Two reviews are underway with the potential to significantly affect many New Zealand businesses. The first involves the enforcement of consumer protection laws. The second is a proposal to improve the enforceability of court judgments between Australia and New Zealand. We thought it useful to provide an overview and a preliminary assessment of the issues.
The Ministry of Consumer Affairs has begun a review of the redress and enforcement provisions in the Fair Trading Act 1986 (FTA) and Consumer Guarantees Act 1993 (CGA). The FTA applies to you if you are "in trade" which includes any business, industry, profession, or occupation relating to the supply or acquisition of goods or services. The CGA will apply to you if you are a consumer, supplier, or manufacturer of goods or services.
The review will consider whether the enforcement and redress provisions in these Acts are effective and whether any legislative amendments are necessary. The effectiveness of the current provisions will be measured against the desired policy outcome that consumers' reasonable expectations of transactions are being met. The scope of the review includes the enforcement processes and policies of the Commerce Commission and NZ Customs Service, compliance costs, and cross-border application of consumer protection laws.
Two surveys will be undertaken by the Ministry this year. The first will ask consumers about their knowledge and attitudes to consumer protection legislation and their experiences of seeking redress. The second survey will question traders about their level of knowledge of the FTA and CGA, and how it applies to their businesses. It will also ask them about their experiences in working with the legislation.
The Ministry has produced an initial think piece that outlines the scope of the review. This can be viewed at: www.consumeraffairs.govt.nz/policylawresearch/enforcement-review/paper-one/paper-one.pdf
Although this review is targeted at consumers' and traders' perceptions of the current law, it is likely that the agencies charged with enforcing it will have plenty to say. In particular, the Commerce Commission appears to be taking a tougher approach to FTA prosecutions than previously, and appears more determined to prosecute individual directors and employees, as well as companies. It could be argued that such individual prosecutions are unduly harsh where the individual concerned is an employee with limited power to correct the behaviour of his or her employer. However, the Commission is likely to use this review to argue that stricter enforcement of the law is required to achieve better compliance, together with higher penalties commensurate with the commercial gains that may be made from breaches of the FTA.
Submissions are due by 31 August 2005; however the Ministry has said it will welcome suggestions made after this date. Submissions may be made to:
Policy - Consumer Law and Marketplace Regulation
Ministry of Consumer Affairs
PO Box 1473
Please contact us if you would like help preparing a submission or would like us to make one on your behalf.
The Trans-Tasman Working Group established by the New Zealand and Australian Prime Ministers in 2003 has released a discussion paper looking at ways to improve the enforceability of court judgments between the two countries. This will be of relevance to all clients who conduct business across the Tasman.
The discussion paper proposes a number of options aimed at making it easier to enforce judgments between Australia and New Zealand, and making it possible to enforce penalties and fines across the Tasman. The proposals are based on the regime that exists between Australia’s state jurisdictions and include:
These measures would complement existing rules which allow subpoenas to be served and enforced across the Tasman and for the recognition and enforcement of money judgments, including tax judgments.
The discussion paper may be viewed at: www.justice.govt.nz/pubs/reports/2005/trans-tasman-court-proceedings-and-regulatory-enforcement/index.html
If adopted, these proposals would represent a very significant further step towards the integration of Australia and New Zealand's legal and regulatory environments. There are undoubtedly great practical benefits in this form of integration. But there are also risks. Under the proposed new rules, a plaintiff would not have to show any justification for issuing proceedings in one country against a defendant in the other. Instead, the burden would be on the defendant to persuade the Court that it should not exercise jurisdiction. This diminishes defendants' protection from ill-founded claims. It will also be much easier for Australian regulators to obtain and enforce judgments against New Zealand-based businesses and individuals, and vice versa. There is a greater likelihood of being drawn into litigation across the Tasman or of falling within the reach of both Australian and New Zealand regulators. This suggests that the proposed changes may increase, rather than reduce, litigation and compliance costs for trans-Tasman businesses.
Submissions are due by 4 November 2005. They may be made to:
Policy and Legal Group
Ministry of Justice
PO Box 180
Please contact us if you would like to discuss how these proposals could affect you or if you would like us to help you prepare a submission or to make one on your behalf.
For further information, please contact your usual Bell Gully advisor or:
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.