ASIC v Kobelt [2019] HCA 18

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  • Mr Kobelt operated a general store in Mintabie, South Australia.  This store sold second hand cars, groceries, fuel, etc.  Mr Kobelt supplied a form of credit to his customers who were mainly  Indigenous Australians from the APY Lands.
  • The credit system was called a “book-up” system. Payment for goods was deferred, subject to the customer supplying Mr Kobelt with their keycard and the PIN linked to the bank account into which the customer’s wages or Centrelink payments were credited. Few transactions were documented. When the customer told Mr Kobelt moneys were coming in, he would withdraw money in increments until there were no funds left. Mr Kobelt usually retained possession of the card until the debt was paid. If the customer left APY Lands, they were allowed to take their keycard on the condition that they would return it when they returned.
  • The “book-up” credit was mainly supplied for the purchase of second-hand cars. The customers could not buy groceries because Mr Kobelt would withdraw all the money, but Mr Kobelt would let customers use a portion of what he had withdrawn during that pay period (up to 50%) to purchase groceries. Customers were therefore restricted to using his store or other stores in Mintabie.
  • The Federal Court trial judge had found that Mr Kobelt contravened s 29(1) of the National Consumer Credit Protection Act 2009 (Cth) (“NCCP“) as he did not hold a licence permitting him to engage in “credit activity”, and that his conduct was unconscionable contrary to s 12CB(1) of the ASIC Act. The Full Federal Court upheld the violation of the NCCP but did not uphold the charge of unconscionable conduct.
  • ASIC appealed to the High Court.


  • Was Mr Kobelt’s conduct unconscionable within the meaning of s 12CB of the ASIC Act?


  • The High Court (Kiefel CJ, Bell J, Gaegler J and Keane J) held that Mr Kobelt’s conduct was not unconscionable under the ASIC Act.
  • Kiefel CJ and Bell J held that there was an “absence of unconscientiousadvantage obtained by Mr Kobelt from the supply of credit to his Anangu customers under his book-up system.” The APY people did not suffer from a a special disadvantage which rendered them incapable of judging what was in their own interests.  The system gave them the “advantage” to deal with a bust and boom economy and to avoid the sharing of economic resources by relatives which is a characteristic of many Indigenous communities.
  • Gageler J said that unconscionable conduct was that outside ordinary norms of societal conduct. Mr Kobelt did not act systematically in bad faith and he was willing to negotiate with customers if they needed money to buy groceries.
  • Keane J agreed with Kiefel CJ and Bell J.  Mr Kobelt did not victimise the customers for his advantage. The customers could have gotten a better deal from elsewhere, either for loans or for second-hand cars. The customers could also inflict significant harm on Mr Kobelt’s business if they united against him.
  • Nettle and Gordon JJ and Edelman J dissented.
  • Nettle and Gordon JJ held Mr Kobelt had taken advantage of the APY Lands customers by taking all their money, had failed to take proper records, that the interest rate was very high and that the system tied customers to Mr Kobelt’s store,
  • The APY customers were clearly at a special disadvantage because they lived in remote communities and were poor, uneducated, and lacked financial literacy. Their attitude to their key cards and PINs rendered them vulnerable for exploitation.
  • Edelman J agreed with Nettle and Gordon JJ but also added various other reasons why the system was unconscionable, including the fact it was only used for Indigenous customers, there was no disclosure of risk, and a lack of transparency.


“In Paciocco v Australia & New Zealand Banking Group Ltd, I referred to unconscionable conduct within the meaning of s 12CB as requiring “a ‘high level of moral obloquy’ on the part of the person said to have acted unconscionably”. “Moral obloquy” is arcane terminology. Without unpacking what a high level of moral obloquy means in a contemporary context, using that arcane terminology does nothing to elucidate the normative standard embedded in the section. The terminology also has the potential to be misleading to the extent that it might be taken to suggest a requirement for conscious wrongdoing. My adoption of it has been criticised judicially and academically. The criticism is justified. I regret having mentioned it.

What I meant to convey by the reference was that conduct proscribed by the section as unconscionable is conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience. To that view of the statutory standard I adhere.”

(Gaegler J at [91]-[92])

“…the terms, nature and circumstances of Mr Kobelt’s book-up system bespoke unconscionability and “[m]any, if not most, members of the broader Australian community would probably find some aspects of the system to be surprising, if not extraordinary” …Putting to one side that the majority of Mr Kobelt’s customers were financially illiterate Anangu living in a remote, harsh and impoverished part of northern South Australia, in what other circumstances would a small-scale consumer credit provider require, let alone expect, a borrower’s assent to terms that, as security for relatively modest advances, the borrower hand over the right to receive the whole of the borrower’s meagre monthly income, with not less than half of it to be applied in reduction of the loan; the borrower confer on the credit provider an untrammelled discretion as to how much, if any, of the other half should be made available to the borrower for the purchase of life’s necessities; and the borrower be tied to purchasing all such necessities from the credit provider at the credit provider’s prices, or else pay the credit provider for the privilege of a “purchase order”?

Where else and with what other customer would it be regarded as acceptable that the terms of the arrangement go entirely undocumented; that the credit provider not be required to, and not, render invoices, receipts or reconciliations; and that the credit provider not maintain financial accounts sufficient even for two experienced accountants, who gave evidence at trial, to determine how much had been advanced and how much had been paid? Surely, anywhere else with any other customer, such an arrangement would be regarded as unconscionable. It is no answer to say that the customers were Anangu people. It is no answer to say that the customers agreed.”

(Nettle and Gordon JJ at [259]-[260])

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