Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

I rise to speak on the Trade Practices Amendment (Personal Injuries and Death) Bill 2004. This bill was originally introduced and debated prior to the 2004 election. When this legislation was considered in the previous parliament, Labor and the minor parties combined in this chamber to amend it. Unfortunately, the amendments were not accepted by the government and the bill lapsed. Labor believes that the rationale for those amendments still stands, and I will return to that point later in my remarks.

The bill arises from the panel of experts’ review of the law of negligence conducted by Justice Ipp back in 2002. Justice Ipp’s review was initiated following widespread community concern about skyrocketing public liability insurance premiums. Public activities and events were put into jeopardy because affordable insurance cover was simply not available. Justice Ipp developed a set of recommendations designed to reduce claims costs and put downward pressure on insurance premiums. In response, all states and territories introduced tort law reforms to bring claims costs under control. Evidence now is beginning to emerge that these reforms have improved the availability and affordability of public liability insurance. Labor has consistently stressed the need for Commonwealth action to support the efforts of the state and territory governments to reduce public liability premiums.

In the previous parliament, Labor supported amendments to taxation laws to facilitate structured settlements which reduce costs to insurers. Labor also backed the principle that the TPA needed to be amended to allow people who engage in high-risk recreational activities to be able to waive their rights to sue. In addition, Labor endorsed legislation to remove the personal liability of volunteers performing work for the Commonwealth. The Ipp review recommended that the Commonwealth should ensure that reforms to the law of negligence at the state level should not be undermined by the practice of forum shopping by litigants—that is, claims that cannot be pursued at state law should not be the basis of an action under Commonwealth law.

Since 2002, Labor has supported appropriate amendments to the Trade Practices Act to ensure that public liability claims costs did not blow out on another front following state tort law reform. However, the opposition has always argued that the need to reduce insurance premiums which threaten the viability of community events must be balanced against the rights of injured consumers. This bill fails to strike that balance. A number of provisions of the Trade Practices Act can give rise to an action for personal injury damages. This bill is concerned with actions under part V division 1. The key provision in this part of the TPA is section 52, which prohibits corporations from engaging in misleading and deceptive conduct. Other provisions of the TPA which can give rise to an action for personal injury damages include part IVA, which deals with unconscionable conduct, and part VA, which imposes liability on manufacturers or importers of defective goods.

Labor is concerned that the government has adopted an inconsistent approach to addressing the potential for forum shopping. Where personal injury or death is caused by misleading and deceptive conduct, this bill seeks to abolish the rights of both individuals and the ACCC acting in a representative capacity to recover damages. In contrast, where an action for personal injury damages is based on other provisions of the TPA, such as for unconscionable conduct, damages will still be available. In 2004, the parliament established a new compensation regime in part VIB to apply to personal injury damages claims arising under the TPA. Labor supported this legislation. Part VIB imposes limitation periods, caps and minimum thresholds for damages to eliminate small and trivial claims.

This compensation regime is broadly consistent with the limitations on negligence actions which have been imposed by state and territory law. The regime does not, however, apply to all actions for personal injury arising under the TPA. While it applies to personal injury cases arising from unconscionable conduct or the sale of defective goods, it does not cover actions for misleading and deceptive conduct. In the last parliament, the opposition argued that the capping regime in part VIB should be extended to cover these cases. Labor remains convinced that this is the best course of action. There is no need to completely abolish long established consumer rights.

In the two years since this legislation was first proposed there has been no evidence of an explosion in TPA claims where plaintiffs have been seeking to get around state law. When this matter was first presented to the parliament back in 2003, Labor sought to have the matter considered by a Senate committee. The committee examined the government’s claims about the impact of this bill on consumers. The government has argued that consumers will not be adversely affected by the removal of the right to seek damages for misleading and deceptive conduct, because damages for negligence will still be available under state law. However, the Senate Economics Legislation Committee was presented with a number of scenarios where consumers would have no remedy available to them if this bill was passed. One possible example cited related to a case involving a defective drug where the defendants destroy or ‘lose’ test results. In such a situation, plaintiffs would lack the crucial evidence needed to make out a negligence claim. Labor believes that this bill has the potential to undermine the culture of care that has developed in Australia since the enactment of the TPA. As a consequence, consumers may be exposed to a greater risk of injury.

During the committee’s hearings, the Law Council noted that the prohibition on misleading and deceptive conduct in section 52 of the act has led to general improvements in community safety and cautioned against restricting its scope. The consumer watchdog, the ACCC, also strongly opposed amending the TPA to remove liability for personal injury under section 52. The ACCC’s argument was based principally on literature known as the economics of accidents. Simply stated, this analysis suggests that liability for the cost of accidents should be assigned to the party that could most easily and cheaply take the actions needed to minimise the risk of an accident.

I will outline some of the significant points made by the ACCC in relation to the effect of the government’s proposal to abolish consumer rights in this bill. The ACCC noted that section 52 of the TPA provides an important incentive for business to behave fairly and to have regard for consumers’ safety. Without the availability of this important remedy, the standard of behaviour that consumers are entitled to expect may break down. This is a very significant concern. Furthermore, the commission has noted that limiting the scope of section 52 is economically inefficient. This is because it forces consumers to incur greater search costs in order to determine which suppliers are reliable. Finally, the ACCC has argued that removing liability for misleading and deceptive conduct which causes personal injury actually damages the competitive process. It allows firms that engage in misleading and deceptive practices to win customers at the expense of those who play by the rules.

Given this evidence from the ACCC, why is the government intent on eliminating an important consumer protection provision? The government has placed a lot of emphasis on the fact that section 52 is a strict liability provision. This means that the intent of a company that misleads and deceives is not relevant in determining liability under the act. Consequently, the government asserts that it is easier to bring an action under the TPA as there is no requirement to prove fault, as is required in negligence cases. Labor does not accept this argument. The fact is that section 52 of the Trade Practices Act has been a strict liability provision since 1974. As the Law Council told the Senate committee, if it were significantly easier to bring an action for personal injury under section 52 rather than for negligence, it would have been used in many more cases.

Provided that the quantum of damages available under the TPA is broadly consistent with the amount available under state or territory law, there is no reason to believe that the availability of a TPA remedy will drive forum shopping. Companies that engage in misleading and deceptive conduct which causes personal injury or death should not be excused of responsibility for their actions. As the ACCC’s Jennifer McNeill told the Senate committee:

In a situation where a business misleads or deceives a consumer and the consumer suffers damage ... the commission thinks that, as a matter of principle, they should be held accountable and liable for that damage, irrespective of intention.

McNeill said that this was because:

... it is much more within the control of the business involved whether and how the representations are made; it is not within the control of the consumer whether and how the representations are made.

The danger of forum shopping, which this bill seeks to address, can be dealt with in a better way. All that needs to be done is to ensure that plaintiffs are unable to recover damages under Commonwealth law that exceed those available under state and territory law.

During the committee stage of this bill, Labor will move amendments to ensure that the capping regime in part VIB of the TPA also applies to actions commenced for a breach of section 52. This will remove the economic incentive for forum shopping while maintaining a fundamental consumer protection provision of the TPA. Labor’s approach is a practical one. We support action to bring claims costs under control and put downward pressure on premiums. At the same time a balanced approach is required. This bill must be amended so that the rights of people who have suffered injury as a result of misleading and deceptive behaviour are not eliminated. Labor believes that this is the only fair way to deal with this issue.