Nick Xenophon (SA, Independent) Share this | Hansard source

by leave—I move amendments (2) and (7) on sheet 5898:

(2)    Schedule 1, item 1, page 6 (lines 1 to 14), omit subsections 3(2) and (3), substitute:

        (2)    In determining whether a term of a consumer contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the contract as a whole.

(7)    Schedule 3, item 7, page 52 (line 29) to page 53 (line 11), omit subsections 12BG(2) and (3), substitute:

        (2)    In determining whether a term of a consumer contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the contract as a whole.

These amendments delete references to the terms ‘transparency’ and ‘detriment’ from the bill. Courts currently have the discretion to consider all aspects of cases before them and should not be constrained to focus on transparency and detriment specifically when it comes to determining whether or not a contract term is unfair. The term ‘unfair’ is expressly and separately defined, and the subsequent specific references in the bill to transparency and detriment are therefore unnecessary.

These are very important amendments in the context of the effectiveness of this legislation. These are additional hurdles for consumers to seek redress, and I am very concerned about this. Rather, the mandatory requirement for the court to focus on transparency and detriment will require the court to address these specific questions and will effectively turn these mandatory requirements into tests in themselves and in a manner that will negatively impact on the consumer. Therefore, this set of amendments will remove this additional and unnecessary test and will give greater opportunity for redress for consumers against unfair contract terms.

I am grateful for the advice I have received from Associate Professor Zumbo on this. I will briefly refer to the Senate Economics Legislation Committee inquiry. National Legal Aid argued that the concept of transparency implies that consumers are able to make informed choices about contract terms. However, they stated in their submission that their casework suggests the opposite. National Legal Aid said:

… because:

• most consumers do not read contracts—most rely on a notion that traders will act in a fair and reasonable way when it comes to enforcing their rights;
• even when they read contracts, consumers do not often understand how a particular clause will operate in practice; and
• even where a contract is read and understood, standard clause contracts are non-negotiable—it is a falsity to think that consumers can somehow bargain their way through amending or deleting a clause in a contract that is unfair but transparent.

Associate Professor Zumbo also argued in his submission that:

… a term can be “transparent” but still be unfair on the simple, but objective basis that the larger party’s bargaining power allows the larger party to draft and impose a contract term in such a way as to (i) represent a significant imbalance in the contractual rights and obligations in larger party’s favour; and (ii) in a manner that that goes beyond what is reasonably necessary in order to protect the legitimate interests of the larger party.

I believe this legislation has been weakened significantly for the benefit of consumers by having the terms ‘transparency’ and ‘detriment’ in it.