Although the leaves look rust coloured, I don't think its rust, but its not typical of Arbutus leaf spot either - check the twigs to see if there's any problem on there though, it might originally have looked more like one of the two leaf spot infections that this plant suffers from. Whatever is wrong with it, it looks pretty sick - certainly very stressed. They hate root disturbance, so it may be that you upset it when you moved it from its pot - I assume you've been watering it well since planted it. I'd return it to wherever you bought it and ask for a replacement, because even if it is one of the leaf spot infections this plant can get, it's untreatable.

I've forgotten which one this is - A. menziesii likes acid soil, the others aren't too fussed, just in case it is that variety and its not in acid soil...

Thanks Bamboo. When I bought it, it looked quite healthy,
there was no sign of any decease, it was nice and green so I doubt if the problem lies with the nursery. I hope it's not
leaf spot. I watered it well a few times since planting it.

I will leave it for a few more weeks and see if new leaves get infected too, if so it will have to go.