Home | Databases | WorldLII | Search | Feedback New Zealand Bill of Rights Act Reports

Consumer Law Reform Bill (Consistent) (Sections 14, 19, 21, 25(c)) [2011] NZBORARp 13 (4 April 2011)

Last Updated: 29 April 2019

Consumer Law Reform Bill

4 April 2011 ATTORNEY-GENERAL LEGAL ADVICE

CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT 1990:

CONSUMER LAW REFORM BILL

1. We have considered whether the Consumer Law Reform Bill (PCO 14958/8.0) (the Bill) is consistent with the New Zealand Bill of Rights Act 1990 (the Bill of Rights Act). We understand that the Bill is likely to be considered by the Cabinet Legislation Committee at its meeting on Thursday, 7 April 2011.
2. We have concluded that the Bill appears to be consistent with the Bill of Rights Act. In reaching that conclusion we have considered possible inconsistencies with

s 14 (freedom of expression), s 19 (freedom from discrimination), s 21 (freedom from unreasonable search and seizure) and s 25(c) (right to be presumed innocent) of that Act.

PURPOSE

3. The Bill seeks to revise and update consumer law so that it is principles-based, enables consumers to transact with confidence, protects reputable suppliers and consumers from inappropriate market conduct, is easily accessible to those who are affected by it, and achieves harmonisation with the Australian Consumer Law.
4. To this end, the Bill is an omnibus bill that amends the Fair Trading Act 1986 (FTA), the Consumer Guarantees Act 1993, the Weights and Measures Act 1987, the Carriage of Goods Act 1979, the Sale of Goods Act 1908 and the Second-hand Dealers and Pawnbrokers Act 2004. The Bill also repeals the Auctioneers Act 1928, the Door to Door Sales Act 1967, the Layby Sales Act 1971, the Unsolicited Goods and Services Act 1975, and incorporates these matters into the amended FTA and a new Auctioneers Act.
   

ISSUES OF INCONSISTENCY WITH THE BILL OF RIGHTS ACT

Freedom of Expression

5. Section 14 of the Bill of Rights Act affirms the right to freedom of expression, which includes the freedom to seek, receive, and impart information and opinions of any kind and in any form. The right has been interpreted as including the right not to be compelled to say certain things or to provide certain information. [1]
6. Several clauses prohibit a person from making unsubstantiated, false or misleading representations and asserting the right to payment of unsubstantiated goods. For example, new Part 4A of the FTA, as set out in cl 18, inserts a number of new sections which set out disclosure requirements relating to layby sale agreements, uninvited direct sale agreements and extended warranty agreements. The new Auctioneers Act proposed by the Bill also sets out the requirements for registration applications and requires that registered auctioneers keep an auctioneer record.
7. It is arguable whether any of these amount to limits on the right to freedom of expression as, for the most part, they either compel the provision of factual information or prohibit the disclosure of false or misleading information.

8. The objective of the FTA is to prohibit certain conduct and practices in trade, to provide for the disclosure of consumer information relating to the supply of goods and services and to promote product safety. This is to protect consumers who are vulnerable to any harm associated with goods and services, and who rely on the information from the supplier or vendor. Small businesses are also vulnerable to imbalances or unfair trading with big businesses. To achieve this objective the FTA prohibits traders from undertaking conduct that is misleading or deceptive, a false representation or other unfair practice.
9. The information required in registers under the new Auctioneers Act is also of a type that people can reasonably be expected to provide in occupational regulation, such as those applying to registered motor vehicle traders under the Motor Vehicle Sales Act 2003. Individuals can check the records to confirm or clarify any aspects of the transaction or confirm or verify that the auction was completed fairly. We understand that the purpose of the register is to provide a safety mechanism for auctioneers and Registrars, helping to resolve any queries about the transaction.
10. To the extent that these provisions could be considered to engage the right to freedom of expression, where information could be seen to be expressive, we consider that the limits placed on the right to freedom of expression appear to be in due proportion to the importance of the objectives and are, therefore, justified under s 5 of the Bill of Rights Act.
    

Freedom from discrimination

11. Section 19(1) of the Bill of Rights Act affirms that everyone has the right to freedom from discrimination on the grounds of discrimination in the Human Rights Act 1993. The grounds of discrimination under s 21(1)(i) of the Human Rights Act include discrimination based on age (commencing with the age of 16 years old) and family status.
12. Drawing on the New Zealand case law on discrimination, we consider that the key questions in assessing whether there is a limit on the right to freedom from discrimination are: [2]
    

• does the legislation draw a distinction based on one of the prohibited grounds of discrimination; and if so
• does the distinction involve disadvantage to one or more classes of individuals?
  

In determining if a distinction arises, consideration is given to whether the legislation proposes that two comparable groups of people be treated differently on one or more of the prohibited grounds of discrimination. [3] The distinction analysis takes a purposive and untechnical approach to avoid artificially ruling out discrimination. [4] Once a distinction on prohibited grounds is identified, the question of whether disadvantage arises is a factual determination. [5]

Age-based discrimination

Clause 67(1)(a) in the new Auctioneers Act prohibits persons under 18 years of age from carrying on business as a registered auctioneer. This age restriction draws a distinction between 16 and 17 year olds and those over 18 years of age. This creates a disadvantage for 16 and 17 year olds as they cannot be registered as auctioneers. The provision, therefore, gives rise to a limit on the right to be free from discrimination on the basis of age.

We have considered whether this age restriction is justifiable under s 5 of the Bill of Rights Act. Where a provision is found to limit a particular right or freedom, it may nevertheless be consistent with the Bill of Rights Act if it can be considered to be justifiable in terms of s 5 of that Act.

Following the guidance of the New Zealand Supreme Court decision of Hansen v R, the s 5 inquiry may be summarised as: [6]

(a) does the objective serve a purpose sufficiently important to justify some limitation of the right or freedom?

(b) If so, then:

1. is the limit rationally connected with the objective?
   
2. does the limit impair the right or freedom no more than is reasonably necessary for sufficient achievement of the objective?
   
3. is the limit in due proportion to the importance of the objective?
   

Auctioneers, like real estate agents, car dealers, and second hand dealers occupy positions involving trust and responsibility. The objective of cl 67(1)(a) is to ensure that auctioneers are persons who are of sufficient maturity to properly understand the nature and consequences of their actions, and who may undertake these actions without undue pressure or influence. Clause 67(1)(a) presumes that persons of 18 years and over are sufficiently mature to do these actions, whereas younger persons are not. Auctioneer responsibilities include completing paper work, dealing with considerable financial transactions, facilitating the transfer of goods, having the responsibility for the insurance of goods and leasing premises where auctions are being held.

Age restrictions necessarily involve a degree of generalisation using age as a proxy measure of maturity and capacity to act responsibly. This avoids the onerous assessment of each individual's maturity and responsibility. However, it is necessary to identify specific justification for the imposition of an age limit in each instance.

We consider the limit imposed by cl 67(1)(a) is justified on two specific grounds. The first is that the age of 18 years has been considered appropriate as a lower age limit for positions involving trust and responsibility in a commercial setting. [7] An auctioneer is responsible for ensuring that contracts are carried out and dealing with large transactions of money. It is our understanding that the Ministry of Consumer Affairs has concerns about the risk that contracts, which often involve large sums of money, could be invalidated where the auctioneer is 16 or 17 years old due to the

Minors’ Contracts Act 1969. Further concerns include potential difficulties of 16 and 17 years olds obtaining insurance cover and dealing with business banking arrangements. Consequently, there is a rational connection between imposing a minimum age requirement and promoting trust and confidence in the industry.

Secondly, it is important to note the age restriction does not preclude a person under 18 years old from being employed by an auctioneer or from conducting auctions but only from carrying on business as an auctioneer. The effect of the provision is merely to delay registration as an auctioneer. Therefore, we consider that the imposition of a minimum age requirement is a proportionate measure to achieve the objective.

Unreasonable search and seizure

Section 21 of the Bill of Rights Act affirms the right to be secure against unreasonable search or seizure, whether of the person, property, correspondence or otherwise. There are two limbs to the right affirmed in s 21. First, whether activities constitute a search or seizure, and second, where

certain actions do constitute a search or seizure, whether the search or seizure is “unreasonable” in

the circumstances.

Under cls 17 and 28, the new ss 33C and 47L give product safety officers and authorised employees the power to enter any place in which they believe on reasonable grounds that goods or services are available to consumers or that consumers have access to the relevant goods or services for supply or are dispatched for supply respectively. Both can remain at that place and inspect, photograph and purchase any goods that are available to consumers for supply.

A request for information or documents constitutes a search for the purposes of s 21 of the Bill of Rights Act. [8] New ss 33C and 47L require the person in charge to provide their own identifications details and identification details of suppliers and information about the goods or services that is normally disclosed to the consumer. Under new s 47F in cl 27, it is an offence to resist, obstruct or delay a product safety officer or authorised employee. An authorised employee can also issue infringement notices.

The purpose of new s 33C is to prevent harm to consumers from unsafe products. The purpose of new s 47L is to monitor and ensure compliance with consumer information standards and product safety regulation. New ss 33C and 47L will encourage compliance with safety standards as visits can be random and the detection of unsafe products can result in a suspension of supply notice or an infringement notice under new ss33D and 47L respectively. Compliance will consequently improve the safety of goods and so protect consumers from harm.

The powers to enter premises without a warrant are restricted to commercial premises at reasonable times. Further, product safety officers and authorised employers cannot enter a dwellinghouse without the consent of the occupier or without a warrant, issued in accordance with s 47 of the FTA. In this way, product safety officers and authorised employees only remain at the place and do all the things that a member of the public can do. For example, a product safety officer is able to request the identification details of the person in charge and of suppliers, but is not able to compel the provision of documents or seize documents setting out these details. The objective of random inspections is to encourage compliance with safety standards and to monitor and eliminate hazards.

We have concluded that although these clauses constitute a search and seizure under s 21 of the Bill of Rights, the search is not unreasonable for the reasons mentioned above.

Right to be presumed innocent

Section 25(c) of the Bill of Rights Act affirms the right to be presumed innocent until proved guilty. This means an individual must not be convicted where reasonable doubt as to his or her guilt exists. The prosecution in criminal proceedings must therefore prove, beyond reasonable doubt, that the accused is guilty.

Strict liability and reverse onus offences give rise to issues of inconsistency with s 25(c) because the accused is required to prove (on the balance of probabilities) a defence to escape liability; whereas, in other criminal proceedings an accused must merely raise a defence in an effort to create reasonable doubt. Where an accused is unable to prove the defence, he or she could be convicted even though reasonable doubt exists as to his or her guilt.

Where a provision is found to limit a particular right or freedom, it may nevertheless be consistent with the Bill of Rights Act if it can be considered to be justifiable in terms of s 5 of that Act. In addition to the considerations set out in paragraph 15, we consider that the following factors are relevant in assessing whether the strict liability offences can be justified under s 5 of the Bill of Rights Act:

• the nature and context of the conduct to be regulated
• the ability of the defendant to exonerate themselves and the risk of conviction of an innocent person
• the penalty level.
  

New provisions in the Fair Trading Act

Various strict liability offences are being added into the FTA. The first group of new offences have maximum penalties of $60,000 for an individual or $200,000 for bodies corporate. These offences are for:

• unsubstantiated claims regime (new s 12A under cl 9)
• asserting a right to payment for an unsolicited good or service (new s 21C under cl 11) (there is an additional defence for this offence where the defendant had a reasonable belief in a right to payment)
• not complying with a cease-supply order for unsafe goods (new s 33D inserted by cl 17).
  

The second group of new offences are found in the new Part 4A of the FTA, which regulates layby sales, direct sales, extended warranties, and auctions. Clause 27 also makes it an offence to resist, obstruct or delay a product safety officer or authorised employee. The maximum penalties are

$10,000 for an individual and $30,000 for a body corporate and the same defences as above (in s 40 of the FTA) apply.

Other strict liability offences include new s 46E (inserted by cl 26) which creates an offence for a breach of a banning order with a maximum penalty of $60,000, and new s47F. Clause 22 also inserts new subsection 1B to s 40 of the FTA which creates an offence for a contravention of any of the provisions of Part 2 or Part 4A of the FTA.

In addition, new s 44(1)(ab), inserted by cl 25, places the onus on the defendant to explain why they reasonably believed they had a right to payment. This may give rise to an issue under s 25(c) to the extent that the defendant in proving the reasonable belief has to disprove an element of the offence. We have therefore included this defence as part of our assessment.

As discussed above, the objective of the FTA is to protect consumers or competing businesses from unfair conduct and to deter traders from contraventions of the FTA. Without such compliance consumers and small businesses are vulnerable to harm due to a power imbalance. In light of these

objectives, these offences can be characterised as regulatory offences intended to protect public welfare.

The Ministry of Consumer Affairs considers it important to have an effective enforcement regime because of the harm caused by unfair trading. Accordingly, the objective of the strict liability offences is to increase the likelihood of successful enforcement action to promote the objectives of the Act.

We understand that strict liability offences were chosen to achieve the FTA objectives because of a desire to put into legislation what is assumed to be minimum standards of fair trading. The strict liability offences seek to deter participants from taking advantage of consumers or small businesses, which in turn encourages fair market conduct. The offences place the burden on participants in trade to adhere to appropriate market conduct and provide safe goods and services. Information relevant to the defences is within the defendant’s ambit of knowledge. This is especially the case with unsolicited goods as the defendant is the only person with the knowledge as to why they should be paid. The defendant is therefore in a good position to give evidence that they complied with the Act and will be able to exonerate themselves using the defence of reasonable mistake.

Accordingly, we consider that the strict liability offences are rationally linked to the objectives in the FTA.

We have also considered the penalty levels for the strict liability offences noted above and have concluded that they are broadly proportionate to the potential harm caused for failing to meet the requirements of the Act. The penalty is at the lower end of the scale ($30,000 for a body corporate, and $10,000 for any other person). Furthermore for unsubstantiated claims, the Commerce Commission must also prove that a representation is not substantiated. The defendant would then have the opportunity to raise matters that are inconsistent with the Crown’s case in relation to the elements of the offence or provide evidence of a reasonable mistake, or reliance on third party information.

In light of the above factors, these strict liability offences appear to be a proportionate way of achieving the objectives of the FTA. We therefore consider that the limit they place on s 25(c) of the Bill of Rights Act is justifiable in terms of s 5 of that Act.

The new Auctioneers Act

Clause 84 creates a strict liability offence under the new Auctioneers Act for failing to comply with record keeping standards.

The purpose of the new Auctioneers Act is to provide for occupational regulation provisions for auctioneers and businesses conducting auctions. As previously noted, the objective is to make information easily accessible to those who are affected by it and to act as a reference for Registrars and auctioneers to use in cases of dispute. To achieve this objective cl 84 seeks to deter auctioneers from circumventing the standards in the Act. In particular, the provision places the burden on auctioneers to keep records verifying their compliance with the Act which links to a desire to ensure that auctioneers take responsibility for their own work. Accordingly, auctioneers are in a good position to give evidence that they complied with the Act and will be able to exonerate themselves by producing documentation verifying compliance with the Act.

For these reasons, we consider that the strict liability offence in cl 84 appears to impair the right to be presumed innocent no more than is reasonably necessary for sufficient achievement of the objective and the limit is in due proportion to the importance of that objective.

Conclusion

We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed by the Bill of Rights Act. This advice has been prepared by the Public Law Group and the Office of Legal Counsel.

Jeff Orr

Chief Legal Counsel Office of Legal Counsel

Footnotes:

1. RJR MacDonald v Attorney-General of Canada (1995) 127 DLR (4th) 1.
2. See, for example, Atkinson v Minister of Health and others [2010] NZHRRT 1; McAlister v Air New Zealand [2009] NZSC 78; and Child Poverty Action Group v Attorney-General [2008] NZHRRT 31.
3. Quilter v Attorney-General [1997] NZCA 207; [1998] 1 NZLR 523 (CA) at [573] per Tipping J (dissenting) relied on in Atkinson v Minister of Health and others [2010] NZHRRT 1 at [199]; McAlister v Air New Zealand [2009] NZSC 78 at [34] per Elias CJ, Blanchard and Wilson JJ and at [51] per Tipping J; and Child Poverty Action Group v Attorney-General [2008] NZHRRT 31 at [137].
4. Atkinson v Minister of Health and others [2010] NZHRRT 1 at [211]- [212]; McAlister v Air New Zealand [2009] NZSC 78 at [51] per Tipping J; and Child Poverty Action Group v Attorney-General [2008] NZHRRT 31 at [137].
5. See for example Child Poverty Action Group v Attorney-General [2008] NZHRRT 31 at [179]; and McAlister v Air New Zealand [2009] NZSC 78 at [40] per Elias CJ, Blanchard and Wilson JJ.
6. The proportionality test under s 5 of the Bill of Rights Act, as applied in Hansen v R [2007] NZSC 7 [123], draws on the test articulated by the Canadian Supreme Court in R v Oakes [1986] 1 SCR 103, R v Edwards Books and Art Ltd [1986] 2 SCR 713 and R v Chaulk [1990] 3 SCR 1303. See for example, Hansen, at [42] per Elias CJ; [64] and [79] per Blanchard J; [103],

[104] and [120]-[138] per Tipping J; [185] and [217] per McGrath J; and [272] per Anderson J.

7. For example, s 151(2)(a) of the Companies Act 1993 fixes 18 as the minimum age of company directors.
8. New Zealand Stock Exchange v Commissioner of Inland Revenue [1992] 3 NZLR 1 (PC).
   

In addition to the general disclaimer for all documents on this website, please note the following: This advice was prepared to assist the Attorney-General to determine whether a report should be made to Parliament under s 7 of the New Zealand Bill of Rights Act 1990 in relation to the Consumer Law Reform Bill. It should not be used or acted upon for any other purpose. The advice does no more than assess whether the Bill complies with the minimum

guarantees contained in the New Zealand Bill of Rights Act. The release of this advice should not be taken to indicate that the Attorney-General agrees with all aspects of it, nor does its release constitute a general waiver of legal professional privilege in respect of this or any other matter. Whilst care has been taken to ensure that this document is an accurate reproduction of the advice provided to the Attorney-General, neither the Ministry of Justice nor the Crown Law Office accepts any liability for any errors or omissions.