Australian Competition & Consumer Commission v Samton Holdings Pty Ltd

The Australian Competition and Consumer Commission brought an action against Samton Holdings Pty Ltd and several other respondents, seeking declaratory relief and other remedial orders due to alleged unconscionable conduct under section 51AA of the Trade Practices Act 1974 (Cth). The dispute arose when the first respondent, Samton Holdings, required a lessee who had failed to exercise an option to extend the lease term, to pay $70,000 for the assignment of a lease for the same extended term. The action was taken to structure the receipt of the money in such a manner that it did not constitute "key money" within the meaning of the Commercial Tenancy (Retail Shops) Agreement Act 1985 (W.A.). The court had to determine whether the conduct of the first respondent amounted to unconscionable conduct, and whether the other respondents were directly or indirectly involved in the contravention of the Act.

The court examined the nature of the conduct and concluded that although it might be considered avaricious and opportunistic, it did not reach the level of unconscionable conduct that equity would regard as unacceptable. The court noted that the failure to exercise the option within the stipulated time resulted in the dissolution of the option as a valuable asset, which is analogous to a forfeiture situation. However, the court held that the principles of relief against forfeiture had not been extended to circumstances such as the one in this case. The court suggested that a legislative adjustment might be appropriate to prevent such grave consequences for the lessee and unearned windfalls for the lessor.

The application against the first to seventh respondents was dismissed. The cross-claim of the first to seventh cross-claimants against the first and second cross-respondents was also dismissed with no order as to costs. The applicant was ordered to pay the first to seventh respondents' costs of the application.