George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Hansard source

The government does not support these amendments, Senator Murray. We remain to be persuaded that section 51AC, in its current form—which operates upon the controlling concept of unconscionable conduct, with the assistance of subsection 51AC(3), which identifies 11 different categories of circumstances to which the court might have regard in making decisions about unconscionability—does not work perfectly well at the moment. It is not to be forgotten, of course, Senator Murray, that section 51AC of the Trade Practices Act builds upon an existing body of equitable doctrine, which goes back many centuries as to what unconscionable conduct means.

What you would do, if I may say so, with respect—and Senator Sherry is quite right: the case law on this is quite settled; it is quite searching—is upset the structure of section 51AC by replacing it with a provision such as 51AC(3) in your proposed amendments, which would have it that:

A term is to be regarded as unfair ... if, contrary to the requirements of good faith—

I pause to say that, although good faith has rhetorical meaning, it also has a technical meaning in the law—

and in all the circumstances—

which is an open-ended category which invites an infinity of considerations to be brought into contemplation—

it causes a significant imbalance in the parties’ rights and obligations arising under the contract ...

Well, for goodness sake, Senator Murray, if that means that whenever there is a negotiation as a result of which there is a significant change, which you might characterise as an imbalance in the party’s rights and obligations under a contract, the contractual term can be set aside by a court, then it seems to me, with respect—and you as a businessperson should understand this, I think, better than most—that it attacks one of the core principles of commercial law: the security of transactions.

There is no controversy. Where there is unconscionable conduct—which, as I said before, is a well-understood notion in the law—there ought to be circumstances in which a contractual term is set aside, but if, absent of unconscionable conduct, there is a carte blanche for courts to set aside contractual terms merely because one side gets the rough end of the deal, that is the end of security of transactions or contractual certainty, which is such an important commercial desideratum.

It only gets worse, with respect, when we go to item 8, which would define unconscionable conduct as anything that is:

... unfair, unreasonable, harsh or oppressive, or is contrary to the concepts of fair dealing, fair-trading, fair play, good faith and good conscience.

Heavens above, Senator Murray: what a cornucopia of adjectival extravagance that is. Can you tell me what the concept of fair play is in commercial law? I bet you cannot. Nobody can because there is no such thing as the concept of fair play in commercial law. It troubles me when people substitute settled legal concepts for political rhetoric.

Progress reported.