Fair Trading Amendment (Australian Consumer Law) Bill 2010

Fair Trading Amendment (Australian Consumer Law) Bill 2010

Amended Print

EXPLANATORY MEMORANDUM

561487

BILL LA AMENDED 16/9/2010

General

The object of this Bill is to apply, as a law of Victoria, the Australian Consumer Law comprising of Schedule 2 to theCompetition and ConsumerAct 2010 of the Commonwealth as in force from time to time ("theAustralian Consumer Law") and regulations made under section 139G of that Act. The Bill also repeals or amends certain provisions of the Fair Trading Act 1999 and makes consequential amendments to other Acts.

The Australian Consumer Law, upon its commencement, will comprise of uniform national consumer protection laws, based on existing provisions in the Trade Practices Act 1974 of the Commonwealth and also including provisions based on best practice provisions from existing State and Territory consumer protection laws, including the Victorian Fair Trading Act 1999. The Australian Consumer Law includes provisions regulating misleading and deceptive conduct, unconscionable conduct, unfair contract terms, unfair practices, consumer guarantees and unsolicited consumer agreements. It sets out new enforcement and redress powers and establishes a new national product safety regime.

The Commonwealth Parliament has passed two Acts that establish the new Australian Consumer Law—

the Trade Practices Amendment (Australian Consumer Law) Act (No. 1) 2010 of the Commonwealth, which received the Royal Assent on 14 April 2010; and
the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 of the Commonwealth, which received the Royal Assent on 13 July 2010.

Schedule 1 to the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 inserts a new Schedule 2 to the Trade Practices Act 1974 ofthe Commonwealth. That Schedule comprises of the Australian ConsumerLaw. Item 2 of Schedule 5 to the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 of the Commonwealth renames the Trade Practices Act 1974 the Competition and Consumer Act 2010.

Copies of the Trade Practices Amendment (Australian Consumer Law) Act (No. 1) 2010 and the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 of the Commonwealth and the related Explanatory Memoranda are publicly available at

The Bill repeals certain provisions and Parts of the Fair Trading Act 1999 to make way for the commencement of similar provisions under the Australian Consumer Law.

The Bill amends the Fair Trading Act 1999—

to ensure that certain provisions relating to the enforcement and administration of the Fair Trading Act 1999, apply for the purposes of the Australian Consumer Law;
to specify that certain provisions relating to the enforcement and administration of the Fair Trading Act 1999, do not apply for the purposes of the Australian Consumer Law; and
to improve some remaining provisions to reflect best practice and to attempt to harmonise Fair Trading Act 1999 provisions with similar provisions in other State or Territory consumer protection legislation.

The Bill includes transitional provisions and makes necessary consequential amendments to other Victorian legislation.

Clause Notes

Clause 1describes the purpose of the proposed Act.

Clause 2provides that the Bill comes into operation on a day or days to be proclaimed. The Bill does not include a default date on which all provisions commence if not proclaimed earlier, because the commencement date will be contingent upon the coming into operation of the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act 2010 of the Commonwealth).

Clause 3provides that, in the proposed Act, the Fair Trading Act 1999 is called the Principal Act.

Clause 4amends section 1 of the Fair Trading Act 1999, which describes the purpose of that Act.

Clause 4(a) repeals paragraphs (ba), (bb), (c) and (d) of section 1 of the Fair Trading Act 1999. The repealed paragraphs relate to matters that will no longer be directly regulated by provisions of the Fair Trading Act 1999, but will instead be dealt with by provisions of the Australian Consumer Law as it applies as a law of Victoria. The repeals reflect that the Fair Trading Act 1999 will no longer directly provide for statutory conditions and warranties in consumer contracts, the regulation of unfair terms in consumer contracts, the safety of goods or services and related information standards, the regulation of off-business premises sales and lay-by sales. As a consequence of the Bill, these matters will instead be regulated directly by the Australian Consumer Law, which will be applied as a law of Victoria under the Fair Trading Act 1999.

Clause 5repeals certain definitions from section 3 of the Fair Trading Act 1999. The repealed definitions are either redundant as a result of the Australian Consumer Law, or are defined within the Australian Consumer Law.

Clause 5 inserts a proposed section 3(2) in the Fair Trading Act1999, confirming that unless the contrary intention appears, expressions used in the Fair Trading Act 1999 have the same meaning as they have in the Australian Consumer Law. Section2 of the Australian Consumer Law defines a number of those expressions which will no longer be defined in section 3 of the Fair Trading Act 1999 as a result of clause 5(1) of the Bill.

Clause 6repeals section 4 of the Fair Trading Act 1999, dealing with representations as to future matters. This section is being repealed as it will be superseded by section 4 of the Australian Consumer Law, which deals with the same topic.

Clause 7amends section 5 of the Fair Trading Act 1999 dealing with the application of the Act to the Crown. The amendment provides that section 5 is subject to proposed section 20 of the Act, which provides specifically for the application of the Australian Consumer Law to the Crown.

Clause 8inserts a new section 6(3) into the Fair Trading Act 1999 clarifying the extraterritorial application of the Fair Trading Act1999. The proposed provision ensures that investigative, compliance and enforcement activities under the Australian Consumer Law and the Fair Trading Act 1999 can be pursued in Victoria when there is an appropriate connection with Victoria. It provides that the Fair Trading Act 1999 applies to the engaging in conduct in Victoria by persons outside of Victoria, the engaging in conduct outside of Victoria by persons in Victoria, a supply of goods or services where the contract is made in Victoria, and to a supply of goods or services to a person normally resident in Victoria or a body corporate whose principal place of business is in Victoria where the contract is made outside Victoria.

Clause 9substitutes Part 2 of the Fair Trading Act 1999, dealing with unfair practices, with a new Part 2 that provides for the application of the Australian Consumer Law in Victoria. Unfairpractice provisions from the Fair Trading Act 1999 are superseded by the provisions of the Australian Consumer Law. Chapter 2 of the Australian Consumer Law contains provisions relating to misleading or deceptive conduct and unconscionable conduct, and Part 31 of Chapter 3 regulates unfair practices.

Chapter 3, 4 and 5 of the Explanatory Memorandum for the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 of the Commonwealth further describes the intention of the general protections contained in Chapter 2 of the Australian Consumer Law. Chapter 6 of that Explanatory Memorandum further describes the intention of Part 3-1 of Chapter 3, dealing with specific protections and unfair practices.

The substituted Part 2 provides for the application of the Australian Consumer Law as a law of Victoria and related matters.

Proposed Division 1 of Part 2 contains definitions for the purposes of the new Part 2.

Proposed Division 2 of Part 2 applies the Australian Consumer Law as a law of Victoria. Proposed section 8 provides that the Australian Consumer Law comprises of Schedule 2 to the Competition and Consumer Act 2010 of the Commonwealth andregulations made under section 139G of that Act. Proposedsection 9 provides that the Australian Consumer Law, as in force from time to time applies as a law of Victoria and may be referred to as the Australian Consumer Law (Victoria).

Proposed section 9(1)(c) provides that the Australian Consumer Law, as applying in Victoria, is a part of the Fair Trading Act 1999. This provision ensures that administration and enforcement powers in the Fair Trading Act 1999 which are expressed to apply in relation to "this Act" or contraventions of "this Act" apply and may be utilised for the purposes of the Australian Consumer Law unless otherwise provided.

The Australian Consumer Law, like the Fair Trading Act 1999, includes offence provisions. The Australian Consumer Law offence provisions are contained in Chapter 4 of the Australian Consumer Law. The maximum penalty levels under the Australian Consumer Law are higher than those for similar offences under the Fair Trading Act 1999. The new maximum penalty levels generally reflect the higher penalty levels that have been available under the Trade Practices Act 1974 of the Commonwealth for serious breaches.

Chapters 13, 14 and 15 of the Explanatory Memorandum for the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 of the Commonwealth further describe the intended operation of the Australian Consumer Law offence provisions. Chapter 14 describes the relationship between the proposed uniform national offence provisions of the Australian Consumer Law and recommendations contained in the Productivity Commission's 2008 Review of Australia's Consumer Policy Framework. The Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 of the Commonwealth noted the Productivity Commission's observation that some enforcement tools have not been available to all regulators and that this can restrict their ability to adopt regulatory responses that are tailored to the severity of breaches of the relevant laws.

The Australian Consumer Law offence provisions generally fall into five categories—

offences with a maximum pecuniary penalty of up to $1000 (natural persons) or $5000 (bodies corporate). This category applies to multiple pricing (sections 44(2) and 165(1) of the Australian Consumer Law);
offences with a maximum pecuniary penalty of up to $3000 (natural persons) or $15000 (bodies corporate). This category applies to conduct including a failure to give an itemised bill on request (section 101(3) of the Australian Consumer Law);
offences with a maximum pecuniary penalty of up to $6000 (natural persons) or $30000 (bodies corporate). This category applies to conduct including that relating to lay-by agreements (for example, an agreement that requires a termination charge for the lay-by agreement, section 97(2) and 189(1) of the Australian Consumer Law);
offences with a maximum pecuniary penalty of up to $10000 (natural persons) or $50000 (bodies corporate). This category includes calling on a person in relation to an unsolicited consumer agreement outside of permitted hours (section 73(1) and 170(1) of the Australian Consumer Law), failing to leave on request when making an unsolicited call (sections 75(1) and 172(1) of the Australian Consumer Law) and failing to advise a consumer of the cooling off period (sections 76 and 173(1) of the Australian Consumer Law); and
offences with a maximum pecuniary penalty of up to $220000 (natural persons) or $1100000 (bodies corporate). This category is reserved for serious offences related to supplying goods that are non-compliant with a safety standard (sections 106(1) and 194(1) of the Australian Consumer Law), supplying goods subject to an interim or permanent ban (sections 118(1) and 197(1) of the Australian Consumer Law), bait advertising (sections 35(2) and 157(2) of the Australian Consumer Law), unconscionable conduct within the meaning of the unwritten law (section 20(1) of the Australian Consumer Law), false or misleading representations about goods or services (sections 29(1) and 151(1) of the Australian Consumer Law) and misleading conduct as to the nature of goods (sections 33(1) and 155(1) of the Australian Consumer Law).

Proposed section 10 allows the Governor in Council to declare byOrder that any future modification to the Australian ConsumerLaw made by a Commonwealth law does not apply. Thedeclaration has effect only if published within 2 months of the date of the modification. A subsequent Order may provide that the declaration ceases to apply to the modification.

Proposed section 11(1) defines the term regulator for the purposes of the Australian Consumer Law of Victoria to mean the Director of Consumer Affairs Victoria. Proposed section 11(2) provides that, for the purposes of the application of Australian Consumer Law of Victoria, the expression court has the meaning given by proposed section 160E of the Fair Trading Act 1999.

To ensure consistent interpretation of the Australian Consumer Law in each jurisdiction across Australia, proposed section 12 applies the Acts Interpretation Act 1901 of the Commonwealth as a law of Victoria for the purposes of interpreting the Australian Consumer Law in Victoria and disapplies the Interpretation of Legislation Act 1984 for the purposes of the Australian Consumer Law of Victoria and instruments made under that law.

Proposed section 13 confirms the extra-territorial application of the Australian Consumer Law of Victoria. This section operates concurrently with section 6 of the Fair Trading Act 1999, which deals more specifically with the question of the extra-territorial application of the Fair Trading Act 1999 and the Australian Consumer Law of Victoria.

Proposed Division 3 of Part 2 deals with references to the Australian Consumer Law. Proposed section 14 provides that unless the contrary intention appears or the context otherwise requires, a reference in any instrument to the Australian Consumer Law is a reference to the Australian Consumer Law of any participating jurisdiction. The expressions instrument and participating jurisdiction are defined in proposed section 7. Proposed section 15 provides for references to the Australian Consumer Law of another jurisdiction.

Proposed Division 4 of Part 2 deals with the application of the Australian Consumer Law to the Crown. Proposed section 16 confirms that Division 4 of Part 2 does not apply to the Commonwealth.

Proposed section 17 provides that the application law of Victoria (defined in proposed section 7) binds the Crown in right of Victoria and of each other jurisdiction in so far as the Crown carries on business either directly or by the authority of the relevant jurisdiction.

Proposed section 18 provides that the application law of another jurisdiction binds the Crown in right of Victoria in so far as the Crown carries on business either directly or by the authority of the Crown in the right of Victoria. Proposed section 18(2) provides that if, because of Part 2, a provision of the law of another jurisdiction binds the Crown in the right of Victoria, the Crown in that right is subject to the law despite any prerogative right or privilege.

Proposed section 19 provides that certain activities carried on by the Crown are not to be regarded as carrying on a business for the purposes of proposed sections 17 and 18.

Proposed section 20(1) provides that nothing in the application law of Victoria makes the Crown, in any capacity, liable to apecuniary penalty or to be prosecuted for an offence. Proposedsection 20(2) provides that nothing in the application law of any participating jurisdiction makes the Crown in right ofVictoria liable to a pecuniary penalty or to be prosecuted for an offence.

Proposed section 21 provides that authorities and officers of the Commonwealth, who have certain powers under the Australian Consumer Law, have those functions and powers with respect tothe Australian Consumer Law as it applies in Victoria. Itprovides that those authorities and officers also have the power to do all things necessary and convenient to be done in connection with the performance of those functions and exercise of those powers.

Proposed section 22 provides that where an act or omission is an offence against the Australian Consumer Law as it applies in Victoria, and is also an offence against the Australian Consumer Law of another participating jurisdiction, an offender is not liable to be punished for the offence under the Australian Consumer Law of Victoria if the offender has been punished under the Australian Consumer Law of another participating jurisdiction. Similarly, if a person has been ordered to pay a pecuniary penalty under the Australian Consumer Law of another participating jurisdiction, the person is not liable to a pecuniary penalty under the Australian Consumer Law of Victoria with respect to that same conduct.

Clause 10repeals sections 32B to 32F of the Fair Trading Act 1999.

Part32 of the Australian Consumer Law includes a uniform national law governing consumer guarantees which will supersede these provisions of the Fair Trading Act 1999 and other provisions of Part 2A of the Fair Trading Act 1999 identified below. Part 2A of the Fair Trading Act 1999 deals with implied conditions and warranties in certain contracts of supply. Part 3-2 of the Australian Consumer Law replaces current provisions that imply conditions and warranties into consumer contracts in Part V, Division 2 of the Trade Practices Act 1974, as well as equivalent State and Territory laws, including some provisions of Part 2A of the Fair Trading Act 1999 described here and below.

Chapter 7 of the Explanatory Memorandum for the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 of the Commonwealth further describes the intended operation of Part 3-2 of the Australian Consumer Law.

Clause 11inserts a new section 32FA of the Fair Trading Act1999 by substituting a provision which makes the interaction with the Goods Act 1958 and the interaction with the Australian Consumer Law clear.

This clause provides that sections 17, 18, 19(a) and (b) of the Goods Act 1958 do not apply to contracts of supply to which Division 1 of Part 32 of the Australian Consumer Law (Victoria) applies.

The clause also provides that section 4(2) of the Goods Act 1958 is taken to apply in relation to this Part of the Fair Trading Act 1999 and Division 1 of Part 3-2 of the Australian Consumer Law (Victoria) as if—

the reference to Part were a reference to Part 32 of the Australian Consumer Law (Victoria); and
the reference to contracts for the sale of goods included a reference to contracts of supply of goods.

This clause also provides that a reference in Part I of the Goods Act 1958 to a condition includes a reference to a guarantee within the meaning of Division 1 of Part 32 of the Australian Consumer Law (Victoria).

The clause provides that, except as otherwise expressly provided by Division 1 of Part 3-2 of the Australian Consumer Law (Victoria), nothing in that Division affects the application to a contract of supply of goods or services of the Goods Act 1958 or any other Act or law.

Clause 12repeals sections 32G to 32MA of the Fair Trading Act 1999, for the reasons identified at clause 10.

Clause 13amends section 32N of the Fair Trading Act 1999 to provide that a term of a contract which operates to limit liability in relation to the supply of recreational services in the ways described is not void by virtue of the commencement of the Australian Consumer Law.