Unconscionability in the Fair Trading Act 1999 explored

By reference to the conclusion that certain costs disclosure conduct was “unconscionable”, Mr Butcher knocked 7.5% off a solicitor’s fees: see the two previous posts about Wilkins’s Case [2006] VCAT 2199. What follows is a consideration of the concept of unconscionability in the Fair Trading Act, 1999, its application to this case, and a criticism of the finding of unconscionability by reference exclusively to non-compliance with the costs disclosure regime under a repealed act when the consequences of that non-compliance were specified by the parliament and which were not triggered in this case.

“Unconscionability” seems to be a concept employed explicitly in three ways in the Fair Trading Act, 1999. First, there is in s. 7 a statutory provision codifying unconscionability in equity. It seems very unlikely that such a finding would have been made by the member without giving reasons in relation to special disadvantage and the like. The provision does not apply where the proscription of statutory forms of unconscionability applies.

Second, there are s. 8 and s. 8A (“unconscionable conduct” and “unconscionable conduct in business transactions”).

Third, whether a contractual term is unconscionable is one of the things which may be taken into account in deciding, under s. 109 whether to “make any order it considers fair” in a case where the controversial services are of a kind “ordinarily used for personal household or domestic purposes” or where the fees were less than $10,000. But there was no consideration of any contractual term by the member. It is possible that the member’s conclusion that the conduct was unconscionable was the factor by reference to which primarily he concluded that the course he adopted was “fair”. But given that it was “conduct” under consideration, it seems most likely that the member’s decision was under s. 8 (since s. 8A only applies where the client’s acquisition of services was for the purposes of trade or commerce: sub-s. (2)).

Section 8 is set out below. It is to be hoped that proper consideration was given by the parties to whether a solicitor engages in trade or commerce in advising on pre-litigious disputes, and whether such advice is “ordinarily used for personal, household or domestic purposes”, since it is far from clear that barristers and solicitors engage in either trade or commerce, and the decisions on the subject proceed on a very nice dissection of the statutory language which is not reproduced in the written form of these reasons.

Given that the work was performed without defect, and was expressly found to be reasonably charged for, it is very difficult to understand what factor gave rise to a finding of unconscionability. If the client would have terminated the solicitor’s instructions earlier, and thereby not incurred the expense, surely such a finding would have been made in the reasons. In fact, the reasons record that the solicitor “put Mr Wilkins in a position of having the benefit of expert advice in relation to matters concerning the property and the estate” [19] in circumstances where after the solicitor’s retainer terminated, the dispute proceeded to litigation in the Supreme Court [12]. In circumstances where a solicitor advised his hourly rate in advance [16], was retained [11], did work without fault [19], and charged reasonably [18], it is difficult to see that the conduct was “unconscionable” only because:

  • it was “practicable” for the solicitor to have complied [18] with the statutory regime where
  • the statutory consequences of non-compliance with the regime are specifically provided for, and do not apply in the circumstances at hand.

I said that the effects of the non-compliance with s. 86 of the Legal Practice Act, 1996 are specifically provided for. They are stated in s. 91, which provides:

“91. Effect of failure to give information

If a legal practitioner or firm does not give to a client any information required to be given by this Division—

(a) on an assessment of a bill of costs, the assessed amount of the bill may be reduced by an amount considered by the person conducting the assessment to be proportionate to the seriousness of the failure to give the information;

(b) in determining a dispute in relation to legal costs, the Tribunal may reduce the amount of the legal costs by an amount considered by it to be proportionate to the seriousness of the failure to give the information.”

The default clearly occurred prior to the repeal of the Legal Practice Act, 1996, as is recognised by the reasons. It seems unfair to the solicitor to have regard to a breach of a then applicable act without having regard to the limited consequences specified by the legislation, none of which were triggered by this case because the Tribunal did not purport to exercise jurisdiction under the Legal Practice Act, 1996.

Section 108 says:

‘108. Settlement of consumer and trader disputes or small claims

(1) The Tribunal may hear and determine a consumer and trader dispute.

(2) The Tribunal may do one or more of the following in relation to a
consumer and trader dispute

(a) refer a dispute to a mediator appointed by the Tribunal;

(b) order the payment of a sum of money-

(i) found to be owing by one party to another party;

(ii) by way of damages (including exemplary damages and damages in the
nature of interest);

(iii) by way of restitution;

(c) vary any term of a contract;

(d) declare that a term of a contract is, or is not, void;

(e) order the refund of any money paid under a contract or under a void

(f) make an order in the nature of an order for specific performance of a

(g) order rescission of a contract;

(h) order rectification of a contract;

(i) declare that a debt is, or is not, owing;

(j) order a party to do or refrain from doing something.

Example: If the supplier has default listed the purchaser with a credit
reference agency in relation to a perceived debt owing, the Tribunal, in
addition to declaring that there is no debt owing, may order the supplier to
contact the credit reference agency and have the default listing removed from
the purchaser‘s credit record.

(3) In awarding damages in the nature of interest, the Tribunal may base the
amount awarded on the interest rate fixed from time to time under section 2 of
the Penalty Interest Rates Act 1983 or on any lesser rate it thinks

See also:

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