The ACCC has today filed an appeal to the Full Federal Court against a recent first instance decision of the Court, arguing the trial judge should have found Quantum Housing Group engaged in unconscionable conduct in in its dealings with investors regarding the National Rental Affordability Scheme (NRAS) in breach of the Australian Consumer Law.
On 9 June 2020, the Federal Court found that Quantum made false or misleading representations. The Court ordered Quantum to pay $700,000 in penalties and also ordered that its sole director, Cheryl Howe, pay a penalty of $50,000 for being knowingly concerned in the conduct, and banned her from managing a corporation for three years.
Quantum and Ms Howe admitted liability and made joint submissions with the ACCC in relation to penalties and other orders. However, the trial judge was not satisfied that the admitted conduct was unconscionable. The judge reached this view because the conduct did not depend on exploiting a special disadvantage or vulnerability on the part of the investors.
“We are appealing this decision in order to seek clarity from the Full Federal Court on whether the Australian Consumer Law (ACL) requires there to be special disadvantage on the part of the target or victim of alleged unconscionable conduct for that conduct to be unconscionable in breach of the ACL,” ACCC Chair Rod Sims said.
“The ACCC’s view is that Parliament did not intend that it would be necessary to establish special disadvantage or any taking advantage of a special disadvantage for conduct to be unconscionable and in breach of the Australian Consumer Law.”
“Clarifying the legal test for statutory unconscionable conduct will be important not just in this case but in many other cases in the future,” Mr Sims said.
The ACCC’s case was that between February 2017 and July 2018, Quantum engaged in a system of conduct or pattern of behaviour that unduly pressured investors to terminate their agreements with their existing property managers and engage a property manager approved by Quantum. Quantum failed to tell investors that it had commercial links with the property managers it recommended.
The ACCC instituted proceedings against Quantum Housing in April 2019.
The Federal Court handed down its ruling on 9 June 2020.
Quantum ceased trading in December 2019 and is in liquidation.