"It's uncscionable!" ASIC v Westpac: Part whatever

Yesterday, it was reported that ASIC is taking action against Westpac for "the alleged rigging of the bank bill swap rate".

In its own words, "ASIC is seeking declarations that Westpac contravened s.12CA, s.12CB and the former s.12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), s.912A(1), s.1041A  of the Corporations Act 2001 (Cth) (Corporations Act)."

Good, but something odd caught my eye: s 12CA?

Section 12CA ASIC Act states, "A person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories."

This means unconscionable conduct as enunciated by the High Court in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14.

The facts of that case, briefly, concerned an elderly couple, the Amadios, who agreed to guarantee the debts of their son's insolvent business. In addition to their age, the Amadios had poor English and limited business understanding. In legal speak, they were under a "special disability." This is the first element necessary for there to be unconscionable conduct.

The second element necessary is that the stronger party, in this case the bank manager who procured their signatures, knew or ought reasonably to have known of the special disability.

The Amadios won that case, and since then Commercial Bank of Australia Ltd v Amadio has represented "the unwritten law". So, unless ASIC can point to some such people, which Westpac had specific knowledge (actual or constructive) of, I'm not sure why ASIC proceeded under s 12CA.

Further the s 12CA claim doesn't make much sense since ASIC is also bringing an action under s 12CB, which is much wider and has been previously applied by the courts in the context of oppressive business conduct.

My guess is ASIC is throwing mud; it'll be interesting to see what sticks.