More at theguardian.com/australia-news/2019/sep ... -consumersNot fair? why judges have been accused of failing Australian consumers. ACCC head Rod Sims is calling for new consumer protection laws following a series of controversial court cases.
When a judge says a bank’s borrowers could afford its loans if they cut down on Wagyu beef and fine shiraz, the accusation that the judiciary is out of touch is not a hard one to make.
That was the case last month, when the federal court judge Nye Perram threw out a case brought by the Australian Securities and Investments Commission alleging irresponsible home lending by Westpac.
Consumer groups exploded, and the ruling went down badly with a regulator that had been told by the banking royal commissioner, Kenneth Hayne – himself a former high court judge – to be quicker to resort to the courts.
But it was only one of a series of cases over the past few years, dealing with everything from door-to-door vacuum cleaner salesman to health insurance, in which judges have frustrated attempts by regulators to use existing laws to protect consumers.
Now Australia’s consumer regulator has called for the law to be changed to bar companies acting unfairly towards customers, after a series of court rulings that have raised concerns judges are out of touch with community expectations.
Rod Sims, the chairman of the Australian Competition and Consumer Commission, told the Guardian a new “unfair conduct” provision should apply across the economy and replace current provisions outlawing “unconscionable conduct” – a phrase rooted in the ancient law of equity that has been criticised because it brings with it connotations of deliberate wrongdoing.
His call adds weight to similar demands from regulators, judges and consumer groups who say the way the courts interpret the existing law is too narrow.
Even when regulators do win under current laws banning unfair contracts, as the ACCC did on Wednesday in a case against the hair clinic Ashley & Martin, the most that can happen is that the arrangement in question is set aside – judges cannot levy fines for breaches.
The Kobelt case
Frustration with judges among regulators came to a head in June, when Asic lost a high court case in which it alleged a man named Lindsay Kobelt engaged in unconscionable conduct in the way he gave credit to customers of a store he ran in an Aboriginal community in remote South Australia.
The facts of the way the “book-up” scheme operated, as found by the court, seem shocking: Kobelt advanced credit to his customers in return for custody of their bank keycards and their PINs.
Most of the credit was advanced to buy cars that had often done more than 200,000 kilometres – vehicles for which Kobelt charged a hefty mark-up in return for the loan.
When the customer’s wages or Centrelink payments arrived, Kobelt or one of his employees drained the account of all or nearly all of the money.
His records of who owed what were cramped, chaotic and barely legible – so badly kept that customers would have had considerable difficulty understanding the entries.
The case divided the court four to three, with the majority ruling that it suited Kobelt’s customers to allow him to drain their bank accounts and he did not exploit them or take advantage of their lack of financial literacy.
It was as if the judges thought buying a car through book-up was “the same as buying a tub of olives at South Melbourne market”, one experienced regulator told Guardian Australia.
Consumer groups also heavily criticised the decision, with the Consumer Action Law Centre saying it showed the law was not working to protect customers and calling for the rules to be changed.
One of Victoria’s most senior judges, the president of the court of appeal, Chris Maxwell, also took aim at the decision last month, saying he would have decided the case differently.
In a speech to the legal community, Maxwell traced the history of unconscionable conduct all the way back to the courts of equity set up in the 15th century and pointed out that proving it generally relied on showing “that the stronger party had knowledge, or at least exhibited wilful ignorance, of the weaker party’s disability”.
And he drew from the dissent written by one of the three judges in the minority in the Kobelt case, James Edelman, to point out that over the past few decades parliament had repeatedly tried to expand the definition of unconscionable conduct “in continued efforts to require courts to take a less restrictive approach”.
He asked: “Are the courts still being too restrictive? Or is the problem with the standard?
“It would certainly promote better understanding by all concerned – and, it might be hoped, higher standards of conduct – if we had a prohibition on conduct which was ‘in all the circumstances unfair’,” he said.
‘Change the test’
Sims says Maxwell’s speech and Edelman’s dissent “have helped clarify my personal thinking and I think the thinking of other people in the ACCC.
“I don’t think this is a matter of criticising judges at all, I think it’s a matter of now we’ve clearly got an issue,” he says. “It’s up to the legislature to be clear about what they mean, and if what they mean is unfairness, which I think they do, then we should change the test to that.”
Judges are too out of touch and many are too old. Constantly letting violent scum and paedophiles back out on the street bears testament to that.
Maybe they should be elected and not appointed and maybe they should only have a defined term instead of sitting on the bench well into dementia.
