. Reference was earlier made to counsel's submission that there was here a disabling circumstance affecting the ability of the lessees to make a judgment in their own best interests.  In truth, there was no lack of ability on their part to make a judgment about anything.  Rather, there was a lack of ability to get their own way.  That is a disability that affects people in many circumstances in commerce, and in life.  It is not one against which the law ordinarily provides relief.

18. In the course of their reasoning on the contentions advanced by the appellant, and in distinguishing between driving a hard bargain and unconscionable conduct, the members of the Full Court, in a single sentence, remarked that it could not be said that the will of the lessees was overborne, or that they did not act independently and voluntarily.  In the context, I would not understand that to indicate that their Honours thought that unconscionability required duress.  It was simply an observation of fact as to part of the context in which the issue of unconscionability arose.

19. The conclusion of the Full Court of the Federal Court was correct.  The appeal should be dismissed with costs.

20. GUMMOW AND HAYNE JJ.   This appeal from the Full Court of the Federal Court (Hill, Tamberlin and Emmett JJ)[16] turns upon the application of Pt IVA of the Trade Practices Act 1974 (Cth) ("the Act") to a dispute concerning the renewal of a lease of premises in a shopping centre on terms that required the tenants to withdraw pending legal proceedings against the landlords. The Full Court reversed the decision of the primary judge (French J)[17] and found against the tenants.

    [16]C G Berbatis Holdings Pty Ltd v Australian Competition and Consumer Commission (2001) 185 ALR 555.

    [17]Australian Competition & Consumer Commission v C G Berbatis Holdings Pty Ltd (2000) ATPR ¶41‑778.

    The facts

21. The shopping centre is known as "Farrington Fayre" and is located at Farrington Road, Leeming in Western Australia ("the Centre").  The first to fourth respondents ("Berbatis Holdings", "GPA", "P & G Investments" and Mr Atzemis) ("the owners") are the registered proprietors as tenants in common of the land on which the Centre stands.  The business of the Centre is conducted by the owners as partners.  The fifth respondent (Mr Berbatis) is a director of Berbatis Holdings and the sixth respondent (Ms Heijne) is a director of P & G Investments.  The seventh and eighth respondents ("Sullivan Property" and Mr Sullivan), who were separately represented, were respectively a company engaged to provide services as asset manager and a director thereof.  At all relevant times, Mr Sullivan advised the owners respecting negotiations concerning leases with the tenants at the Centre.

22. The Centre comprises some 26 leased premises.  Mr and Mrs Roberts in their capacity as trustees of the Roberts Family Trust leased shop 14 at which they conducted a business styled "Leeming Fish Supply".  Mr and Mrs Roberts had purchased the fish and chip shop business with effect from 1 October 1989.  The previous owner had conducted the business for approximately two and a half years and Mr and Mrs Roberts took an assignment of the remainder of the lease.  Thereafter, in June 1992, they exercised a five year option, with the result that the term of the lease was extended until 14 February 1997.

23. For approximately five years, Mrs Roberts had been the proprietor of small businesses in the United Kingdom, including a florist and a fruit and vegetable shop.  She also had managed a number of other businesses over some 15 years.  After moving to Australia, she had been involved in management roles in a number of companies.  She gave evidence of her belief that she had "very good business management experience".

24. In 1990, a number of tenants at the Centre, including Mr and Mrs Roberts, became concerned at some of the charges levied under the terms of their leases.  Legal advice was sought and a "fighting fund" was established.  In January 1996, proceedings were instituted by Ms Donna Clark, who operated at the Centre a business styled "Gifts R Us", and other tenants against the owners in the Commercial Tribunal of Western Australia ("the Tribunal"), a body established under the Commercial Tribunal Act 1984 (WA). The Tribunal has jurisdiction conferred by s 24 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) ("the Commercial Tenancy Act") to hear and determine various disputes under that statute. The Roberts (and other tenants) held a "retail shop lease" to which the Commercial Tenancy Act applied.

25. On 13 December 1996, the Tribunal delivered a decision in a "test case" in which one of the tenants, John Hender Real Estate Pty Ltd ("Hender"), was partially successful.  The owners and the tenant both filed appeals in the District Court of Western Australia.  Thereafter, by consent, an order was made in the District Court quashing the Tribunal decision and remitting the matter for rehearing.  On 1 April 1997 (whilst the Roberts were in negotiations with the owners respecting renewal of their lease), Hender commenced proceedings in the Supreme Court of Western Australia claiming declarations and damages against the owners in relation to matters similar to those the subject of the proceedings which had been brought in the Tribunal.  The Supreme Court proceedings were settled in November 1998 on terms which involved repayments to tenants up to a maximum of $3,898 for any one tenant.  Had the Roberts participated in the settlement, they would have been entitled to $2,429.50 by way of refund of management fees and $356.93 in respect of variable outgoings.

26. Section 10(1) of the Commercial Tenancy Act stated:

    "Notwithstanding any other written law, a retail shop lease shall be taken to grant to the tenant a right to assign the lease, subject only to a right of the landlord to withhold consent to an assignment on reasonable grounds."

    The retail shop lease held by Mr and Mrs Roberts for the fish shop was for a term to expire on 14 February 1997.  The Roberts had made it known to the manager of the Centre that they were anxious to sell their business and that if they could negotiate a new lease term, which they could then assign to the purchaser, that would assist them.  A purchaser, Mr Holland, on 28 October 1996, signed an offer to purchase the business for $65,500, subject to a lease of the premises being assigned to his satisfaction.

27. Mrs Roberts estimated at approximately $50,000 the alleged overpayments which she and her husband were interested in recovering from the owners.  The owners required the inclusion in a proposed deed of assignment of cl 14 whereby the Roberts and Mr Holland would discharge the owners from all claims arising from any act or omission by the owners prior to the proposed assignment date and Mr and Mrs Roberts would consent to the dismissal of any current legal proceedings against the owners.  Mrs Roberts' solicitor advised her on 2 December 1996 not to sign a document including cl 14.  French J made a finding[18]:

    "In the event, after consideration, Mrs Roberts decided that she had little option but to sign the documents.  Her lease was due to expire on 14 February 1997.  There was no prospect of renewal and without that she would have no business to sell.  She believed she had no choice but to sign the deed as it was.  She then decided to sign the deed and did so.  She felt extremely upset and angry that [the managing agent] and the owners had, in her view, put her in a situation where she had no choice but to give up her legal rights."

    [18](2000) ATPR ¶41‑778 at 41,184.

28. The settlement of the sale took place on 2 December 1996.  Mr Holland took possession of the business and subsequently traded in a "viable position".  Notwithstanding the provisions of cl 14, the Roberts did not withdraw from the then current litigation against the owners and continued to contribute to the costs involved.

    The ACCC litigation

29. In subsequent litigation instituted in the Federal Court on 3 April 1998, the Australian Competition and Consumer Commission ("the ACCC") alleged that the imposition by the owners of conditions requiring withdrawal by Mr and Mrs Roberts of their participation in the pending legal proceedings as a condition of the grant of a new lease contravened Pt IVA of the Act. A case also was presented under Pt V of the Act, in particular s 52, of misleading or deceptive conduct. This related to alleged representations made in the course of negotiations with the Roberts that the owners would not require them, as a condition of obtaining a new lease, to withdraw from the legal action against the owners. In particular, disputed evidence was given respecting a conversation with Mrs Roberts in October 1996. French J was not prepared to find that the representations had been made so the claim of contravention of s 52 failed. The ACCC's case also included allegations respecting the treatment of other tenants but French J held that no case of contravention of s 51AA or s 52 was made out[19].  The Full Court and this Court have been concerned only with the position of the Roberts.

    [19](2000) ATPR ¶41‑778 at 41,199‑41,200.

30. With respect to the Roberts, French J granted declaratory relief that the various respondents, either directly or as parties knowingly concerned, had contravened s 51AA of the Act; the conduct declared to be unconscionable within the meaning of the section was the requirement as a condition of the grant of a new lease to Mr and Mrs Roberts that they release the owners of the Centre from various claims arising under their existing lease. His Honour also ordered that the individual, as distinct from the corporate, respondents attend a trade practices compliance seminar conducted by a specialist in trade practices law where the unconscionable conduct provisions of the Act, and in particular s 51AA, were addressed. His Honour declined to order the injunctive relief sought by the ACCC.

31. An appeal to the Full Court succeeded and in place of the relief granted by the primary judge the Full Court ordered that the application be dismissed with costs.

    Part IVA of the Act

32. Before considering the issues which arise on the appeal, it is convenient to return to Pt IVA of the Act. Part IVA was added by s 9 of the Trade Practices Legislation Amendment Act 1992 (Cth) ("the 1992 Act"). Part IVA since has been amended, by the Trade Practices Amendment (Fair Trading) Act 1998 (Cth), in particular by the insertion of s 51AC (headed "Unconscionable conduct in business transactions"). Section 51AC(3) lists in pars (a)‑(k) various circumstances to which regard may be had in determining whether there has been a contravention of that section and does not rely simply upon "the unwritten law". At the relevant time for this litigation, Pt IVA comprised ss 51AA‑51AB. Section 51AA stated:

    "(1)     A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.

    (2) This section does not apply to conduct that is prohibited by section 51AB."

    The latter provision forbade corporations, in trade or commerce, from engaging in conduct in connection with the supply or possible supply of goods or services to a person which, in all the circumstances, was unconscionable. It is accepted that the conduct complained of in this litigation, whilst in trade or commerce, was not conduct prohibited by s 51AB. The result was that the dispute turned entirely upon s 51AA(1).

33. The remedies for contravention of Pt IVA were found in Pt VI of the Act. Injunctive relief might be granted under s 80 and other orders made under s 87. Section 82 did not allow recovery of damages in respect of contravention of Pt IVA but some pecuniary remedies would appear to have been available under par (d) of s 87(2). The powers to prohibit payment or transfer of money or other property by order under s 87A applied to Pt IVA proceedings. The provisions in s 76 for the recovery of pecuniary penalties did not apply. Standing to institute and maintain proceedings was conferred upon the ACCC by various provisions, in particular by ss 80 and 87.

34. The validity of s 51AA was called into question before the primary judge[20].  Full argument was heard by his Honour on the matter and the validity of the provision was upheld[21]. In this Court, no question arises respecting the validity of s 51AA. Rather, the issues concern the construction of the provision and its application to the facts concerning the Roberts.

    [20]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (1999) 95 FCR 292.

    [21]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491.

    The construction of s 51AA

35. The Full Court drew a distinction between parties adopting "an opportunistic approach to strike a hard bargain" and those who act unconscionably within the meaning of the section[22].  Their Honours added[23]:

    "It cannot be said that the Roberts' wills were so overborne that they did not act independently and voluntarily.  Unfortunately for the Roberts, the owners were under no obligation to renew or extend their lease.  The Roberts had the choice of either maintaining their legal claims against the owners and losing the opportunity to sell their business or abandoning their claims and gaining the opportunity to sell their business.  They made that choice of abandoning their claims.  That may have been a hard bargain, but it was not an unconscionable one." (emphasis added)

    [22](2001) 185 ALR 555 at 571.

    [23](2001) 185 ALR 555 at 571.

36. The ACCC submits that the Full Court was in error to construe s 51AA as requiring that the will of the individual in question be so overborne as to deny to what was done the nature of an independent and voluntary act. That submission should be accepted. What was said by the Full Court reflects notions associated with common law duress and the defence of non est factum rather than unconscionable conduct[24].

    [24]Barton v Armstrong [1976] AC 104 at 118‑119; Bridgewater v Leahy (1998) 194 CLR 457 at 475‑476 [65], 477‑478 [73], 491‑492 [118]-[119]; "R" v Her Majesty's Attorney-General for England and Wales [2003] UKPC 22 at [15]-[16].

37. Counsel for the owners did not seek to uphold this approach to the construction of the section.  Counsel for all respondents submitted, and counsel for the ACCC did not really demur, that the litigation had been pleaded and conducted on the footing that the expression "engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories" was to be understood with reference to the equitable doctrine expounded, in particular, by this Court in Commercial Bank of Australia Ltd v Amadio[25].  The respondents submitted that the result in the Full Court should be upheld and that the application should have been dismissed by the primary judge because the facts found fell short of circumstances which would attract the operation of the principles expounded in Amadio.  The ACCC submitted to the contrary but the submissions for the respondents should be accepted.

    [25](1983) 151 CLR 447.

38. The parties, correctly, accept that the term "unconscionable" is not used in s 51AA in any sense which is at large or reflects an ordinary or natural meaning in general usage. That is plain from the identification in s 51AA of "the meaning" given by "the unwritten law, from time to time". The identification thus made is the principles of law and equity expounded from time to time in decisions respecting the common law of Australia. It is now settled that there is but one Australian common law and the reference in the section to "the unwritten law ... of the States and Territories" must be read in that way[26].  French J held that the phrase in question "can only be taken as a reference to the common law of Australia, a single body of judge-made law"[27], and the contrary has not been suggested in submissions to this Court.

    [26]Lange v Australian Broadcasting Corporation (1997) 189 CLR 520; Lipohar v The Queen (1999) 200 CLR 485; John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503.

    [27](2000) 96 FCR 491 at 502.

39. French J also said[28]:

    "The concept of unconscionability is arguably to be found at two levels in the unwritten law.  There is a generic level which informs the fundamental principle according to which equity acts.  There is the specific level at which the usage of 'unconscionability' is limited to particular categories of case.  The Explanatory Memorandum [to the Bill for the 1992 Act] suggests that it is the latter sense that was intended – defined by reference to Blomley v Ryan^[[29]^] and Commercial Bank of Australia [Ltd] v Amadio^[[30]^]."

    The relevant passage in the Explanatory Memorandum said of s 51AA that it embodied "the equitable concept of unconscionable conduct as recognised by the High Court" in those two cases[31].

    [28](2000) 96 FCR 491 at 502.

    [29](1956) 99 CLR 362.

    [30](1983) 151 CLR 447.

    [31](2000) 96 FCR 491 at 495.

40. The reference by his Honour to the use in s 51AA of the term "conduct that is unconscionable within the meaning of the unwritten law" as identifying particular categories of case should be accepted as indicating the proper construction of s 51AA. The argument on the present appeal of all parties appeared to proceed on that footing. However, there then arises the question as to which particular manifestations of equity's concern with unconscientious or unconscionable conduct are reached by s 51AA. The issue is an important one because s 51AA does more than re‑enact for application in trade and commerce the general law principles concerned. Contravention of s 51AA attracts particular remedies under the Act which may not otherwise be available and provides, as this case illustrates, for litigation to be instituted and conducted by a public body, the ACCC.

41. In The Commonwealth v Verwayen[32], Deane J referred to the use of the terms "unconscientious" and "unconscionable" in "areas where equity has traditionally intervened to vindicate the requirements of good conscience".  Later, in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd[33], Gleeson CJ observed that, whilst it may be appropriate to identify as "unconscientious" engagement in conduct enjoined by injunction:

    "that leaves for decision the question of the principles according to which equity will reach that conclusion.  The conscience of the [defendant], which equity will seek to relieve, is a properly formed and instructed conscience."

    His Honour added that the real task was to decide what a properly formed and instructed conscience would have to say about the conduct sought to be enjoined.

    [32](1990) 170 CLR 394 at 446.

    [33](2001) 208 CLR 199 at 227 [45].

    The term "unconscionable"

42. The term "unconscionable" is used as a description of various grounds of equitable intervention to refuse enforcement of or to set aside transactions which offend equity and good conscience.  The term is used across a broad range of the equity jurisdiction.  Thus, a trustee of a settlement who misapplies the trust fund and the fiduciary agent who makes and withholds an unauthorised profit may properly be said to engage in unconscionable conduct.  The relief given by equity against the imposition of monetary penalties and the forfeiture of proprietary interests has been said to reflect the attitude of equity to overreaching and unconscionable dealing[34], as well as to accident, mistake and surprise[35].  The remedy of rescission may reflect the characterisation as unconscionable of the conduct of the party seeking to hold the plaintiff to a contract entered into under the influence of innocent misrepresentation[36] or unilateral mistake[37].  Again, the various doctrines and remedies in the field of estoppel, at a general level, may be said to overcome the unconscionable conduct involved in resiling from the representation or expectation induced by the party estopped.

    [34]Stern v McArthur (1988) 165 CLR 489 at 526‑527; Ashburner's Principles of Equity, 2nd ed (1933) at 262; Pomeroy's Equity Jurisprudence, 5th ed (1941), §433.

    [35]Shiloh Spinners Ltd v Harding [1973] AC 691 at 722.

    [36]Redgrave v Hurd (1881) 20 Ch D 1 at 12‑13; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 535‑536 [117].

    [37]Taylor v Johnson (1983) 151 CLR 422 at 430‑433.

43. It will be unconscientious for a party to refuse to accept the position which is required by the doctrines of equity.  But those doctrines may represent, as the above examples indicate, the outcome of an interplay between various themes and values of concern to equity.  The present editor of Snell has noted the use of the terms "unconscionable" and "unconscientious" "in areas as diverse as the nature of trusteeship and the doctrine of laches"; he rightly observed that "this may have masked rather than illuminated the underlying principles at stake"[38].

    [38]McGhee (ed), Snell's Equity, 30th ed (2000), Preface.

44. In GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd[39], Gyles J expressed the view that unconscionable or unconscientious conduct is only one element of the doctrine of equitable estoppel. His Honour rejected the submission that s 51AA of the Act was concerned with a general doctrine of unconscionability which is recognised by equity and encompasses all circumstances where behaviour which can be described as unconscionable plays a part in the entitlement to relief. On the other hand, in his judgment dealing with the challenge to the validity of s 51AA, French J concluded[40]:

    "[T]he concept of unconscionable conduct 'within the meaning of the unwritten law' is presently confined in its operation by reference to specific doctrines.  Nevertheless the cases indicate that its use is a matter of taxonomy which may be subject to substantial change.  As Hardingham has suggested[41]:

    '... the boundaries between traditional heads of intervention against unconscionable behaviour – specifically between common law duress and actual undue influence or pressure, between presumed undue influence and unconscionable dealing as such – are shifting.  Lines of demarcation are not now as clearly defined as they may have been in the past.  As a consequence, the traditional heads themselves may be ready for some redefinition or [rationalisation].'

    In considering the contention that 'unconscionable conduct within the meaning of the unwritten law' in s 51AA refers to some kind of legal dictionary, it is important to observe that it has no settled technical meaning. It is, as Mahoney JA^[[42]^] said, 'better described than defined'.  It offers a standard determined by judicial decision-making rather than a rule, albeit it may for the present be subject to limitation in its factual field of operation by the existence of specific doctrines."

    [39](2001) 117 FCR 23 at 77.

    [40](2000) 96 FCR 491 at 501‑502.

    [41]"Unconscionable Dealing", in Finn (ed), Essays in Equity, (1985) 1 at 2.

    [42]Antonovic v Volker (1986) 7 NSWLR 151 at 165.

45. This appeal may be decided without choosing between the differing emphases in the views expressed by Gyles J and French J respecting the present state of equitable doctrine and thus the reach of s 51AA. Nor need this Court now determine whether the section is limited to matters of equitable doctrine so as, for example, to exclude developments in the common law respecting principles of duress. For example, in Crescendo Management Pty Ltd v Westpac Banking Corporation[43], McHugh JA considered, with reference to English authority, what has come to be called "economic duress".  His Honour said[44] that pressure will be illegitimate "if it consists of unlawful threats or amounts to unconscionable conduct".  Again, it will be recalled that, in Muschinski v Dodds[45], Deane J referred to the "general equitable notions" respecting unconscionable conduct which have found "expression in the common law count for money had and received".

    [43](1988) 19 NSWLR 40.

    [44](1988) 19 NSWLR 40 at 46.

    [45](1985) 160 CLR 583 at 619‑620. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 525‑526 [16], 554‑555 [100].

46. It is unnecessary to resolve these questions concerning the reach of s 51AA because, as remarked earlier in these reasons, and consistently with what had been said in the Explanatory Memorandum, the litigation was conducted on the footing that the facts fell within that well-established area of equitable principle concerned with the setting aside of transactions where unconscientious advantage has been taken by one party of the disabling condition or circumstances of the other. In such situations, and as will be further discussed below, equity intervenes not necessarily because the complainant has been deprived of an independent judgment and voluntary will, but because that party has been unable to make a worthwhile judgment as to what was in the best interests of that party.

    The reasoning of the primary judge

47. The reasoning of the primary judge which led his Honour to find in favour of the ACCC in respect of the complaints respecting the Roberts was introduced in the following passage[46]:

    "The Roberts as lessees of Shop 14 operated a small business, the Leeming Fish Supply, the value of which to any prospective purchaser was critically dependent upon the length and security of the tenure of the premises which the Roberts could convey to that purchaser at settlement.  At the time that they first negotiated with Mr Holland between March and May 1996, they had less than twelve months of their lease to run.  A mere assignment of the balance of the term, to which they were entitled by virtue of the provisions of the Commercial Tenancy Act, could not secure for Mr Holland a tenancy of the length necessary to make his investment worthwhile.  So the sale of the business was dependent upon the owners' willingness to grant a new lease.  They were under no obligation to do so.  Neither the Roberts nor Mr Holland were actually or potentially large tenants.  They were actual and prospective small business operators.  The Roberts, in particular, had little bargaining power when it came to dealing with the owners.  There was a marked inequality of bargaining power between them.  The Roberts suffered what might be called a 'situational' as distinct from a 'constitutional' disadvantage.  That is to say it did not stem from any inherent infirmity or weakness or deficiency.  It arose out of the intersection of the legal and commercial circumstances in which they found themselves.  That disadvantage, not being constitutional in character, was not able to be mitigated by the fact of legal representation which they had available to them at all material times."

    [46](2000) ATPR ¶41‑778 at 41,196-41,197.

48. The distinction drawn by French J between "situational" and "constitutional" disadvantages was important for his reasoning.  In particular, it was because the disadvantage identified by his Honour was of the former rather than the latter character that no particular significance attached to the availability to Mrs Roberts of independent legal advice, which she received but chose not to follow.

49. French J continued by saying that[47]:

    "the circumstances in which a business operator on a lease may effectively lose the value of that business upon expiry of the lease does place the tenant at a special disadvantage in dealing with the owner".

    [47](2000) ATPR ¶41‑778 at 41,197.

50. Whilst this did not import any obligation of renewal, a question arose whether the owner unfairly exploited the disadvantage of the tenant in a fashion regarded by equity as unconscionable.  His Honour continued[48]:

    "Unfair exploitation of disadvantage amounting to unconscionable conduct may occur when an owner uses its bargaining power to extract a concession from the tenant that is commercially irrelevant to the terms and conditions of any proposed new lease."

    [48](2000) ATPR ¶41‑778 at 41,197.

51. The respondents criticise the use in this context of the phrase "commercially irrelevant".  The evidence was that it was important to the owners and their advisers that cl 14 be included, so much so that without it they were not prepared to renew the lease.  In that setting, for a court to suggest that concern was a commercial irrelevance falsely suggests the availability to the court of some objective criterion of relevance which may override the attitude taken by the owners.

52. The critical passage in which French J formulated his conclusions was as follows[49]:

    "In my opinion for the owners to insist, as they did through Mr Sullivan in this case, upon the Roberts abandoning their rights to proceed with bona fide litigation in relation to their rights under their existing lease was to engage in unconscionable conduct.  The claims that they, in common with other tenants, were raising against the owners were bona fide and serious.  They were taken seriously by both the tenants and by the owners."

    His Honour added that it was of no consequence that the detriment suffered by the Roberts may have been small in monetary terms; there had been an exploitation of the vulnerability of the Roberts in relation to the sale of their business which was "grossly unfair".

    [49](2000) ATPR ¶41‑778 at 41,197.

53. French J also referred to the personal circumstances of the Roberts, saying[50]:

    "Whether or not [the owners] had personal knowledge of the circumstances of the Roberts, they were fixed with such knowledge through that of Brian Sullivan and his company. The corporate respondents were therefore in contravention of s 51AA and the natural respondents knowingly involved in that contravention."

    [50](2000) ATPR ¶41‑778 at 41,197.

54. The reference to the personal circumstances of the Roberts was primarily to a discussion in or about March 1995 between Mrs Roberts and Ms Glenda Clapp, the Centre Manager at Farrington Fayre, who was employed by the managing agent.  Mrs Roberts had told Ms Clapp that she and her husband were thinking of selling the business, that their daughter was ill and required considerable attention and that both she and her husband thought it was time to get out, having been in the business long enough.

    Conclusions

55. In Commercial Bank of Australia Ltd v Amadio[51], Mason J referred to passages in the judgments of Fullagar J and Kitto J in Blomley v Ryan[52].  Mason J said[53]:

    "It is made plain enough, especially by Fullagar J, that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition [or] circumstance is placed at a special disadvantage vis‑à‑vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created.  I qualify the word 'disadvantage' by the adjective 'special' in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party."

    His Honour went on to emphasise[54] the need for the plaintiff seeking relief to establish the taking of unconscientious advantage of the plaintiff's disabling condition or circumstance.  It will be apparent that the special disadvantage of which Mason J spoke in this passage was one seriously affecting the ability of the innocent party to make a judgment as to that party's own best interests.

    [51](1983) 151 CLR 447 at 461‑463.

    [52](1956) 99 CLR 362 at 405, 415.

    [53](1983) 151 CLR 447 at 462.

    [54](1983) 151 CLR 447 at 462‑463.

56. In the present case, the respondents emphasise that point and stress that a person in a greatly inferior bargaining position nevertheless may not lack capacity to make a judgment about that person's own best interests.  The respondents submit that the facts in the present case show that Mr and Mrs Roberts were under no disabling condition which affected their ability to make a judgment as to their own best interests in agreeing to the stipulation imposed by the owners for the renewal of the lease, so as to facilitate the sale by Mr and Mrs Roberts of their business.  Those submissions should be accepted.

57. In dealing with the owners for a new lease, the Roberts were in a difficult bargaining position because they had no legal right to a renewal, there having been no option bargained for and included in the subsisting lease.  Nor was their situation like that of the hotel lessee considered by Waddell CJ in Eq in Bond Brewing (NSW) Pty Ltd v Reffell Party Ice Supplies Pty Ltd[55].  In the circumstances of that case, the lessor was estopped from terminating the defendant's lease without making a payment for the goodwill built up by the tenant and an order for possession was made in favour of the lessor only upon the lessor giving security for an amount of compensation for goodwill to be determined thereafter by the Court.  However, the situation in which the Roberts were placed did not necessarily support the conclusion that they lacked the capacity to make a judgment about their best interests by agreeing to cl 14 as the price of obtaining the renewal which then would support the sale of the business to Mr Holland.

    [55]Unreported, Supreme Court of New South Wales, 17 August 1987.

58. The second requirement to which Mason J pointed in Amadio is the taking advantage of the alleged disadvantage.  The present case was conducted on the footing that it was the imposition by the owners of cl 14 which constituted the unconscionable conduct.  Much of the argument for the ACCC falls away after an understanding of what is required to constitute the necessary special disadvantage and of the conduct impugned as that requiring the inclusion of cl 14.

59. A little more should be said respecting the situations in which the owners and the Roberts were placed when the negotiations for the renewal of the lease reached their final stage.  The lease held by the Roberts was not the only lease of premises at the Centre whose term was set to expire in February 1997.  There was a significant number of leases which would expire at that time.  Moreover, there were seven or eight vacant shops.  Mr Sullivan had regarded these matters as weakening the bargaining position of the owners.  The Roberts valued their rights of recovery of overpayments at $50,000.  That was a significantly over-optimistic estimate.  The best indication that this was so is provided by the estimated entitlement to a sum of less than $3,000 had the Roberts participated in the later settlement.  On the other hand, the renewal of the lease was essential for the consummation of the sale of the business to Mr Holland for some $65,500.

60. There were three apparent resolutions to the impasse between the parties.  First, the lease might be renewed without the inclusion of cl 14.  This was unacceptable to the owners; they were not obliged to grant any renewal at all and so were at liberty to prevent that outcome and thereby deprive the Roberts of their sale proceeds.  The second and third possibilities were both acceptable to the owners but, given the evidence of Mr Sullivan referred to above, the second probably was preferable.  The second was renewal of the lease and inclusion of cl 14; the third was no renewal and no release of the owners by cl 14.  To the Roberts, the renewal of the lease (albeit giving up the other claim later shown to be worth apparently only some $3,000) was vital to the sale of the business, making the second outcome preferable to the third.  Against that background, it may not be surprising that the bargain struck reflected the second outcome.

61. It was never the case of the ACCC that the owners were obliged to deal with the Roberts by producing the first outcome, so that the owners, consistently with s 51AA, might deal with the Roberts only to the disadvantage of the owners. To conclude that the owners "extract[ed]" the agreement by the Roberts to include cl 14, as did the primary judge, mistakes the significance of the available outcomes. The owners would not agree to renew the lease without cl 14 and were at liberty to achieve that result, as his Honour accepted. To stigmatise the second (and actual) outcome appears to favour as the preferable result the third outcome whereby the owners would have had no further dealing with the Roberts, the lease would have expired and the sale lost, but the Roberts would have later received some $3,000 at the settlement.

62. Reference has been made to the evidence concerning the family circumstances of the Roberts. It was submitted to this Court that there was no clear basis for a finding that the knowledge of Ms Clapp, an employee of the managing agent of the Centre, respecting the illness of the daughter of the Roberts, was to be attributed to the owners. Section 84(1) of the Act would apply[56].  It would direct attention to the scope of the actual or apparent authority of Ms Clapp.

    [56]Section 84(1) stated:

    "Where, in a proceeding under this Part in respect of conduct engaged in by a body corporate, being conduct in relation to which section 46 or 46A or Part IVA or V applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, servant or agent of the body corporate, being a director, servant or agent by whom the conduct was engaged in within the scope of the person's actual or apparent authority, had that state of mind."

63. It is unnecessary to embark upon that inquiry.  First, the primary judge made no clear finding, saying[57]:

    "The personal circumstances of the Roberts are also relevant in so far as they were known to the owners or their agents",

    and that the case disclosed unconscionable conduct "[q]uite apart from that circumstance".  Secondly, on the facts of this case, so far as they were found, the particular family situation, which with other matters led the Roberts to wish to sell the business rather than to seek a renewal purely for their benefit, fell short of a disabling condition or circumstance seriously affecting their ability to make a judgment as to their own best interests.

    [57](2000) ATPR ¶41‑778 at 41,197.

    Orders

64. The appeal should be dismissed with costs.

65. KIRBY J.   Yet again the Court has before it an appeal concerning the application of the Trade Practices Act 1974 (Cth) ("the Act"). On this occasion the issue involves s 51AA of the Act which incorporates a statutory prohibition of unconscionable conduct, as such conduct is understood in the unwritten law of Australia. Yet again this Court has a choice between affording a broad and beneficial application of the relevant provision of the Act, as opposed to a narrow and restrictive one.

66. In the proceedings at trial in the Federal Court of Australia, French J (the primary judge) found that the respondents had engaged in unconscionable conduct.  As other members of this Court have found, the Full Court of the Federal Court, in allowing the appeal from his Honour's judgment, applied an excessively narrow legal criterion.  Given that the relevant factual findings are undisturbed and that the primary judge did not make any error of legal principle, this Court should affirm his Honour's judgment.

    The facts, legislation and common ground

67. Facts and legislation: The facts are stated in the reasons of Gummow and Hayne JJ ("the joint reasons") and of Callinan J. Also set out in other reasons are the terms of the applicable provisions of the Act and passages from the reasons of the primary judge and of the Full Court of the Federal Court, explaining the contrasting conclusions to which they respectively came. I will avoid unnecessary repetition.

68. Common ground:  There was a great deal of common ground in the appeal.  I will state the main points in summary form, in order to make it clear that I have put all such matters to one side.  Thus, the parties agreed that:

    (1)Section 51AA of the Act, whose meaning was chiefly in question in the proceedings, is a valid law of the Commonwealth. This was so despite the arguments advanced at trial that the section involved an impermissible delegation of law-making power by the Parliament to the judiciary, or an invalid attempt by a law of the Parliament to intrude into the functions of the courts responsible for making the "unwritten law"; and was unacceptably uncertain or otherwise void[58].  The validity issue was the subject of a separate decision on the part of the primary judge[59]. It was not a matter upon which special leave was granted by this Court. I will assume that the decision upholding the validity of s 51AA was correct and that the section bound the respondents in the terms enacted by the Parliament.

    (2)The reference in s 51AA to "the unwritten law" includes a reference to the principles of equity as developed by Australian courts exercising equitable jurisdiction concerned with "unconscionable" conduct and in particular (but not limited to) the principles stated in such decisions as Blomley v Ryan[60] and Commercial Bank of Australia Ltd v Amadio[61].  In accordance with such decisions, whatever else the section covers, it includes the case of a party to a contract who was in such a debilitated condition that there was not "a reasonable degree of equality between the contracting parties"[62]; where "the [party's] condition was sufficiently evident to those who were acting for the [other party] at the time to make it prima facie unfair for them to take his assent to the [impugned transaction]"[63].  As was said in Evans v Llewellin[64], "though there was no actual fraud, it is something like fraud, for an undue advantage was taken of [the] situation".  Further, "the principle applied is not one which extends sympathetic benevolence to a victim of undeserved misfortune; it is one which denies to those who act unconscientiously the fruits of their wrongdoing"[65].

    (3)The factors relevant to determining whether the conduct of a party was unconscionable in the circumstances of a given case cannot be comprehensively catalogued.  They may include the wealth or poverty of the party seeking relief, that party's means and access to independent assistance and advice, as well as the party's age, state of health, infirmity of body and mind[66], and also financial and other circumstantial pressures[67].  It is not enough that the weaker party has suffered a hard bargain.  There needs to be some special disadvantage that renders the consequences of enforcing the parties' legal rights unfair to the point of offending conscience when all the circumstances are considered.

    (4)The advantages introduced by s 51AA of the Act include the provision, in a case in which the complaining party could have sought relief in a court exercising equitable jurisdiction, of the wide-ranging remedies available under the Act; the support of, and sometimes representation by, the Australian Competition and Consumer Commission ("the ACCC") to pursue that party's cause as a matter of principle and example; and the facility of federal jurisdiction such as the ACCC invoked in the Federal Court in these proceedings on behalf of the tenants.

    (5)None of the tenants in the shopping centre represented by the ACCC in the proceedings before French J, other than Mr and Mrs Roberts ("the Roberts"), was entitled to relief under the Act.

    [58]cf Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 484-488, concerning the Native Title Act 1993 (Cth), s 12.

    [59]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 504-510 [29]-[44].

    [60](1956) 99 CLR 362 ("Blomley").

    [61](1983) 151 CLR 447 ("Amadio").  See the reasons of the primary judge, Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 502 [23].

    [62]Longmate v Ledger (1860) 2 Giff 157 at 163 [66 ER 67 at 69].

    [63]Blomley (1956) 99 CLR 362 at 428 per Kitto J.

    [64](1787) 1 Cox 333 at 340 [29 ER 1191 at 1194].

    [65]Blomley (1956) 99 CLR 362 at 429.

    [66]Blomley (1956) 99 CLR 362 at 405, 415. See also Amadio (1983) 151 CLR 447 at 474.

    [67]Blomley (1956) 99 CLR 362 at 415.

    The meaning and scope of unconscionable conduct in s 51AA

69. The history of the section: A starting point for deriving the meaning and scope of the section is contextual. It is important to remember the history of the introduction of s 51AA in order to understand the legislative purpose for adding that section and a number of other provisions in a new Pt IVA of the Act dealing with "Unconscionable Conduct"[68]. 

    [68]By the Trade Practices Legislation Amendment Act 1992 (Cth), s 9. Part IVA has been subsequently amended, however those amendments have no bearing on the provision invoked in the present proceedings.

70. The history of the insertion of s 51AA into the Act was recounted by the primary judge. His Honour took account of this indication of the statutory purpose[69]. This Court, in deciding the application of s 51AA to the facts and circumstances of this case, should likewise start from a clear appreciation of the novelty of the objects sought to be accomplished by the inclusion of the section in the Act. In interpreting the scope of a provision such as s 51AA, this Court should assist so far as it properly can in furthering the attainment of those purposes[70].

    [69]See Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 494-496 [5]-[8].

    [70]Bropho v Western Australia (1990) 171 CLR 1 at 20; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408.

71. The enactment of s 51AA of the Act followed a review of the Act by the Swanson Committee[71]. That Committee rejected suggestions that a general prohibition of "unfair" conduct on the part of corporations engaging in trade and commerce should be enacted. However, it accepted that a prohibition upon unconscionable conduct in such activities should be included in the Act "as a civil matter only". According to its conclusions, such facilities should be added to ensure that it was possible to deal with the problem of the general disparity of bargaining power between buyers and sellers[72].  The Committee recognised that unconscionable conduct involved a standard "quite apart from, and usually not encompassed by, the standards of misleading or deceptive conduct"[73].  The equitable doctrine of unconscionable dealing itself seeks to uphold a broader principle of ethical behaviour, whereby conduct on the part of contracting parties which falls short of fraud could still enliven equity's intervention[74]. 

    [71]Report of the Trade Practices Review Committee to the Minister for Business and Consumer Affairs, (1976) ("Swanson Committee Report").

    [72]Swanson Committee Report, par 9.59.

    [73]Swanson Committee Report, par 9.60.

    [74]Blomley (1956) 99 CLR 362 at 429.

72. It took some time for the Government and the Parliament to accept the Swanson Committee's recommendation. Initially, in 1986, s 52A was introduced into the Act prohibiting unconscionable conduct in consumer dealings. As the primary judge pointed out, before the enactment of s 51AA, a number of additional reports examined the issue of whether a similar statutory prohibition of unconscionable conduct should extend to purely commercial dealings[75].  Eventually, the Parliament acted.

    [75]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 494-495 [7]. See also O'Brien, "The ACCC v Berbatis Litigation and Section 51AA of the Trade Practices Act 1974 (Cth)", (2002) 10 Trade Practices Law Journal 201 at 202.

73. The objects of the Act and of the section: The object of the Act, as stipulated in s 2, is "to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection". The introduction of statutory notions of unconscionable conduct into the Act was a recognition of the advantages of the "unwritten law" doctrines in promoting fair trading. Such equitable categories developed in order to protect the integrity of the contracting process where a party is induced to act or enter a transaction due to weakness or illegitimate pressure, and does so without full information or appreciation of the extent or nature of the transaction or the way it affects that party's interests and choices. By enacting s 51AA, the Parliament adopted from the unwritten law the characterisation of conduct as unconscionable, and prohibited such conduct by corporations engaged in trade or commerce. The design of s 51AA was intended not to expand the notions of unconscionable conduct in the unwritten law but to allow the application in such circumstances of the flexible remedies available under the Act[76].  Yet the very fact that such a provision would facilitate more cases coming before the courts than might otherwise be the case inevitably results in a closer elaboration of the concept of unconscionable conduct in new and different factual circumstances.  The present is such a case.

    [76]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 495 [8]; cf at 503 [25] in relation to ss 51AB and 51AC of the Act.

74. A particular purpose of the inclusion of s 51AA in the Act was to afford more effective remedies to small operators in the marketplace, such as the Roberts. They already had access to remedies of an equitable character. However, in practice, where the stakes were comparatively low (as here) a corporation dealing with such a small player would normally be entitled to assume that it could take advantage of the comparative weakness of that player without any real fear that it would be rendered accountable in a court of law or equity.

75. The proper approach to the section: In outlining his approach to the construction and application of s 51AA, the primary judge said, correctly in my view[77]:

    "Section 51AA prohibits corporations from engaging in conduct which is unconscionable within the meaning of the common law of Australia. The meaning of the term is found in the dictionary. Its meaning is not altered by the unwritten law. What the unwritten law does presently is to confine its operation to certain classes of case. The reference in s 51AA to the 'meaning of the unwritten law' is a reference to the classes of case in which the unwritten law will award remedies for unconscionable conduct ... There is no distinct rule which defines such conduct. The description embodied in the word 'unconscionable' ultimately refers to the normative characterisation of conduct by a judge having jurisdiction in the relevant class of case. … [T]he rules governing the relevant application of the term 'unconscionable conduct' and therefore the application of s 51AA are judge-made rules that can change from time to time. The development of doctrine which may alter that application may occur in the judgments of the courts of the States and Territories and of the High Court and of the Federal Court in the exercise of its accrued jurisdiction. This may also occur through the exercise of jurisdiction under s 51AA which itself if valid, will become a significant source of the unwritten law."

    [77]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 503-504 [26].

76. The primary judge also observed that s 51AA "uses the unwritten law to the extent that it provides for the characterisation of conduct as unconscionable and then prohibits such conduct"[78]. In terms of the type of conduct that would fit the description "unconscionable within the meaning of the unwritten law", the primary judge made three pertinent observations: first, that as a general proposition the object of equity's intervention is to prevent behaviour contrary to conscience, however, this does not mean that the prohibition in s 51AA encompasses all conduct that would attract the intervention of equity[79]; secondly, that within the meaning of the "unwritten law" the notion of unconscionable conduct has no "technical meaning" and provides "a standard determined by judicial decision-making rather than a rule"[80]; and thirdly that while the Explanatory Memorandum prepared in support of the clause in the Bill that became s 51AA of the Act specifically referred to the concept of unconscionable conduct explained in Blomley and Amadio, that "may turn out to have been an unduly narrow selection of case law"[81].

    [78]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 504 [28].

    [79]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 498 [14]. See also Australian Consolidated Investments Ltd v England (1995) 183 LSJS 408 at 439 per Doyle CJ.

    [80]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 502 [21].

    [81]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 at 495 [8].

77. While the present appeal was substantially argued by reference to the principles of unconscionable dealing as elaborated in cases such as Blomley and Amadio, the reach of the section, in my view, goes further.  Its full scope remains to be elaborated in this and future cases.

    The Full Court erred

78. In allowing the respondents' appeal against the judgment of the primary judge, and in distinguishing the characteristics of an unconscionable bargain, the Full Court held that, in the circumstances, it could not be said that "the Roberts' wills were so overborne that they did not act independently and voluntarily"[82].  I agree with the joint reasons, in their criticism of this crucial part of the reasoning of the Full Court[83].  To the extent that the judges in the Full Court decided the appeal by reference to the foregoing criterion, they erred in law.

    [82]C G Berbatis Holdings Pty Ltd v Australian Competition and Consumer Commission (2001) 185 ALR 555 at 571 [81].

    [83]The joint reasons at [35]-[36].

79. As the joint reasons point out, the question of whether the will of the party was overborne, so that it cannot be said that that party acted voluntarily, is a consideration relevant to the doctrine of common law duress[84].  Nascent in the case law is the development of principles of economic duress[85], upon which the parties did not seek to rely in this case.  The quality of the consent (or assent) of the weaker party and the extent to which it acted independently and voluntarily is also relevant to the equitable principles of undue influence[86]. While circumstances involving those "unwritten law" doctrines may fall within the scope of s 51AA, the criterion of the section is not so narrowly confined. Before this Court, the respondents did not submit otherwise.

    [84]The joint reasons at [36].

    [85]Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 46 per McHugh JA; cf Equiticorp Finance Ltd (In Liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 107. See also Parras Holdings Pty Ltd v Commonwealth Bank of Australia unreported, Federal Court of Australia, 24 October 1997 at 99, 127-129 per Davies J; Clough, "Trends in the Law of Unconscionability", (1999) 18 Australian Bar Review 34 at 46-49.

    [86]Amadio (1983) 151 CLR 447 at 461 per Mason J, 474 per Deane J.

80. In cases where unconscionable dealing is relied upon, equity will provide relief where, even if the act of the weaker party is independent and voluntary, it "is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position"[87].  The demonstrated error of the Full Court therefore requires that the appeal of the ACCC to this Court must be upheld unless this Court concludes, on its own review of the facts and of the applicable law, that the same result follows as favoured by the Full Court.  In my opinion, the conclusion of the primary judge should be restored.

    [87]Amadio (1983) 151 CLR 447 at 461 per Mason J; see also at 474 per Deane J.

    Reasons for restoring the decision at trial

81. Advantages of the primary judge and appellate restraint:  Many serious mistakes and injustices arise in factual determinations at trial.  Depending upon the applicable legislation, an appellate court normally has power to correct such errors[88].  The Full Court had such power[89].  However, such correction is subject to well-established constraints.  These include the restrictions that arise from credibility findings[90].  They also include those that derive from the advantages that the trial judge has in considering all the facts disclosed by the evidence[91].  Appellate courts normally only perceive the evidence through the "telescoped" procedures that are available to, or feasible for, them. 

    [88]I agree in this respect with the observations of Callinan J at [167].

    [89]Federal Court of Australia Act 1976 (Cth), s 27.

    [90]Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179; Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479, 483.

    [91]State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306 at 330 [89]-[90]; 160 ALR 588 at 619. See also Housen v Nikolaisen (2002) 211 DLR (4th) 577 at 586 [14].

82. The decision of the primary judge in the present case was not strictly a discretionary one, so far at least as it concerned whether the conduct of the respondents was "unconscionable"[92].  Yet it undoubtedly involved elements of evaluation and assessment, as the primary judge himself recognised[93].  It involved the application to a mass of evidence of a legal standard expressed in broad statutory language and of decisional law calling forth a judicial response that is partly analytical and partly intuitive.  In the nature of things, it is difficult for appellate courts to replicate exactly the advantages of the primary judge in making such decisions.  These are not reasons for neglecting the appellate function.  However, they are reasons for exercising a degree of restraint when asked, on the basis of the written record, to review a conclusion about unconscionable dealing reached at trial.

    [92]Issues of discretion arose in the provision of relief under the Act.

    [93]Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2000) ATPR ¶41-778 ("Berbatis") at 41,197 [124].

83. The primary judge's reasons represent the best expression in words of the overall conclusion that the judge has reached, based on a consideration of all the evidence and the consequent findings and inferences of fact[94].  Considerable caution should be observed in disturbing such an opinion given the significant advantages enjoyed by the primary judge in the evaluation and characterisation of the facts.  One reason for disturbing such conclusions would be if it were shown that the primary judge had applied an incorrect legal criterion[95], as the Full Court did in the present appeal.  However, no such error of legal principle has been demonstrated on the part of the primary judge to authorise the reversal of his ultimate conclusions on that ground. 

    [94]cf Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 77 ALJR 398 at 417 [97]; 194 ALR 485 at 510 referring to Biogen Inc v Medeva plc [1997] RPC 1 at 45 per Lord Hoffmann.

    [95]Housen v Nikolaisen (2002) 211 DLR (4th) 577 at 594 [33].

84. Special considerations of the Roberts:  Essential to equitable relief under the principles of unconscionable dealing (as explained by this Court's decisions in cases such as Blomley and Amadio) is a demonstration that the weaker party was subject to a disadvantage which was in some way "special".  In this Court, as in the Full Court, the finding of the primary judge that the Roberts were suffering from such a special disadvantage has been criticised.  In my view, his Honour's conclusion was open on the basis of the evidence that he accepted.

85. The primary judge specifically addressed his attention to the rejection of the notion that the presence of an inequality in bargaining power between the parties, or the striking of a hard bargain from the perspective of the weaker party, would, in itself, justify the conclusion of unconscionable conduct on the part of the stronger party[96].  That rejection was correct.  The reasons for it are clear.  Many transactions involve a disparity in bargaining power.  Further, courts are not always well placed to determine whether, in all the circumstances, a bargain that was struck was fair or hard as between the transacting parties.  To do this would involve the re-examination of many transactions and a risk that courts would usurp the economic freedom of individuals normally to decide for themselves the transactions that they would, and would not, agree to.

    [96]Amadio (1983) 151 CLR 447 at 462 per Mason J.

86. Conscious of such considerations, the primary judge recognised that "circumstances of inequality do not of themselves necessarily call for the intervention of equity"[97].  His Honour also pointed out that "the requisite disadvantage will not necessarily be found in the normal run of bargaining inequality between large landlords and small tenants"[98].  In addition, his Honour had earlier observed, correctly in my view[99]:

    "The elements of inequality, disadvantage or disability on the one hand and the unfair conduct of the stronger party taking advantage of them on the other are not … to be weighed up as though independent.  It is conduct in context which has to be judged.  A party may take advantage of the disadvantage of another without necessarily acting unfairly or so unfairly, having regard to the nature of the disadvantage, that equity would intervene.  Where the disadvantage or inequality is great it may take less to discern unconscientious exploitation of it than in a situation involving less disadvantage or inequality."

    [97]Berbatis (2000) ATPR ¶41-778 at 41,195 [117].

    [98]Berbatis (2000) ATPR ¶41-778 at 41,197 [123].

    [99]Berbatis (2000) ATPR ¶41-778 at 41,196 [118].

87. The primary judge held that the special disadvantage of the Roberts was of a "situational" rather than "constitutional" nature.  It arose out of the "legal and commercial circumstances in which they found themselves", rather than from some inherent weakness or infirmity on their part[100].  That disadvantage, and the resulting effect on their ability properly to assess and evaluate their options and interests, "was not able to be mitigated by the fact of legal representation which they had available to them at all material times"[101].  It was in light of the Roberts' need to maintain the value of their business (in order to proceed with an imminent sale of that business) that the conduct of the owners and their insistence on the inclusion of a release clause was judged to be unconscionable.

    [100]Berbatis (2000) ATPR ¶41-778 at 41,197 [122].

    [101]Berbatis (2000) ATPR ¶41-778 at 41,197 [122].

88. It is true that the respondent owners of the shopping centre were not obliged to extend the Roberts' lease in such a way as to protect their goodwill and thus afford the Roberts a sellable business.  However, this fact masks the realities of the economic and litigious positions in which the Roberts and the owners respectively found themselves.  I agree with the primary judge that, for the purposes of the section, generalisations about the relationship of landlord and tenant are not helpful[102].  It is the particular circumstances of the relationship and conduct in question that need to be examined.  In the present case the owners were already faced with a shopping centre that had a number of empty shops.  They knew that the Roberts were good tenants and that their proposed assignee was an objectively acceptable, indeed desirable, tenant.  Thus, it was in the interests of the owners and agents to extend the lease and facilitate the sale of the Roberts' business.

    [102]Berbatis (2000) ATPR ¶41-778 at 41,196 [119].

89. The original litigation between the tenants and the owners was brought on behalf of a number of the tenants in the shopping centre due to their concern about alleged overcharging by the owners and their agents.  That litigation would not disappear because of any dealings the owners had with the Roberts.  The owners and their agents were also concerned about possible commercial damage to their business because of media attention to the subject matter of the dispute between the shopping centre and the tenants, including the Roberts. 

144. Mrs Roberts felt that she had "little option" but to sign the deed because her lease was shortly due to expire, there was "no prospect of renewal", and "without [a new lease] she would have no business to sell".  She therefore believed that she had no choice but to sign the deed as it was, and was "extremely upset and angry" that the agents and respondent owners had, in her view, "put her in a situation where she had no choice but to give up her legal rights".  She raised her concerns with Mr Wilson and Ms Clapp who offered to bring the matter to the respondent owners' attention again, but this would have meant that settlement would not be able to be effected on the due date.  Mrs Roberts said that she wanted the settlement to proceed because "she could not afford to have the sale of the business fail again".  She signed a deed (which contained the mutual release) on Monday 2 December 1996 and the settlement of the sale took place on the same day.

145. Less than a fortnight later the Tribunal decided in part in one tenant's favour, against the respondent owners.  Both parties appealed to the District Court. 

146. On 22 January 1997, senior counsel's advice was obtained by the tenants' solicitor.  It was that the respondent owners' appeal on the test case was likely to succeed to a considerable extent, but that there was a prospect that at least part of the tenants' original claims would succeed.  On the basis of that advice, the tenants agreed that the respondent owners' appeal be allowed.  The tenants commenced fresh proceedings however in the Supreme Court.  In breach of their obligations under the mutual release Mr and Mrs Roberts took no steps to discontinue their claims.

147. The Supreme Court proceedings were resolved in November 1998 by a compromise, which, had Mr and Mrs Roberts participated in it, would have yielded them a refund of about $2,800.

     The application to the Federal Court

148. On 3 April 1998 the appellant in exercise of the powers conferred on it, by for example ss 80 and 87 of the Act, instituted proceedings in the Federal Court for (inter alia) contravention of ss 51AA and 52 of the Act in respect of the respondents' dealings with several of the tenants including Mr and Mrs Roberts. The contraventions of s 51AA were said to be the conduct of the respondent owners in relation to the renewal or assignment of the leases of premises at the Centre in imposing the mutual release upon the tenants.

149. The matter came on for hearing before French J.  His Honour found for the appellant and made these declarations on 26 September 2000[159]:

     "1. It is hereby declared that in May 1996 and October 1996 the First, Second and Third Respondents, engaged in conduct that was unconscionable within the meaning of the unwritten law from time to time of the States and Territories, in contravention of s 51AA of the Trade Practices Act 1974, in that the said Respondents required, as a condition of the grant of a new lease to Margaret Joan Roberts and James Arthur Roberts, as Trustees of the Roberts Family Trust, trading as Leeming Fish Supply at Shop 14, Farrington Fayre Shopping Centre, that the Roberts do release the First to Fourth Respondents from various claims arising under their existing lease.

     2. It is hereby declared that in May 1996 and October 1996 the Fourth, Fifth and Sixth Respondents were directly or indirectly knowingly concerned in or party to conduct in trade or commerce that was unconscionable within the meaning of the unwritten law from time to time of the States and Territories, in contravention of s 51AA of the Trade Practices Act 1974, in that the said Respondents required, as a condition of the grant of a new lease to Margaret Joan Roberts and James Arthur Roberts, as Trustees of the Roberts Family Trust, trading as Leeming Fish Supply at Shop 14, Farrington Fayre Shopping Centre, that the Roberts do release the First to Fourth Respondents from various claims arising under their existing lease.

     3. It is hereby declared that the Seventh Respondent, in October 1996 and the Eighth Respondent in May 1996 and October 1996, acting as agent for or on behalf of the owners of Farrington Fayre, were directly or indirectly knowingly concerned in or party to conduct in trade or commerce that was unconscionable with[in] the meaning of the unwritten law, from time to time of the States and Territories, in contravention of s 51AA of the Trade Practices Act 1974, in requiring, as a condition of the grant of a new lease to Margaret Joan Roberts and James Arthur Roberts, as Trustees of the Roberts Family Trust, trading as Leeming Fish Supply at Shop 14, Farrington Fayre Shopping Centre, that the Roberts do release the First to Fourth Respondents from various claims arising under their existing lease."

     [159](2000) ATPR ¶41-778 at 41,199-41,200.

150. His Honour made these findings in favour of Mr and Mrs Roberts[160]:

     "In order to address the question whether the owners contravened s 51AA in their dealings with the Roberts it is convenient first to consider whether there was a relationship of disadvantage, disability or inequality between the two parties.

     The Roberts as lessees of Shop 14 operated a small business, the Leeming Fish Supply, the value of which to any prospective purchaser was critically dependent upon the length and security of the tenure of the premises which the Roberts could convey to that purchaser at settlement.  At the time that they first negotiated with Mr Holland between March and May 1996, they had less than twelve months of their lease to run.  A mere assignment of the balance of the term, to which they were entitled by virtue of the provisions of the Commercial Tenancy Act, could not secure for Mr Holland a tenancy of the length necessary to make his investment worthwhile.  So the sale of the business was dependent upon the owners' willingness to grant a new lease.  They were under no obligation to do so.  Neither the Roberts nor Mr Holland were actually or potentially large tenants.  They were actual and prospective small business operators.  The Roberts, in particular, had little bargaining power when it came to dealing with the owners.  There was a marked inequality of bargaining power between them.  The Roberts suffered what might be called a 'situational' as distinct from a 'constitutional' disadvantage.  That is to say it did not stem from any inherent infirmity or weakness or deficiency.  It arose out of the intersection of the legal and commercial circumstances in which they found themselves.  That disadvantage, not being constitutional in character, was not able to be mitigated by the fact of legal representation which they had available to them at all material times.

     The use of the word 'special' to describe the class of disadvantage or disability which will attract the application of the doctrines of equity is not to be treated as one would treat the word in a statute.  It indicates that the requisite disadvantage will not necessarily be found in the normal run of bargaining inequality between large landlords and small tenants.  In my opinion, however, the circumstances in which a business operator on a lease may effectively lose the value of that business upon expiry of the lease does place the tenant at a special disadvantage in dealing with the owner.  This does not import any obligation on an owner to renew a lease which has expired.  The question is whether the owner has unfairly exploited the tenant's disadvantage in a way that equity would regard as unconscionable.  Unfair exploitation of disadvantage amounting to unconscionable conduct may occur when an owner uses its bargaining power to extract a concession from the tenant that is commercially irrelevant to the terms and conditions of any proposed new lease.

     This is an area of evaluation and assessment where there are few hard and fast guides. In my opinion for the owners to insist, as they did through Mr Sullivan in this case, upon the Roberts abandoning their rights to proceed with bona fide litigation in relation to their rights under their existing lease was to engage in unconscionable conduct. The claims that they, in common with other tenants, were raising against the owners were bona fide and serious. They were taken seriously by both the tenants and by the owners. This conclusion would not prevent an owner from insisting as a condition of the renewal of a lease that a tenant not engage in frivolous or vexatious litigation against the owner. Nor would it prevent an owner from simply refusing to renew a lease in favour of a tenant with whom that owner was engaged in litigation. Each case must be considered according to its own circumstances. The personal circumstances of the Roberts are also relevant in so far as they were known to the owners or their agents. In particular, Mrs Roberts had spoken to Ms Clapp on numerous occasions over the years about her daughter's condition and the consequent emotional strain placed on herself and her husband. Quite apart from that circumstance, in my opinion, the present case insofar as it involves the Roberts, discloses unconscionable conduct on the part of the owners on the two occasions in May 1996 and November 1996 in which they insisted upon the execution of a release clause by the Roberts as a condition of the grant of a new lease and assignment thereof to Mr Holland. It is of no consequence, in my opinion, that the detriment suffered by the Roberts may have been small in money terms. The way in which the owners acted, through their agent Mr Sullivan and his company, was a grossly unfair exploitation of the particular vulnerability of the Roberts in relation to the sale of their business. Whether or not they all had personal knowledge of the circumstances of the Roberts, they were fixed with such knowledge through that of Brian Sullivan and his company. The corporate respondents were therefore in contravention of s 51AA and the natural respondents knowingly involved in that contravention."

     [160](2000) ATPR ¶41-778 at 41,196-41,197 [121]-[124].

151. Subsequently, on 20 December 2000 his Honour made orders on the application of the appellant for the "re-education" of the respondent natural persons (the fourth, fifth, sixth and eighth respondents) as follows, that they:

     "(a)within four months from the date of this order, at their own cost, arrange and/or attend a Trade Practices Compliance Seminar ('the Seminar');

     (i)conducted by a trade practices law specialist in the terms of the Seminar outline annexed; and

     (ii)which addresses the unconscionable conduct provisions of the Act and, in particular, section 51AA; and

     (b)within one week of attending the Seminar, notify the [appellant] of that attendance."

     The outline to which his Honour referred in the orders is as follows:

     "1.       Introduction

     Overview of principles of unconscionable conduct.

     2.The Trade Practices Act

     Unconscionable conduct and the Trade Practices Act

     (i)Overview of Part IVA

     (ii)Section 51AA

     -    special disability or situation of disadvantage

     -    unfair advantage of superior bargaining position

     3.Business principles

     (a)High risk situations:

     (i)where weaker party did not fully understand transaction;

     (ii)where there is no real opportunity for the weaker party to bargain;

     (iii)where a contract is one-sided;

     (iv)excessive terms and prices;

     (v)using a position of power to impose unreasonable conditions

     (b)      Dispute avoidance and resolution".

152. The primary judge dismissed the appellant's claim that the respondents had engaged in deceptive conduct contrary to s 52 of the Act and also the appellant's claims in respect of tenants other than Mr and Mrs Roberts.

     The appeal to the Full Court of the Federal Court

153. The respondents appealed to the Full Court of the Federal Court[161] (Hill, Tamberlin and Emmett JJ).  A cross-appeal (with which this Court is not concerned) was also filed and argued by the appellant.

     [161](2001) 185 ALR 555.

154. There was no dispute between the parties in the Full Court as to the relevant principles.  All accepted that it was necessary to demonstrate that Mr and Mrs Roberts were under a "special" disadvantage in their dealings with the respondents in connexion with proposals for the renewal or extension of their lease in accordance with the reasoning of this Court in Commercial Bank of Australia Ltd v Amadio[162]. The dispute on appeal was whether the circumstances of the parties and Mr and Mrs Roberts were such that the conclusion should be drawn that the latter truly were at a relevant special disadvantage so as to attract the protection of s 51AA of the Act.

     [162](1983) 151 CLR 447.

155. In a unanimous judgment the Full Court pointed out that this was not a case in which there was any expectation engendered in Mr and Mrs Roberts that they would be granted an unconditional fresh lease:  even though Mrs Roberts had given evidence that she had been given an assurance to that effect, the primary judge had made an express finding that he could not be satisfied that such an unequivocal and groundless statement had been made.  Their Honours in allowing the respondents' appeal said[163]:

     "By offering terms upon which a renewal or extension of the lease could be granted, the Roberts were, in effect, thrown a lifeline.  Whether they were better off by foregoing their claims and accepting that lifeline than if the lifeline had not been offered to them may be a matter of judgment for them to make.  Clearly, their judgment was that they were better off by accepting the lifeline.  It would be curious, therefore, to characterise the conduct that led to that result as unconscionable. 

     A distinction can be drawn between parties who adopt an opportunistic approach to strike a hard bargain and parties who act unconscionably[164].  It cannot be said that the Roberts' wills were so overborne that they did not act independently and voluntarily.  Unfortunately for the Roberts, the owners were under no obligation to renew or extend their lease.  The Roberts had the choice of either maintaining their legal claims against the owners and losing the opportunity to sell their business or abandoning their claims and gaining the opportunity to sell their business.  They made that choice of abandoning their claims.  That may have been a hard bargain, but it was not an unconscionable one.

     It is inappropriate to characterise the detriment that a tenant has by reason of the imminent expiration of a lease as a special disadvantage. His Honour appears to have accepted that proposition. His Honour erred, however, in concluding that the Roberts were under a special disadvantage such that the arrangements that they entered into in December 1996, with proper legal advice, were unconscionable. It follows that there was no contravention of s 51AA in relation to the conduct of the owners from October to December 1996.

     Since the bargain that was struck between the Roberts and the owners in December 1996 was not unconscionable, it follows, a fortiori, that nothing that was done in May by the owners could be characterised as unconscionable.  Equity is concerned with a remedy where a transaction has been entered into against good conscience or which is unconscientious.  No transaction was entered into in May.  There could be no conduct that could be characterised as unconscionable under the unwritten law."

     [163](2001) 185 ALR 555 at 571 [80]-[83].

     [164]See Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2000) ATPR ¶41-791 at 41,403 [99].

     The appeal to this Court

156. It is convenient first to set out s 51AA(1) of the Act:

     "51AA Unconscionable conduct within the meaning of the unwritten law of the States and Territories

     (1)A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories."

157. Section 51AA, together with ss 51AB and 51AC, is contained in Pt IVA of the Act. Part IVA was inserted in 1992 and s 51AC was added in 1998.

158. The explanatory memorandum that was promulgated with the Bill for the Act to insert Pt IVA said this of s 51AA:

     "The provision embodies the equitable concept of unconscionable conduct as recognised by the High Court in Blomley v Ryan[165] and Commercial Bank of Australia v Amadio[166]. ...

     The advantages of providing a statutory prohibition for conduct which is already dealt with by equity lie in the availability of remedies under the Principal Act, the potential involvement of the Commission including the possibility of representative actions, and the educative and deterrent effect of a legislative prohibition in the Principal Act.

     ... Because of the position of the High Court of Australia as the ultimate appellate court for all States and Territories, the 'unwritten law' of the States and Territories is the same. If a court in a State or Territory were thought to deviate from the principles recognised by the High Court, another court exercising its jurisdiction in relation to section 51AA would not be bound to follow that deviation, unless it was satisfied that to do so was consistent (or at least not inconsistent) with the law as recognised by the High Court from time to time."

     [165](1956) 99 CLR 362.

     [166](1983) 151 CLR 447.

159. The appellant submitted that unconscionable conduct for the purposes of s 51AA of the Act might arguably fall into any one of four categories:

     "(a)the discrete doctrine of unconscionable dealing resulting from the knowing exploitation by one party of the special disadvantage of another;

     (b)all specific equitable doctrines, including estoppel, unilateral mistake, relief against forfeiture and undue influence, which are united by the underlying notion of 'unconscionability';

     (c)the doctrine of unjust enrichment in addition to all the specific equitable doctrines referred to in (b) above; and

     (d)any conduct which is contrary to 'conscience' in its ordinary meaning."

160. As will appear, no wide-ranging consideration of what conduct may constitute unconscionable conduct within the "unwritten law", or of the correctness or otherwise of the appellant's attempted categorisation of it in those four last paragraphs is necessary in this case.

     The appellant's principal submissions

161. This case, the appellant submitted, was concerned with unconscionable conduct involving the unconscionable exploitation by one person of the serious disadvantage of another to secure the disposition of property, or the assumption of contractual or other obligations by the weaker party.

162. At the outset however the appellant sought to characterize the primary judge's decision as an exercise of a discretion, and accordingly not open to interference except upon narrow grounds[167] of a kind which were not available here.  The primary judge, the appellant claimed, made detailed findings in respect of all facets of the case, including the litigation undertaken by the tenants against the respondent owners, the general strategy adopted by the respondent owners of tying new leases to the abandonment by the tenants of existing litigation, and the circumstances of Mr and Mrs Roberts' sale of the business.  Only after considering those matters did the primary judge exercise such discretion as he identified as being available to him on the basis of a disciplined application of existing equitable principles.

     [167]House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ; Lovell v Lovell (1950) 81 CLR 513 at 533 per Kitto J; Singer v Berghouse (1994) 181 CLR 201 at 212 per Mason CJ, Deane and McHugh JJ; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 549 per Toohey and Gummow JJ, 569 per Kirby J.

163. The careful exercise of discretion, the appellant submitted, is apparent in the primary judge's conclusion that the respondent owners had engaged in unconscionable conduct in respect of Mr and Mrs Roberts, but had not engaged in unconscionable conduct in respect of the other two tenants whose cases were before him.  In so exercising his discretion, the primary judge enjoyed the advantages that are inevitably associated with his position as the first instance judge including the benefit of exposure to the nuances of the evidence and the atmosphere at trial.  The Full Court should therefore not have substituted its own discretionary analysis for that of the primary judge.  The consequences of its doing so were particularly significant in view of the nature of the law under consideration of equitable principles of conscience.

164. The submission continued, that by enacting s 51AA, which expressly locates the notion of conscience in the arena of trade and commerce, the legislature on behalf of the Australian community has clearly signalled its view as to the appropriateness of applying equitable concepts in the commercial world: the courts have a clear obligation to apply s 51AA so as to give proper effect to the section in trade and commerce.

165. Equitable jurisdiction, the appellant accepted, however, is to be exercised according to recognised principles.  Courts are not armed with a general power to set aside bargains simply because in the eye of a particular judge, they might appear to be unfair, harsh or unconscionable.  The primary judge's careful evaluation of the facts and application of relevant principles to those facts show that he was aware of, and appreciated this proposition.

166. Nonetheless the appellant did not seek the intervention of this Court on any different basis from the one upon which it relied in the Federal Court at both levels, that Mr and Mrs Roberts were at a special disadvantage, as the trial judge found, and of a kind to which Amadio[168] applied.

     [168](1983) 151 CLR 447.

     The appellant's submissions should be rejected

167. The appellant's submission that the primary judge's decision was wholly or substantially a discretionary one should be rejected. The language of s 51AA does not support it. Nor does the concept of unconscionability under the unwritten law support such a proposition. The manner in which the test of unconscionability in relevant aspects is generally stated[169] or as discussed in Amadio does not presuppose the exercise of a discretion.  Practically, indeed perhaps every judgment of a trial judge requires an evaluation of facts, but the evaluation is a different and subsequent process from the finding of the facts.  An evaluation of facts found is precisely one of the exercises which an appellate court is obliged, when an unrestricted right of appeal is available, to undertake.

     [169]Blomley v Ryan (1956) 99 CLR 362 at 405 per Fullagar J, 415 per Kitto J; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461 per Mason J; Louth v Diprose (1992) 175 CLR 621 at 637 per Deane J.

168. In this case, the evaluation of the facts by the Full Court is to be preferred to that of the primary judge.  The respondent owners were under no obligation to grant Mr and Mrs Roberts a new lease although they were under a statutory obligation (which they acknowledged at all material times) to consent to an assignment to a responsible new tenant[170].  Furthermore, Mr and Mrs Roberts had their opportunities, either to take up a new lease or to seek to enforce what they contended to be a concluded agreement to grant a new lease[171]. 

     [170]Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 10.

     [171]cf Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623.

169. The facts of this case may be contrasted with those of Bond Brewing (NSW) Pty Ltd v Reffell Party Ice Supplies Pty Ltd[172] in which there was no appeal.  That was one of a very large number of cases in which there had been a consistent course of dealings by a brewer landlord with respect to extensions and assignments of unwritten tenancy agreements of hotels, and payments by way of goodwill from time to time.  It was also a case in which the Court was prepared to hold that the evidence went so far as to establish an estoppel against the owner[173]. 

     [172]Unreported, Supreme Court of New South Wales, 17 August 1987.

     [173]Unreported, Supreme Court of New South Wales, 17 August 1987 at 35, 43-45.

170. The Full Court did not err in taking the view that the only matters which the evidence established as giving rise to any operative "special disadvantage" were those common to any tenant in similar circumstances.  A person obligated under one contract, containing, as with most contracts, temporal limitations as to its operation, is under no obligation to extend or renew the operation of that contract.  This is particularly so in the case of leases in respect of which the most naïve of tenants is likely to understand the need for, and accordingly the necessity to obtain at the outset, an option to renew, or, in this case a further option to renew.  Such are the utility and flexibility, and therefore the value of options, they are something to be bargained for, and accordingly their presence or absence from the instrument of lease may well be reflected in the quantum of the rent payable during the term. 

171. The appellant submitted that the Full Court erred at law in concluding that unconscionable conduct will generally only be found in equity and for the purposes of the section, where the weaker party's will is so overborne as to prevent that party from acting independently and voluntarily.  I do not myself read the reasons of the Full Court as conveying that view.  What the Court was saying was that whether a person's will had in fact been overborne was a relevant, but not necessarily an essential element in many cases of unconscionability, a proposition which the respondents do not contest.  Here, the Full Court held that the evidence showed that Mr and Mrs Roberts were not overborne.  They may have been at a commercial disadvantage.  That disadvantage resulted from a number of factors, some, if not all of them of their own making, for example:  their taking of a lease without a [further] option; their delay in seeking a fresh lease; their failure to seek to enforce what they contended to be a concluded agreement, or to accept in a timely way an unqualified offer of a fresh term; and, their desire to negotiate a different rent from the rent proposed by the respondent owners. 

172. The appellant seeks to maintain the primary judge's holding that unfair exploitation of disadvantage amounting to unconscionable conduct may occur when an owner uses its bargaining power to "extract a concession" from the tenant that is commercially irrelevant to the terms and conditions of any proposed new lease.  The appellant when challenged was unable to point to any authority for such an expansive principle.  It is far too broad and imprecise to be accepted in this Court. 

173. But in any event the facts of this case do not fall within a principle expressed even in those wide terms.  To describe the promise to withdraw from the litigation in the Tribunal as a "concession" is to misdescribe it.  Mr and Mrs Roberts had a choice.  It was a commercial choice with respect to which they had to make, and did make a judgment.  Which was worth more, either in money or certainty:  the pursuit of litigation which might or might not involve an appeal, and the quantum of which could be (and did turn out to be) a few thousand dollars only; or a new lease which the respondent owners could not be obliged to grant, but which, if granted, would enable a prompt sale for tens of thousands of dollars to be effected?  The word "extract" as used by the primary judge has overtones of coercion.  For the respondent owners to seek the best commercial outcome for themselves when they were under no legal obligation to act otherwise, is hardly "to extract a concession".  The evidence shows in fact that the respondent owners too had a choice to make between competing commercial considerations of, for example, keeping Mr and Mrs Roberts as tenants, or obtaining another responsible tenant such as Mr Holland, preserving their public image as non-oppressive landlords, fostering the goodwill of their tenants generally, and ridding themselves of irritating and no doubt expensive litigation when the opportunity to do so arose.  The choice they too made was a commercial one.  They used an entirely unexceptional and unexceptionable right that they had to grant or withhold a new lease upon a condition that enabled them to rid themselves of troublesome litigation.

174. Nor can it be said in my opinion that the "mutual release" was commercially irrelevant to the new lease.  The primary judge spoke of commercial irrelevance as if it were a readily identifiable touchstone.  With respect I very much doubt this.  Perhaps anything arising between parties in negotiation that has a monetary significance, whether direct or indirect, is of commercial relevance, even assuming, which I am not at this stage prepared to do, that the seeming or actual commercial irrelevance of a condition or requirement by one arms length party of another, will render the former's conduct unconscionable.

175. The appellant submitted that either uncontradicted evidence concerning, or findings with respect to four matters had such significance that a finding of unconscionability was justified, and should not have been disturbed by the Full Court.  The four significant matters were said to be the respondents' anxiety to renew the tenancies, the concern that the respondent owners held about their relationship with the tenants generally, their concerns about the litigation against them in the Tribunal, and the use of their leverage of the potential to grant a fresh lease to obtain what was asserted to be an unrelated and undeserved gain.

176. This submission is in substance met by what I have so far said.  But, in addition, the expression "unrelated and undeserved gain" is inaccurate.  It immediately raises the question of what might be a deserved gain.  Nowhere does the appellant in its submissions even attempt to define the nature of such a gain.  It seems to me that it is perfectly open however to describe the withdrawal from litigation as part of the price of the grant of a new lease which an owner was in no way obliged to grant, as a not unreasonable quid pro quo.  Whenever parties are in a business relationship with each other and they fall out over an aspect of that relationship, it will generally not be unreasonable or indeed unconscionable for them to seek to insist upon their legal rights, or to require that one party give up some right in exchange for the conferral of a new right upon that party. 

177. I cannot help observing before leaving this submission that insufficient regard seems to have been given at first instance to the respective rights involved.  I earlier described Mr and Mrs Roberts' claim at the Tribunal as uncertain as to both outcome and quantum.  It certainly appears that the claim as formulated was overly ambitious and also raised the spectre of litigation which, including appeals, might in the end not necessarily have been to the nett financial benefit of Mr and Mrs Roberts.  Whilst the claim of Mr and Mrs Roberts was on foot it provided them with a "bargaining chip" in their negotiations for a fresh lease, and little more than that.  I do not think that it could even be fairly said that Mr and Mrs Roberts were exposed to the "rough edge"[174] of their contract with the respondent owners.

     [174]See Bridge v Campbell Discount Co Ltd [1962] AC 600 at 626 per Lord Radcliffe.

178. The appellant sought to describe the litigation in which Mr and Mrs Roberts were participating as "bona fide and serious litigation" as opposed to trivial or vexatious litigation. Experience tells that the outcome of much litigation is unpredictable. It was for these reasons no doubt that the respondent owners were advised by their lawyers of the possibility that their conduct might conceivably offend s 51AA of the Act, a matter incidentally relied upon by the appellant but which in my opinion has nothing relevant to say about the quality of their conduct in this case. Prudent business people will always seek legal advice, and the best lawyers will give it conservatively with a careful eye to the uncertainties, and desirability of the avoidance of litigation.

179. The appellant contended that the Full Court had misconstrued s 51AA of the Act. In doing so it inaccurately attributed to the Court a holding that in no circumstances of dealings between an owner and a lessee upon the expiry of the lease, could there be unconscionable conduct on the part of the landlord. What the Full Court held, and correctly so, is that there is nothing special about a situation in which a tenant without an option is anxious to obtain a fresh lease, and the landlord, conscious of that anxiety, utilizes it to obtain a business advantage, whether by way of a higher rent or otherwise.

180. The Full Court did not rule out the application of s 51AA to the granting of leases in trade and commerce. Their Honours were applying themselves to the facts before them, and on those facts differed, as I think they were bound to do, from the conclusion of the trial judge.

181. It is possible to dispose of this case on its own facts. The appeal does not provide the occasion, as indeed the appellant ultimately conceded, for a complete exposition of the meaning and operation of s 51AA of the Act or the current law of unconscionability.

182. The case and the appeal in the Federal Court were conducted upon the complete basis that Mr and Mrs Roberts' situation, and the respondent owners' conduct were governed by the statements of Mason J in Amadio[175].  There his Honour first referred to statements by Fullagar J and Kitto J in Blomley v Ryan[176] respectively.  In that case the former had said:

     "The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified.  Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary.  The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other."

     [175](1983) 151 CLR 447 at 462.

     [176](1956) 99 CLR 362 at 405 per Fullagar J, 415 per Kitto J.

183. Kitto J also referred to illness, but added ignorance and financial need or other circumstances affecting a person's ability to conserve his own interests as relevant.

184. It is important to note that although their Honours expressed themselves very broadly in the passages to which I have referred, I do not understand that the presence of one or more of the factors which they mentioned necessarily dictated that in every such case unconscionability should be found.  Take for example Kitto J's reference to "circumstances affect[ing a person's] ability to conserve his own interests".  Use of the word "conserve" suggests the maintenance of a pre-existing or current right or interest.  Two circumstances which almost always will have the capacity to affect a person's ability to protect or further his or her own interests, are the financial capacity of that person, and its relativity to the financial capacity of a person with a competing interest.  Mason J was conscious of this in Amadio, and accordingly qualified the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever, and because there is some difference, even substantial, in the bargaining power of the parties.  His Honour also obviously thought it necessary to emphasize that the relevant conditions or circumstances calling for the application of the doctrine be ones which seriously affect the ability of an innocent party to make the judgment as to his or her own best interests, when the other party knows, or ought to know of that condition or circumstance, and its effect on the innocent party.

185. The appellant's attempt to bring Mr and Mrs Roberts and the relevant circumstances within the principle stated by Mason J, fails.  There was no circumstance seriously affecting the ability of Mr and Mrs Roberts to make a judgment as to where their best interests lay.  They recognised and understood what was in their best interests, and acted accordingly by undertaking to withdraw from the proceedings in the Tribunal and by taking up the opportunity of obtaining a fresh lease.  It is difficult to see how any prudent choice could be otherwise, even assuming that their daughter's illness, and their concern about it, were personal circumstances which were relevant and capable of giving rise to a special disadvantage, here, again a proposition which I seriously doubt. 

186. What I have said is sufficient to dispose of the appeal. There are only two other matters to which I should however refer. The first is that the Act does make separate and explicit provision for the unlawful taking of advantage of a substantial degree of power in a market, by, for example s 46. There is no necessity to explore the ambit of that section in this case or its relationship with s 51AA. It is sufficient to point out that its presence may serve to indicate the, or some circumstances in which the use of a superior bargaining position may be relevant. Nor is it necessary in this case to seek to resolve the difficulties bound to arise in applying s 51AA of the Act, and therefore principles relating to unconscionability, to trade and commerce generally, in which the bargaining position, because of superior resources, skill, judgment, timing or indeed simply luck on one side, of the parties is rarely likely to be equal.

187. The second matter is the nature of the orders which were made by the primary judge after his Honour made the declarations that the respondents had infringed s 51AA of the Act. The orders which I have earlier set out were that the fourth, fifth, sixth and eighth respondents be, in effect, "re-educated".

188. There was no argument in this Court that the orders which were made were not an exercise of federal judicial power. Nor was any attention given to the legality or practicality of their enforcement by proceedings for contempt. I will accordingly confine myself to a consideration of their appropriateness and availability on the assumption that they might properly constitutionally be made pursuant to s 87 or a combination of ss 80, 82 and 87 of the Act[177].

     [177]See eg ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 264-266 per Gummow J.

189. The conduct in question was conduct found to have occurred in relation to one tenancy only.  The effect of the conduct even on his Honour's view of it was long spent.  There was no suggestion of any repetition of it[178]. The seventh and eighth respondents no longer had any interest in the Centre, and the eighth respondent was not even currently employed in the relevant industry. The orders assumed, either that trade practices law specialists regularly conducted trade practices compliance seminars, or that it was appropriate for a trial judge to order and design a particular trade practices seminar, or to approve the appellant's proposal for one. The fact that the appellant may have issued in 1998 "A guide to unconscionable conduct in business transactions" and that in so doing it may have been acting within s 28 of the Act, could provide no basis for orders of the kind made by the primary judge here.

     [178]Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2000] FCA 1893 at [8].

190. It is unnecessary, because of the other errors identified, to give consideration to the effect (if any) that the making of those unjustified orders might have on the declarations and reasoning to support them made and given earlier by the trial judge.

191. The appeal should be dismissed.  I agree with the orders proposed by Gummow and Hayne JJ.