Commissioner for Consumer Affairs v Pitt - [2021] HCATrans 209

[2021] HCATrans 209

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A21 of 2021

B e t w e e n -
COMMISSIONER FOR CONSUMER AFFAIRS
Applicant
and
ZANE ANTHONY PITT
Respondent
Application for special leave to appeal

GAGELER J
GORDON J
STEWARD J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA BY VIDEO CONNECTION TO SYDNEY AND MELBOURNE

ON FRIDAY, 3 DECEMBER 2021, AT 1.28 PM

GAGELER J: In accordance with the protocol for remote hearings, I will announce the appearances of the parties.

MR M.J. WAIT, SC appears with MR B.L. GARNAUT for the applicant. (instructed by Crown Solicitor’s Office (SA))

MS K.E. CLARK, SC appears with MS M.L. HAMLYN for the respondent. (instructed by Brian Deegan Lawyers)

GAGELER J: Yes, Mr Wait.

MR WAIT: Thank you, your Honour. The central point upon which this application rests is that these proceedings present a suitable vehicle for the further elucidation of the principles concerning the test for statutory unconscionability that divided this Court in the matter of ASIC v Kobelt. I propose to order my submissions as follows. First, I intend to briefly outline the factual background. Second, I will seek to explain how we say the Court of Appeal fell into error in discerning the applicable standards of unconscionable conduct to be applied, pursuant to section 21 of the Australian Consumer Law from the various reasons in Kobelt. Then, I will seek to explain how the Court of Appeal fell into error in applying the relevant legal principles to the facts of the case.

If I can turn briefly to the facts. In May 2012, Mr Pitt was an experienced real estate agent. Mr Hartwig, a 70‑year old pensioner with limited education, no experience in relation to property or commercial transactions. Mr Hartwig was suffering substantial financial difficulties and he wanted to move into a retirement home and the only way that he could do so was to sell his house which was his only substantial asset. The property was subject to a mortgage, was in a state of disrepair and was valued at $260,000. On 1 June 2012, following discussions with Mr Pitt, Mr Hartwig entered into an option agreement whereby Mr Pitt obtained an option to purchase the property for $200,000 at any time until 1 June 2016.

Mr Pitt also held an option to extend that agreement for a further year. The only consideration that Mr Hartwig in fact received for entering into the option agreement was an initial fee of $250 and payment of one or two mortgage payments of $50 each. The effect of the option agreement was that Mr Hartwig was at the whim of Mr Pitt for a period of up to five years as to whether his property would be sold at the fixed price of $60,000 less than its market value, as valued in 2012.

GORDON J: Mr Wait, I understand why you are taking us through this but…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] HCATrans 209
Decision Date

CaseChat Overview and Summary

The Commissioner for Consumer Affairs (the Commissioner) brought proceedings against Pitt, alleging breaches of the *Australian Consumer Law* (ACL) in relation to the supply of goods. The dispute concerned whether Pitt had engaged in misleading or deceptive conduct and had supplied goods that were not of acceptable quality. The matter came before the High Court of Australia.

The High Court was required to determine whether Pitt's conduct in supplying the goods amounted to misleading or deceptive conduct in trade or commerce, contrary to section 18 of the ACL. It also had to consider whether the goods supplied by Pitt were of "acceptable quality" as defined by section 266 of the ACL, and if not, whether Pitt had contravened section 259 of the ACL by failing to comply with a consumer guarantee.

The Court reasoned that the question of whether conduct is misleading or deceptive is an objective one, assessed by reference to the likely effect on a relevant section of the public. It considered the representations made by Pitt and the context in which they were made, concluding that the conduct was likely to mislead consumers about the nature and quality of the goods. Regarding the acceptable quality, the Court applied the statutory definition, which includes fitness for all the purposes for which goods of that kind are commonly supplied, and acceptable in appearance and finish, free from defects, safe, and durable. The Court found that the goods failed to meet these standards.

The High Court allowed the Commissioner's appeal, finding that Pitt had contravened sections 18 and 259 of the ACL.

Orders