Unconscionable Conduct

3 April 2026 in Commercial Lawyers | 6 min read | skip to FAQs

This article explores the legal principles of unconscionable conduct, including the criteria for establishing accessorial liability. We refer to the High Court judgment in the case of Productivity Partners v ACCC, where the High Court upheld the decision of the Federal Court that ruled in favour of the ACCC. This decision reinforced the expectation that education providers, and businesses more broadly, avoid unconscionable conduct when engaging with their consumers. We also explore the background, legal issues, and implications of this decision.

Competition & Consumer Act 2010

The principles of unconscionable conduct and accessorial liability are governed by the Competition and Consumer Act 2010 (Cth) (the Act), in particular Schedule 2 of the Act, the Australian Consumer Law (ACL).

The following three sections of the Act prohibit unconscionable conduct, provide the factors a court may consider when deciding if a person has conducted themselves unconscionably and set out where any person knowingly concerned with or a party to unconscionable conduct may also become liable.

Section 21 of the ACL

Section 21 of Australian Consumer Law prohibits a person or business from engaging in conduct that is unconscionable.

Section 22(1) of the ACL

Section 22(1) of Australian Consumer Law provides a non-exhaustive list of factors that the court may consider in deciding whether the conduct of a person or business is unconscionable. These are as follows:

1. The relative strength of the bargaining positions between the parties involved.
2. Whether the consumer was required to comply with conditions not reasonably necessary for the protection of the supplier’s legitimate interests.
3. Whether the consumer understood the documents that related to the provision of goods or services.
4. Use of undue influence, pressure, or unfair tactics by the supplier against the consumer.
5. Whether the total amount paid for the goods or services was notably excessive.
6. Whether the supplier acted consistently with their usual conduct in similar transactions.
7. Applying the requirements of any applicable industry code.
8. Whether the consumer acted on the reasonable belief that the business would comply with all applicable industry codes.
9. Whether the supplier disclosed any foreseeable risks to the consumer.
10. If there is a contractual agreement, the conduct of the parties, the terms and conditions, and the extent to which the supplier intended to allow the consumer to negotiate and amend the terms and conditions.   
11. Whether the supplier and the consumer acted in good faith.

Section 224(1)(e) of the ACL

Section 224(1)(e) of the ACL, provides for pecuniary penalties to be enforced where it is proven that a person is “knowingly concerned in, or party to” any and all acts of unconscionable conduct. There are two elements required to fulfil this definition; these are

1. conduct and
2. knowledge.

The Australian Competition and Consumer Commission (ACCC) has commenced a number of legal cases against businesses that have allegedly breached these provisions and exploited consumers.  The case of Productivity Partners v ACCC provides a useful guide to the scope of unconscionable conduct, the approach taken by the ACCC and the courts and the possible penalties.

Productivity Partners v ACCC

The definition of and test for unconscionable conduct is described in the case of Productivity Partners Pty Ltd v ACCC (2023) 297 FCR 180; [2023] FCAFC 54 (the Case).

In 2018, the ACCC brought legal proceedings against Productivity Partners Pty Ltd (Productivity Partners), trading as Captain Cook College (the College), for engaging in unconscionable conduct. The application to the court was made on the basis that Productivity Partners was exploiting the federal government’s Commonwealth Vocational Education and Training Fee Higher Education Loan Program (VET FEE-HELP) scheme. This scheme is designed to assist students by increasing access to tertiary schooling by offering government funded loans.

The College recruited students from different disadvantaged backgrounds, including remote Aboriginal Australians, with the use of marketing and third-party agents. In many instances, these individuals were offered incentives such as free laptops if they agreed to enrol in online courses, including subjects that were not required for the completion of their studies. Through the use of this tactic, the College claimed approximately $54 million of student fees funded by government loans.

The ACCC alleged that the business operated a system that deliberately employed unconscionable conduct. Pursuant to Section 139B of the Act, the College’s parent company, Site Group Limited, and its Chief Operating Officer, Mr Blake Wills, were also listed as additional respondents.

Outcome

At trial, the ACCC succeeded in establishing a direct and intentional contravention of section 21 of the ACL, finding unconscionable conduct in connection with the supply of goods or services. Productivity Partners and Mr Wills sought special leave to appeal to the High Court of Australia, which was granted in 2023.

High Court Appeal

In hearing the facts of the Case, the High Court addressed two central issues:

Unconscionable Conduct of Productivity Partners under Section 21 of the Act

The High Court reviewed the Federal Court’s findings that the College’s enrolment system amounted to unconscionable conduct under Section 21 of the Act. The appeal raised legal questions about the application of Section 21 by the courts in practical cases and whether the factors provided in Section 22(1) of the ACL must be considered.

The Appellants argued that they did not intend to harm the students and that, because not all factors of section 22(1) were applicable, their conduct should not be found to be unconscionable. The Court clarified that section 21 is focused on the overall character of the business’s conduct, assessed in the light of all circumstances, and on the reasonably foreseeable risks for consumers.

Accessorial Liability of Mr Wills under Section 224(1) of the ACL

Mr Wills, the Chief Operating Officer of the parent company, challenged the decision made by the Federal Court that he was personally liable for Productivity Partner’s unconscionable conduct. This argument was made on the basis that he did not act intentionally when implementing the system for student recruitment to the College. With this defence, the key legal issue was whether a person can be held liable as an accessory without knowing that the conduct is unconscionable.

In responding to Mr Wills, the High Court considered the Federal Court’s findings that he:

1. reasonably foresaw the risk surrounding the College’s implemented business model;
2. was responsible for the removal of the College’s risk management strategies;
3. was aware that the change to the procedure would maximise profit, and that this was the intention of it; and
4. following his removal of the safeguards, acknowledged the subsequent increase in enrolments and profit.

The Decision of the High Court

The High Court unanimously dismissed both appeals brought by Productivity Partners and Mr Wills. The Court held that:

1. The enrolment practices were exploitative, with particular consideration of the vulnerable nature of the targeted community and the foreseeable risk that many would incur substantial debt for subjects that were beyond their course handbooks or requirements.
2. The removal of consumer safeguards, such as confirmation calls, orientation sessions, or comprehension checks, significantly increased the risk of harm for the students.
3. The appeal was dismissed, and the matter was listed for a penalty hearing before the primary judge.

These findings were critical in characterising the conduct of Productivity Brothers and Site Group International as unconscionable.

In responding to Mr Will’s appeal, the High Court referred to the decision in Rural Press Ltd v Australian Consumer Commission (2003) 216 CLR 53. This case cited the longstanding principle that an accessory is not required to recognise that their conduct contravenes the applicable legislation. Rather, it is expected that the essential facts and wrongdoing are sufficient to satisfy the criteria for accessorial liability.

The High Court found that Mr Wills was aware of how the enrolment system was originally designed to operate, the consumer safeguards in place before their removal, and the specific targeting of vulnerable consumers. This knowledge, combined with his role in implementing the recruitment process, the court considered him as the ”key driver” of the conduct that was determined to be unconscionable. This principle was originally established in the cases Yorke v Lucas (1985) 158 CLR 661 and Giorgianni v The Queen (1985) 156 CLR 473.

Key Takeaways

For commercial businesses:

1. Sections 21 and 22 of the ACL prohibit and describe unconscionable conduct.
2. Business operations that breach the consumer protections of the ACL, may constitute unconscionable conduct even without proof of any direct intention.
3. Section 224(1) of the ACL provides that business executives can be held personally liable as accessories if they knowingly engage in or facilitate unconscionable conduct in breach of the ACL, they do not need to have recognised that the conduct is illegal.
4. Training is crucial to ensure that employees understand their obligations regarding unconscionable conduct, fair dealings, and the obligations of the ACL generally.

For consumers:

1. Consumers are protected from unconscionable conduct by a business. Even if a contract has been signed, the ACL provides for the consideration of the surrounding conduct of the supplier and the parties involved.

How BSM Sydney Lawyers can assist you

Brander Smith McKnight law firm Sydney has commercial lawyers with decades of experience in Australian commercial consumer law. We are able to provide tailored advice on how to avoid unconscionable conduct in commercial transactions. BSM Sydney lawyers provides expert legal advice to all levels of business, helping navigate the sometimes complex legislation. Our commercial and business lawyers have extensive experience in providing legal advice regarding Australian consumer law, in particular, unconscionable conduct. Brander Smith McKnight lawyers will carefully assess your business to ensure compliance with Australian consumer law. We also provide advice to consumers who may be concerned with a recent commercial transaction. BSM senior commercial lawyers provide a complimentary 20-minute consultation to discuss your matter.

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