Kobelt v Australian Securities and Investments Commission

The case of Kobelt v Australian Securities and Investments Commission involves the appellant, Mr Kobelt, who sells second-hand vehicles in Mintabie, South Australia, under a book-up system, where customers purchase goods on credit and repay the amount over time. The Australian Securities and Investments Commission (ASIC) brought proceedings against Mr Kobelt, alleging that he contravened consumer credit laws and engaged in unconscionable conduct. The primary judge found in ASIC’s favour, and Mr Kobelt appealed to the court.

The court was required to decide whether the primary judge was correct in finding that Mr Kobelt contravened section 29(1) of the National Consumer Credit Protection Act 2009 by engaging in credit activity without a licence. The court also needed to determine if the purchase of second-hand motor vehicles under the appellant’s book-up system fell within the terms of section 11 of the National Credit Code. Additionally, the court considered whether there was a charge for the appellant’s provision of credit within section 5(1)(c) of the National Credit Code. The court further examined whether the primary judge erred in finding that Mr Kobelt engaged in unconscionable conduct under section 12CB(1) of the Australian Securities and Investments Commission Act 2001, and if the primary judge was correct in granting an injunction against Mr Kobelt under section 12GD(1) of the ASIC Act.

The court held that the primary judge was correct in finding that Mr Kobelt contravened section 29(1) of the National Consumer Credit Protection Act by engaging in credit activity without a licence. The court found that the book-up system used by Mr Kobelt constituted credit activity, as the customers did not have immediate access to the funds used to purchase the goods. The court also held that the primary judge was incorrect in finding that Mr Kobelt engaged in unconscionable conduct. The court found that the book-up system was not predatory, and the customers understood the basic elements of the arrangement. The court further held that the primary judge erred in granting an injunction against Mr Kobelt, as the injunction included elements not part of the pleaded system.

The court ordered the appeal to be adjourned to a date and time during the week commencing 19 February 2018 to hear the parties as to final orders, including costs. The final orders will be determined after hearing from the parties.