Fair Trading and Other Acts Amendment Bill 2008

Fair Trading and Other Acts Amendment Bill 2008

Introduction Print

EXPLANATORY MEMORANDUM

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BILL LA INTRODUCTION 3/12/2008

General

The Bill amends the Fair Trading Act 1999 to clarify that courts can make"non-punitive" corrective advertising orders and "punitive" adverse publicity orders,to ensure that courts can make orders prohibiting a person who is subject to litigation from divesting his or her assets and property andto increase the amount of compensation able to be awarded by a court or the Victorian Civil and Administrative Tribunal (Tribunal) for humiliation or distress arising from conduct which is an offence under the Fair Trading Act 1999.

The Bill will also amend Part 2B of the Fair Trading Act 1999 to enable the Director of Consumer Affairs Victoria (Director) to apply to the County or Supreme Court as well as to the Tribunal for an injunction or declaration under Part 2B of that Act, to provide a Court or the Tribunal with the capacity to make remedial orders under Part 2B in conjunction with declarations made under that Part, to provide that, if it is alleged in any proceeding under Part 2B that a contract is a consumer contract or a standard form contract, it is presumed (unless the contrary is established) that Part 2B applies to the contract and to remove the good faithrequirement from the definition of an unfair termof a contract under that Part.

The Bill also implements a recommendation of the Report of the Consumer Credit Review,which was published in 2006,to apply Part 2B of the Fair Trading Act 1999 to credit contracts. Thisrecommendation was endorsed in the Government Response to the Report of the Consumer Credit Review published in 2006.

The Bill also amends the Residential Tenancies Act 1997 in relation to residential premises that may or may not be formally affiliated with a school or institution which provides education and training and amends the Consumer Credit (Victoria) and Other Acts Amendment Act 2008 to amend the commencement of certain provisions in that Act.

The Bill also makes consequential amendments to the Consumer Credit (Victoria) Act 1995, the Retirement Villages Act 1986, the Relationships Act 2008 and the Veteran's Act 2005.

Clause Notes

PART 1—PRELIMINARY

Clause 1sets out the purposes of the Bill. The purposes of the Bill are to apply Part 2B of the Fair Trading Act 1999 to consumer credit contracts and to strengthen enforcement capacity under that Act and to amend certain definitions in that Act; to amend the Residential Tenancies Act 1997 in relation residential premises that may or may not have formal affiliation with schools or institutions which provide education or training; and to amend the Consumer Credit (Victoria) and Other Acts Amendment Act 2008 to enable certain provisions to come into operation at different times. Anadditional purpose of the Bill is to make consequential amendments to the Consumer Credit (Victoria) Act 1995, the Retirement Villages Act 1986, the Relationships Act 2008 and the Veteran's Act 2005.

Clause 2provides that the Bill, (with the exception of clauses 18, 20 and21) will come into operation on the day after the day on which it receives the Royal Assent.

Clauses 18, 20 and 21 will come into operation on a day or days to be proclaimed. Their commencement is deferred in order for consultation to be undertaken and regulations to be made prescribing criteria a school or institution must consider prior to entering an agreement referred to in section 21 of the Residential Tenancies Act 1997,the form of the notice required to be displayed under new section 505B of that Act and the endorsement of such notices. If clauses 18, 20 and 21 of the Bill do not come into operation before 1 March 2010, they will come into operation on that date.

PART 2—AMENDMENTS TO THE FAIR TRADING ACT 1999

Clause 3amends the definition of officer in section 3 of the Fair Trading Act 1999 by substituting the words"in section 82A" for the words "officer of a corporation has in section 9". The Fair Trading Act 1999 defines officer by reference to section 82A ofthe Corporations Act 2001 of the Commonwealth. Thisdefinition needs to be updated as the definition of officer in the Corporations Act 2001of the Commonwealth is now located in section9 of that Act.

Clause 3 also amends the definition of trade and commerce in section 3 of the Fair Trading Act 1999 by substituting the words "abusiness" for the words "any business or professional activity whether or". The amendment brings the definition in line with the Fair Trading Act 1987 of NSW and the Fair Trading Act 1987 of WA, which define trade and commerce to include "any business or professional activity".

Clause 4substitutes section 32V in Part 2B of the Fair Trading Act 1999. The effect of the substitution will be to repeal section 32V(a), which currently excludes Part 2B from applying to contractual terms contained in a contract (other than a contract in a prescribed class of contract) to which the Consumer Credit (Victoria) Act 1995applies. The repeal of section 32V(a) means that Part 2B of the Fair Trading Act 1999will apply to credit contracts. This amendment was supported in the Government Response to the Report of the Consumer Credit Review published in 2006.

Clause 5amends section 32W of the Fair Trading Act 1999 to removethe element of good faith from the definition of what an unfair term in a consumer contract is.

Clause 6substitutessection 32Y(2) of the Fair Trading Act 1999to provide that a prescribed unfair term in a standard form contract to which the Consumer Credit (Victoria) Act 1995 applies is unenforceable from the time the unfair term is prescribed.

Clause 7amends section 32ZA of the Fair Trading Act 1999to enable the Director to apply to the Supreme Court or the County Court as well as to the Tribunal for a an injunction against a person using a term in a consumer contract that is an unfair term or a term in a standard form contract that is a prescribed unfair term.

Clause 8amends section 32ZB(1)(b) of the Fair Trading Act 1999 torefer to a court order as well as a Tribunal order. Thisamendment is consequential to the amendments made underclauses 7 and 9.

Clause 9amends section 32ZC of the Fair Trading Act 1999 to enable the Director to apply to the Supreme Court or the County Court as well as to the Tribunal for an order declaring that a contract is a consumer contract, a standard form contract or that a term of a standard form contract is a prescribed unfair term or that a term of a consumer contract is an unfair term.

Subclause (4) inserts newsection 32ZC(4), which enables the Court or Tribunal to make certain remedial ordersif an order has been made declaring that a term of a consumer contract is an unfair term or that a term of a standard contract is a prescribed unfair term.

Clause 10inserts new section 32ZDA into the Fair Trading Act 1999. New section 32ZDA provides that if it is alleged in any proceeding under Part 2B or in any other proceeding in respect ofa matter arising under that Part that a contract is a consumer contract or a standard form contract, it is presumed, unless the contrary is established, that Part 2B applies to the contract. Apresumption under this section does not apply in respect of criminal proceedings against a natural person.

Clause 11amends section 153 of the Fair Trading Act 1999to clarify that the orders available under that section are non-punitive, to rename the orders under that section as corrective advertising orders and to remove references to adverse publicity orders, which are now dealt with under new section 153A inserted by clause 12 of the Bill.

Clause 12inserts new section 153A into the Fair Trading Act 1999.

Proposedsection 153A(1) provides that a court may, on the application of the Director, make a"punitive" adverse publicity order in relation to a person found guilty of an offence under theFair Trading Act 1999.

Proposed section 153A(2) provides that an adverse publicity order requires the person to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to, or requires the person to publish, at the person's expense and in the way specified by the order, an advertisement in the terms specified in, or determined in accordance with, the order.

Proposed section 153A(3) provides that section 1523A does not limit a court's powers under any other provision of theFair Trading Act 1999.

Clause 13amends section 154 of the Fair Trading Act 1999.

This clause inserts new section 154(1)(ab), which provides that a court may make an order prohibiting, either absolutely or subject to conditions, a relevant person from parting with possession of, or transferring or encumbering, any of that person's money or property. Such an order would prevent a person disposing of money or property in order to frustrate the judgment of the court.

This clause also amends section 154(1)(b) of the Fair Trading Act 1999to clarify that a reference to "property" under that section includes a reference to land.

Clause 14makes a consequential amendment to section 157 of the Fair Trading Act 1999 to refer to new section 153A inserted by clause 12 of the Bill.

Clause 15amends section 160(1)(a) of the Fair Trading Act 1999to increase the amount of compensation that a person found guilty of an offence against that Act may have to pay if they have caused humiliation or distress.

Clause 16amends Schedule 3 to the Fair Trading Act 1999to insert new clause 14, which contains a number of transitional provisions relating to the amendments made by clauses 4, 10, 11, 12, 13 and15 of the Bill.

Clause 17makes a statute law amendment to section 32O(5) of theFair Trading Act 1999 to replace an incorrect cross-reference to section 32NA with a reference to section 32NB.

Clause 17 also makes a statute law amendment toSchedule 1 to the Fair Trading Act 1999to place a reference to the Conveyancers Act 2006 in correct alphabetical order.

PART 3—AMENDMENTS TO THE RESIDENTIAL TENANCIES ACT 1997

Clause 18inserts new section 21(3) into the Residential Tenancies Act 1997, whichrequires a school or institution toconsider prescribed criteria prior to entering into an agreement to formally affiliate residential premises under section 21 of that Act.

Clause 19inserts new section 505A into the Residential Tenancies Act 1997. New section 505A(1)provides that it is an offence attracting a maximum penalty of 300 penalty units for an owner or operator of residential premises (or a person acting on their behalf) which is not formally affiliated with a school or institution to represent that the premises has such an affiliation.

New section 505A(2) provides that it is an offence attracting a maximum penalty of 300 penalty units for an owner or operator of residential premises (or a person acting on their behalf) to engage in conduct that is liable to mislead the public in relation to the formal affiliation status of the premises.

Clause 20inserts new section 505B into the Residential Tenancies Act 1997. New section 505B provides that it is an offence attracting a maximum penalty of 10 penalty units for an owner or operator of a residential premises, which the Residential Tenancies Act 1997 does not apply to because of formal affiliation of the premises with a school or institution, not to display a notice of that fact.

Clause 21amends section 511 of the Residential Tenancies Act 1997 to enable regulations to be made under that Act in respect of criteria that a school or institution must take into account prior to formally affiliating residential premises, to prescribe the form of the notice required to be displayed in a residential premises with formal affiliation and in respect of endorsements of those noticesby a school or institution granting affiliation.

PART 4—AMENDMENTS TO THE CONSUMER CREDIT (VICTORIA) AND OTHER ACTS AMENDMENT ACT 2008

Clause 22substitutes section 2(3) of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008 to provide that sections 4, 5, 5A, 20 and 23 as well as Parts 5 and 6 of that Act will come into operation on 1 July 2009, if not proclaimed to come into operation earlier.

As a result of the substitution of section 2(3) of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008, sections 7 to 19, 21, 22 and 24 of that Act, which introduce an enhanced credit provider registration scheme, will no longer commence by default on 1 July 2009. This amendmentis required because under the auspices of the Council of Australian Governments, it is proposed that the Commonwealth Government take over the regulation of credit, making these provisions unnecessary. However the provisions are not being repealed at this stage in case the transfer of regulation of credit tothe Commonwealth does not proceed and they need to be proclaimed. Therefore they have no default commencement date.

Clause 23substitutes new sections 4 and 4A for section 4 of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008, to restructure the definitions contained in section 4 of that Act to enable the definition of approved EDR scheme to come into operation separately from the remaining definitions.

New section 4 replicates the definition of approved EDR scheme at the beginning of section 4 of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008.

New section 4A replicates the remaining definitions in section 4 of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008. The definition of domestic partner in section 4 of that Act has been amended to bring it into line with amendments made by the Relationships Act 2008.

Clause 24inserts new section 5A into the Consumer Credit (Victoria) and Other Acts Amendment Act 2008. New section 5A replicates the requirement in section 6 of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008 that a registered credit provider be a member of an approved EDR scheme. The purpose of this amendment is to enable this provision to commence separately from the rest of section 6.

Clause 25amends section 6 of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008 to restructure the provision and remove the requirement that a registered credit provider be a member of an approved EDR scheme which is now in new section 5A.

Clause 26substitutes a reference to "section 6" in section 24 of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008 for an updated reference to "section 5A". The updated reference is a consequence of the amendments restructuring section 6 of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008.

Clause 27substitutes section 40 of the Consumer Credit (Victoria) and Other Acts Amendment Act 2008 to provide that, instead of being repealed on 1 July 2010, the Act will be repealed on the first anniversary of the first day on which all of the provisions of the Act come into operation.

PART 5—CONSEQUENTIAL AMENDMENTS TO OTHER ACTS

Clause 28amends section 40A(1) of the Consumer Credit (Victoria) Act 1995. Section 40A(1) of the Consumer Credit (Victoria) Act 1995 provides that section 153 of the Fair Trading Act 1999 applies to that Act as if it were a provision of that Act. Clause 28 amends section 40A(1) to ensure that both section 153 of the Fair Trading Act 1999, as amended by clause 11 of this Bill, and section 153A of the Fair Trading Act 1999, as inserted by clause 12 of this Bill, apply to the Consumer Credit (Victoria) Act 1995.

Clause 29amends section 40(2) of the Retirement Villages Act 1986 to ensure that section 153A of the Fair Trading Act 1999, as inserted by clause 12 of this Bill, does not apply to that Act. Section 40(2) currently excludes the application of section 153 ofthe Fair Trading Act 1999(as amended by clause 11 of this Bill). Consequently section 153A, inserted by clause 12 of this Bill,has also been excluded from applying to the Retirement Villages Act 1986.

Clause 30repeals item 69 in Schedule 1 to the Relationships Act 2008 because this provision is no longer needed as the changes in the definitions relating to domestic partners that it was to substitute in the Consumer Credit (Victoria) Act 1995 have been incorporated into the amendments made to the Consumer Credit (Victoria) and Other Acts Amendment Act 2008by clause 23 of this Bill.

Clause 31amends section 59(1) of the Veterans Act 2005 to ensure that section 153A of the Fair Trading Act 1999, as inserted by clause 12 of this Bill, does not apply to the Veterans Act 2005. Section 59(1) of the Veterans Act 2005currently excludes the application of section 153 of the Fair Trading Act 1999(asamended by clause 11 of this Bill). Consequently, new section 153Ahas also been excluded from applying to the Veterans Act 2005.

PART 6—REPEAL OF AMENDING ACT

Clause 32provides that the amending Act is repealed on 1 March 2011. The repeal of this Act does not affect the continued operation of the amendments made by this Act (see section 15(1) of the Interpretation of Legislation Act 1984).

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