Courts are taking a too narrow view of whether businesses are breaking the law when they do things that hurt their customers, a senior judge said last night.
Delivering the Victoria Law Foundation oration, the president of Victoria’s court of appeal, Chris Maxwell, said parliament had repeatedly tried to get judges to take a less restrictive approach to the law against unconscionable conduct.
“If that’s right, why are courts taking a restrictive approach?” he said. “Are we not recognising that parliament wants this to apply with real force?”
He suggested that it might be necessary to replace the prohibition against unconscionable conduct, which he said relied on the “powerful but elusive concept of good conscience”, with a broader law against unfair conduct.
His speech followed a decision by federal court judge Nye Perram on responsible lending in which he drew outrage from consumer groups by suggesting borrowers could cut back on wagyu beef and fine shiraz if they wanted to take out a mortgage.
Maxwell also spent much of his oration on a recent decision of the high court, Asic v Kobelt, in which it decided, by a four to three margin, that a man who ran a shop in a remote Aboriginal community did not engage in unconscionable conduct.
The shopkeeper gave his customers credit for purchases, and took their bank details and pin numbers. On pay day, he drained their accounts of most or all of their money.
Regulators and consumer groups were outraged by the decision, with the Consumer Action Law Centre saying it proved the law was “not working”.
Asked by the Guardian what would constitute unconscionable conduct given the behaviour in the Kobelt case failed to meet the test, Maxwell stopped short of criticising the high court.
“I would have had my own view,” he said.
Maxwell traced the history of the rule against unconscionable conduct back to the development of the law of equity in the 15th century.
He said last year’s banking royal commission, which heard tale after tale of customers being ripped off by financial institutions, suggested there was not much moral reasoning going on in the financial services sector.
“Equity’s moral aspirations seem to remain largely unfulfilled,” he said.
He said judges were “constantly called on to perform the role of moral arbiter”, including when sentencing criminal offenders, and seeing them do so helped the community have confidence that they were not out of touch.
“That judgment has a direct bearing on the size of the fine or more often the length of the prison term,” he said.
