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Financial Markets Conduct Bill (Consistent) (Sections 14, 18, 19, 21, 25(c)) [2011] NZBORARp 46 (3 October 2011)
Last Updated: 29 April 2019
Financial Markets Conduct Bill
3 October 2011 ATTORNEY-GENERAL LEGAL ADVICE
CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT
1990:
FINANCIAL MARKETS CONDUCT BILL
- We
have considered whether the Financial Markets Conduct Bill (PCO 15084/11.0)
(‘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, 6 October 2011.
- We
have concluded that the Bill appears to be consistent with the rights and
freedoms contained in the Bill of Rights Act. In reaching
this conclusion, we
considered potential issues of inconsistency with ss 14 (right to freedom of
expression), 18 (right to freedom
of movement), 19 (right to be free from
discrimination), 21 (right to be secure against unreasonable search or seizure)
and 25(c)
(right to be presumed innocent) of the Bill of Rights Act. Our
analysis under those sections is set out below.
PURPOSE OF THE BILL
- The
Bill seeks to:
- promote the
confident and informed participation of businesses, investors, and consumers in
the financial markets, and
- promote and
facilitate the development of fair, efficient, and transparent financial
markets.
To support these goals, the Bill sets out the following additional
purposes:
- provide for
timely, accurate, and understandable information to be provided to persons to
assist those persons to make decisions relating
to financial products or the
provision of financial services
- ensure that
appropriate governance arrangements apply to financial products and market
services that allow for effective monitoring
and reduce governance risks
- avoid
unnecessary compliance costs, and
- promote
innovation and flexibility in the financial markets.
The Bill repeals the Securities Act 1978, Securities Markets Act
1988, Unit Trusts Act 1960, Superannuation Schemes Act 1989, and
Securities
Transfer Act 1991 and amends several other enactments, including the Financial
Advisers Act 2008 and the KiwiSaver Act
2006.
The Bill covers four types of financial product: debt, equity, managed
investment products and derivatives. The Bill contains nine
Parts and four
Schedules, which regulate: the financial products covered by the Bill (Parts 1
and 8), misleading and deceptive conduct
(Part 2), disclosure and exclusion
(Part 3 and Schedule 1), governance of financial products and services (Part 4),
financial product
markets and licensed services (Parts 5 and 6), enforcement and
liability (Part 7), transitional
provisions (Part 9), registers (Schedule 1), schemes (Schedule 3) and
consequential amendments (Schedule 4).
SUMMARY OF THE BILL OF RIGHTS ACT ISSUES
Issues of consistency with the Bill of Rights Act
arise in the following ways:
Section 14 – Right to freedom of expression
- Obligations
in the Bill to disclose, publish and register documents, information and other
matters amount to compelled expression.
- Limits on
advertising and publicity restrict the freedom to impart certain
information.
Section 18 – Right to leave New Zealand
- Court
orders requiring a person to deliver up to the Court their passport or
prohibiting a person from leaving New Zealand limit their
freedom of
movement.
Section 19 – Right to be free from discrimination
- The
disclosure obligations do not apply to offers to relatives of persons who offer
financial products, thereby discriminating against
those people on the grounds
of marital and family status.
Section 21 – Right to be secure against unreasonable search and
seizure
- A
requirement to report a breach of obligations, limit breaks or pricing errors,
as well as other reporting and notification obligations,
amount to a search for
the purposes of s 21 of the Bill of Rights Act. Complying with requirements to
report a breach of obligations
may lead to liability for an infringement or
other offence and the protection offered against self- incrimination is,
therefore,
an important safeguard.
Section 25(c) – Right to be presumed innocent until proved guilty
- Offence
provisions containing strict liability and reverse onus offences raise an issue
of consistency with the presumption of innocence
because an accused is required
to prove a defence or disprove a presumption to escape liability instead of
merely raise a defence
in an effort to create reasonable doubt. These provisions
create a risk that an accused may 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 a reasonable limit that is demonstrably justified in terms of s 5 of
that Act. Following the guidance of the
New Zealand Supreme Court decision in
Hansen v R, the s 5 inquiry may be summarised as follows: [1]
(a) Does the objective serve a purpose sufficiently important to justify some
limitation of the right or freedom?
(b) If so, then:
- is
the limit rationally connected with the objective?
- does
the limit impair the right or freedom no more than is reasonably necessary for
sufficient achievement of the objective?
We have concluded that the issues summarised above appear
to be justified under s 5 of the Bill of Rights Act.
DISCUSSION OF THE ISSUES OF CONSISTENCY WITH THE BILL OF RIGHTS ACT
Disclosure provisions
The Bill provides for a comprehensive disclosure regime. The relevant
disclosure provisions require, or authorise the Financial Markets
Authority
(‘FMA’) to direct, [2] among
other things, that statements, information or documents be made available to
relevant persons or the FMA or that they be notified,
made public, or kept in a
register. [3] The Bill also states that
certain information (for example, misleading information, insider information or
false statements) must
not be disclosed [4] and that the disclosure obligations do not
apply to certain offers or investors. [5]
The Bill further authorises the Governor-General to make regulations relating to
the disclosure of information, documents and other
matters. [6]
Section 14 – Right to freedom of expression
- Section
14 of the Bill of Rights Act affirms that everyone has the right to freedom of
expression, including the freedom to seek,
receive, and impart information and
opinions of any kind 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. [7]
- The disclosure
regime in the Bill is reinforced by means of an extensive enforcement regime. A
failure to comply with the disclosure
requirements in the Bill makes a person
liable for civil remedies, including a pecuniary penalty not exceeding the
greatest of the
consideration for the relevant transaction, three times the
amount of the gain made, or the loss avoided, and $1 million in the case
of an
individual or $5 million in any other case. [8] Non-compliance with some
disclosure provisions may also give rise to infringement offences, [9]
which may result in the imposition of a fine not exceeding $50,000, or other
offences, which can carry penalties such as imprisonment
for a term up to five
years, a fine not exceeding $500,000, or both (in the case of an individual) or
$2.5 million (in any other
case). [10]
- The imposition
of penalties creates a clear element of compulsion. The disclosure regime in the
Bill, therefore, raises a prima facie issue of inconsistency with the
right to freedom of expression affirmed in s 14 of the Bill of Rights Act. For
that reason, we have
considered whether the limits on the freedom of expression
can be justified under s 5 of that Act.
Is the limit on the right to freedom of expression justified?
- The
disclosure provisions relate to two types of disclosure: point of sale
disclosure and ongoing disclosure. The objectives of point
of sale disclosure
are to ensure that individuals are properly informed about potential investments
before they invest and to provide
the means for individuals to compare different
products (which will ideally result in funds being directed to the more
productive
investments). The objectives of ongoing disclosure are to ensure that
investors are effectively informed about the status of their
investments and to
promote comparability between products where there is a market for trading those
particular products. We consider
these objectives to be significant and
important.
- We consider that
the disclosure provisions are rationally linked to these objectives as they
provide for necessary information to
be made available, thus enabling
individuals to make informed decisions in relation to investments.
- The complexity
of many financial products and the risks to which many investors may be exposing
themselves mean that it is particularly
important that individuals be well
informed about financial products that they invest in. The Ministry of Economic
Development advises
that standardised disclosure is the most effective means by
which accurate comparability between financial products can be achieved.
We also
note that the compelled information contributes to a fair, efficient and
transparent functioning of financial markets.
- Accordingly, due
to the importance of individuals being properly informed, we consider that any
limits placed by the disclosure regime
on the right to freedom of expression are
in due proportion to their objectives.
- Overall, we
consider that the disclosure regime appears to be justifiable under s 5 of the
Bill of Rights Act.
Limits on advertising and publicity
- The
Bill regulates advertising and publicity for financial products. [11] Clauses 76 to 78 of the Bill provide
specific rules on advertising and publishing offers or intended offers of
financial products
that are regulated offers (ie. offers requiring disclosure
under Part 3 of the Bill as defined in cl 29). Advertising or publicity
other
than in accordance with those rules is not permitted (cl 73) and a breach of
these rules makes a person liable for civil
remedies. [12] Clauses 13 and 17 of Schedule 1 state
that it is also not permitted to advertise offers that would be regulated offers
but for the
exclusions referred to in cl 12 (small offers) and 16 (small
schemes) of that Schedule (exceptions apply).
Section 14 – Right to freedom of expression
- The
right to freedom of expression extends to all forms of communication, including
commercial speech such as advertising. [13] Overseas case law suggests, however, that
not all forms of expression are equally deserving of protection and commercial
expression
is considered to reside not at the core of the right. [14] Courts in similar jurisdictions to New
Zealand have held the view that commercial expression is of less importance than
political
or
artistic expression and consequently limitations on the
right in this context are easier to justify. [15]
- The provisions
in the Bill that regulate the advertising and publicity of financial products
raise a prima facie issue of inconsistency with the freedom of expression
affirmed in s 14 of the Bill of Rights Act because they limit the right to
impart
information.
- The objectives
of the advertising rules in cls 76 to 78 are to ensure that advertising does not
become the primary means by which
investment decisions are made and the product
disclosure statement cannot be bypassed as the primary document on which
investors
base their decisions.
- The objective of
the prohibition on advertising in cls 13 and 17 of Schedule 1 is to ensure that
the relevant types of offers are
not made to the public at large given the risks
associated with general retail investors subscribing to such an offer. The
reason
is that these types of offers do not require disclosure under Part 3 of
the Bill.
- We consider that
these objectives are significant and important. In our view, the advertising
rules are also rationally and proportionately
connected to this objective. We
have, therefore, concluded that the limits on advertising and publicity of
financial products appear
to be justifiable under s 5 of the Bill of Rights
Act.
Requirements to report a breach of obligations, limit breaks or pricing
errors
- Clause
102 of the Bill requires an issuer of a debt security who has reasonable grounds
to believe that it has contravened, or may
have contravened, any of its
obligations in a material respect, to report the (possible) contravention to the
supervisor. The issuer
should include advice about the steps taken or to be
taken in light of the breach or possible contravention. Clauses 136 and 410
of
the Bill impose similar reporting obligations on the manager of a registered
scheme and a licensee providing market services.
- Clause 187
requires the supervisor of a debt security or registered scheme who has
reasonable grounds to believe that the issuer has
or may have contravened an
issuer obligation, to report this to the FMA. Under cl 186, the FMA may also
require a supervisor to attest
to the FMA as to whether the supervisor is
satisfied that the issuer has not contravened an issuer obligation in a material
respect.
- Clause 153(2)
requires the manager of a registered scheme to report a material breach of the
limits on the nature or type of investments
that may be made, or the proportion
of each type of assets that may be invested in (‘limit breaks’) to
the supervisor
or the FMA, if there is no supervisor. Similarly, cl 436(2)
requires a licensee who acts as a provider of a
discretionary
investment management service (‘DIMS licensee’) to report limit
breaks to the FMA. Clause 154(2) requires
the manager of a registered scheme to
report pricing errors or non-compliances with the pricing methodology to the
supervisor, if
they are material.
Section 21 – Right to be secure against unreasonable search and
seizure
- Section
21 of the Bill of Rights Act provides that everyone has the right to be secure
against unreasonable search or seizure, whether
of the person, property,
correspondence or otherwise.
- There are two
limbs to the s 21 right. First, s 21 is applicable only in respect of those
activities that constitute a "search or
seizure". Second, where certain actions
do constitute a search or seizure, s 21 protects only against those searches or
seizures
that are "unreasonable" in the circumstances.
- A requirement to
produce certain information constitutes a search for the purposes of s 21 of the
Bill of Rights Act. [16] Accordingly, we
have examined whether the reporting obligations listed above are reasonable. In
making this assessment we have taken
into account that expectations of privacy
may not be as great in the commercial world as they are in the domestic sphere.
[17]
- It is the duty
of the supervisor of a debt security or registered scheme to ensure that the
issuer of a debt security or manager of
a registered scheme complies with their
obligations, and to seek appropriate remedies on behalf of investors for any
breaches. The
obligations to report actual or potential breaches to the
supervisor under cls 102, 136 and 410 of the Bill are designed to assist
the
supervisor in carrying out this task.
- Limit breaks can
affect the nature and the performance of a collective investment scheme. Pricing
errors are a risk to investors,
especially when they are entering or exiting a
collective investment scheme. Accurate pricing of interests in the scheme is
essential
to enable investors to monitor its performance. Significant and/or
regular limit breaks and pricing errors often indicate a problem
in the
administration of a scheme. The purpose of cls 153(2), 154(2) and 436(2) is to
notify the supervisor and the FMA when issues
with a registered scheme or
discretionary investment management service arise and enable them to address
these issues.
- We consider that
the objectives of these reporting obligations are important, also in light of
the overall purposes of the Bill.
- We further note
that limit breaks or pricing errors cannot result in liability for a civil
remedy or in a charge for an offence. The
contravention of their obligations by
an issuer of a debt security, manager of a registered scheme, licensee providing
market services
or financial adviser providing discretionary investment
management services can result in a civil remedy [18] as well as a charge for an offence. [19] However, an issuer, manager, licensee,
or financial adviser is not required to provide information under cls 102, 136
or 410 that
would, if so provided, be likely to incriminate them under New
Zealand law for an offence punishable by a fine or imprisonment. [20] This is an important safeguard.
- For these
reasons, we have concluded that the above reporting obligations in the Bill are
reasonable and, therefore, not inconsistent
with s 21 of the Bill of Rights
Act.
Other reporting and notification obligations
- In
addition to the obligations discussed in paragraphs 25 to 35, the Bill provides
for other reporting obligations at prescribed times
or on the occurrence of
prescribed events and otherwise in a prescribed manner. Clauses 100 and 101
require the issuer of a debt
security to prepare and provide reports to the
supervisor that contain the documents, information, or other material that are
required
by the regulations or all documents and records relating to the issuer
and any other reports or information required by the supervisor.
Clauses 134 and
135 impose similar reporting obligations on the manager of a registered scheme.
Clause 409 requires a licensee providing
market services to send the FMA reports
that contain the prescribed documents, information, and other matters.
- Non-compliance
with these reporting obligations can make a person liable for civil remedies,
including a pecuniary penalty not exceeding
$200,000 in the case of an
individual or
$600,000 in any other case. [21]
- Clause 336
requires a licensed market operator to give a report to the FMA and the Minister
on the extent to which it has complied
with its licensed market obligation. In
addition to this reporting obligation, cl 337 provides that the FMA may carry
out a review
of how well an operator is meeting its obligations and must do this
at least once in respect of each reporting period. The FMA may,
in carrying out
the review, take into account the most recent report and other information
provided under cl 336.
- Clause 619
inserts, inter alia, new s 117(1) in the Kiwisaver Act 2006, which
requires the relevant person to notify the FMA in case of fee increases. [22]
Section 21 – Right to be secure against unreasonable search and
seizure
As noted above, we consider that the requirements to provide information or
produce documents constitute a search for the purposes
of s 21 of the Bill of
Rights Act. [23] However, in our view,
the reporting obligations do not constitute an unreasonable search under
s 21 because:
- the purpose of
these provisions (except cl 619, new s 117(1)) is to enable the supervisor or
the FMA to determine whether or not an
issuer of a debt security, manager of a
registered scheme, licensee providing market services or licensed market
operator is complying
with their obligations under the Bill
- the purpose of
new cl 619, new s 117(1) is to enable the FMA to oversee the fees being charged
and take action in respect of any unreasonable
fees, and
- the financial
market sector is heavily regulated and, as a result, the privacy expectations of
industry participants would be limited
in relation to the information provided
to or sought by the supervisor or the FMA in these circumstances.
Presumption, strict liability and reverse onus offences
The Bill contains, inter alia, the following
offence provisions:
- offence
provisions providing for statutory defences to escape liability
- offence for
insider conduct and market manipulation, and
- strict liability
infringement offences.
Offence provisions providing statutory defences to escape liability
- The
Bill contains various offence provisions where an accused may escape liability
for the offence by proving that they have a reasonable
excuse for
non-compliance. [24] These offences,
except the offence in cl 619, principally relate to refusing or failing to
comply with various directions or orders
from the FMA relating to, for
example:
- trading of
quoted financial products or participation in the licensed market, and
- breaches of
market services licensee obligations, material change of circumstances or the
provision of false or misleading information.
- The offence in
cl 619 relates to refusing or failing to give notice to the FMA of a fee
increase, or refusal or failure to provide
an annual return, as required under
the relevant provisions of the Kiwisaver Act 2006 or regulations made under s
228 of that Act.
Offence for insider conduct and market manipulation
- We
note that cl 264 (criminal liability for false or misleading appearance of
trading) makes it an offence for a person to contravene
cl 260 (false or
misleading appearance of trading) if the person knows that the act or omission
will have the effect of creating
a false or misleading appearance. The offence
itself is not a strict liability or reverse onus offence; however, cl 262
(persons
treated as contravening false or misleading appearance of trading
prohibition) creates a presumption that an accused has contravened
cl 260 in
specific circumstances. An accused must rebut this presumption by showing that
the trading in securities occurred, or the
offer to trade was made, for a
legitimate reason.
- The Ministry of
Economic Development has advised that the presumption in cl 262 is necessary in
light of the difficulty that may exist
– in extremely limited situations
– in distinguishing market manipulation from legitimate market activity.
However, we
note that wide exceptions under subcls (2) and (3) allow the
defendant to raise defences that must be disproved by the Crown. We
further note
that the offence provision in cl 264 itself still requires the Crown to prove
knowledge on the part of the defendant
that the act or omission will have, or is
likely to have, the effect of creating, or causing the creation of, a false or
misleading
appearance.
- We therefore
consider that cls 260-264 are unlikely to raise an issue under s 25(c) of the
Bill of Rights Act.
Strict liability infringement offences
- The
Bill contains a wide range of strict liability infringement offences. [25] If these offences are proceeded with by
the issue of an infringement notice, the infringement fee may not exceed
$20,000. [26] If these offences are
proceeded with summarily, the maximum fine is
$50,000. A conviction
may not be entered for these contraventions.
Section 25(c) – Right to be presumed innocent until proved
guilty
- Section 25(c) of
the Bill of Rights Act affirms that everyone who is charged with an offence has,
in relation to the determination
of the charge, the right to be presumed
innocent until proved guilty according to law. The right to be presumed innocent
requires
that an individual must be proven guilty beyond reasonable doubt, and
that the state must bear the burden of proof. [27]
- Presumptions,
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 or disprove a presumption 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 or disprove the presumption, he or she could be
convicted even though reasonable
doubt exists as to his or her guilt.
Is the limit on the right to be presumed innocent justified?
- We
have considered the following factors in assessing whether a departure from s
25(c) 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 penalty
level.
- As to the nature
and context of the conduct to be regulated by this Bill, we note that reversal
of the onus of proof is generally
considered to be more easily justifiable for
"regulatory" offences. Those who choose to participate in regulated industries
should
be expected to meet certain expectations of care and accept the enhanced
standards of behaviour. The offences discussed in this advice
are regulatory in
nature.
- With respect to
the penalty level of the offences discussed in this advice it is important to
note that in the financial markets context
higher maximum penalties may be
appropriate where high levels of deterrence are necessary and where a
significant economic benefit
can be gained from the offending. We accept that
the penalty levels in this Bill are appropriate when considering justification
of
presumptions, strict liability and reverse onus offences.
Offence provisions providing statutory defences to escape liability
- Clauses
190(3), 370, 419(1), 461(2) and 658 create offences for refusing or failing to
comply with directions or orders of the FMA.
Clause 619 creates offences for
refusing or failing to notify the FMA or provide an annual return. The Ministry
of Economic Development
advises that it is very important in relation to FMA
directions and orders, notification obligations, and obligations to provide
an
annual return that the threshold for failing to comply with these obligations is
set very high. Only in cases where it is impossible
or at least highly
impractical to comply can a failure to meet these obligations be justified. In
these situations, the defendant
is best placed to show that the threshold for
non-compliance has been met, for example, by showing that a direction or order
has
not been received.
- For these
reasons, we consider that these offence provisions are justifiable under s 5 of
the Bill of Rights Act.
Strict liability infringement offences
- Strict
liability offences can be defended by an accused by the defence proving an
absence of fault on the balance of probabilities.
In our view, the strict
liability offences in the Bill can be justified as these offences turn on
particular matters that are peculiarly within the knowledge of the
defendant. We consider that it is easier for the defendant to explain why he or
she took (or failed to
take) a particular course of action than it is for the
Crown to prove the opposite. [28]
- Infringement
offence schemes are generally designed to address comparatively minor breaches
of the law and, as a general rule, infringement
fees should not exceed $1,000
(LAC guidelines recommend a fee less than $500). However, the Ministry of
Economic Development has
advised that low fine levels have a relatively minor
deterrent effect in a financial markets context and can effectively become
merely
a cost of doing business. They considered that in these circumstances an
infringement notice regime will make it more economic to
enforce lower level
breaches, and that a higher infringement fee of $20,000 is necessary in order to
ensure that there is an adequate
level of deterrence for these breaches.
- Accordingly, in
our view the strict liability infringement offences can be justified under s 5
of the Bill of Rights Act.
Court orders to deliver up passport or prohibiting a person from leaving New
Zealand
Section 18 – Right to leave New Zealand
- Clause
499(2) authorises the High Court to issue the orders listed in cl 500 to protect
the interests of aggrieved persons in case
of financial markets investigations
or proceedings. Under cl 500(k) and (l), the Court may order an individual to
deliver up to the
court his or her passport and may prohibit that person from
leaving New Zealand without the consent of the Court. These orders equate
to a
limitation of the right to leave New Zealand affirmed in s 18(3) of the Bill of
Rights Act.
- The objective of
cl 500(k) and (l) is to ensure that effective enforcement action can be taken
against market participants who breach
the law (for example, freezing their
assets or preventing them from leaving the country). This is an important
objective. We note
also that breaches of the law will often result in extremely
large financial losses for investors, making it important that offenders
are
able to be held accountable and do not abscond.
- We also consider
that the limitation on the right to leave New Zealand is rationally and
proportionately connected to this objective
and have concluded that cl 500(k)
and (l) appear to be justifiable under s 5 of the Bill of Rights
Act.
Disclosure obligations: exceptions applicable to relatives
Under cls 4 and 5 of Schedule 1 of the Bill,
disclosure under Part 3 of the Bill is not required in case of an offer of
financial
products to a close business associate or a relative of the offeror or
director of the offeror. The definition of ‘close business
associate of
the offeror’ includes the spouse, civil union partner, de factor partner;
and the child, parent, brother, or sister
(whether or not by adoption or a step
relationship) of a person who is a close business associate of the offeror under
cl 4(2)(a)
to (d) or (3) of Schedule 1. [29] The definition of ‘relative’
includes, inter alia, the spouse, civil union partner, de facto partner of the
offeror
or director of the offeror (B); a grandparent, parent, child,
grandchild, brother, sister, nephew, niece, uncle, aunt, or first cousin
of B,
the offeror or director of the offeror; and the spouse, civil union partner or
de facto partner of these persons. [30]
Section 19 – Right to be free from discrimination
- 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)(b) and (l) of the Human Rights
Act include discrimination
based on marital and family status.
- 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: [31]
- 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
whether a distinction arises, consideration is given to whether the legislation
proposes that two comparable groups
of people be treated differently based on
one or more of the prohibited grounds of discrimination. [32] The distinction analysis takes a
purposive and untechnical approach to avoid artificially ruling out
discrimination. [33] Once a distinction
on prohibited grounds is identified, the question of whether disadvantage arises
is a factual determination.
[34]
- Clauses 4 and 5
of Schedule 1 draw a distinction on prohibited grounds of discrimination:
marital and family status.
- It is arguable
that the exception to the disclosure obligations in cls 4 and 5 of Schedule 1
involves a disadvantage to relatives
of the offeror or of a close business
associate of the offeror. An important purpose of the disclosure obligations is
to address
information asymmetries in the financial products market, where one
person (typically the seller of a financial product) knows more
about a product
then other persons (typically buyers of a financial product).
- The assumption
underlying the exemption for close business associates and relatives is that
these persons are better able to look
after their own interests because they
have easier access to relevant financial product information and are able to
contact the offeror
more easily. We consider this a plausible assumption. We
have, therefore, concluded that cls 4 and 5 of Schedule 1 do not appear
to lead
to a disadvantage and, therefore, do not raise an
issue of prima
facie discrimination on the ground of marital and family status under s 19
of the Bill of Rights Act.
Conclusion
We have concluded that the Bill does not appear to
be inconsistent with the rights and freedoms affirmed in 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. 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. 2. See, for instance, cls 453-454(b),
456(1)(e) and 602.
3. See, inter alia,
cls 27-28, 35, 37, 47, 59, 80-82, 200 ff, 214 ff, 265, 270-273, 283-285, 287
ff,
295-296, 302 ff, 421, 426, 576-580, 619 (new s 128), 696; cl 26 of Schedule
1; and Part 2 of Schedule 1. See also Schedule 2 (Registers).
4. Clauses 83, 236, 257, 425, 453-454(b)(iii) and cl
27 of Schedule 1.
5. See, inter alia, Part 1 of Schedule
1. 6. Clauses 517-519.
7. RJR-MacDonald Inc v Canada (Attorney-General)
[1995] 3 SCR 199. Also see, Andrew Butler and Petra Butler, The New
Zealand Bill of Rights Act: A Commentary (LexisNexis, Wellington, 2005), at
389-390.
8. See cls 84, 385 and 446.
9. Clauses 47(3), 80(3), 81(3), 200(4), 202(4), 206(4), 208(3), 211(3),
218(2), 290, 291(4), 305
and 696(3).
10. Clauses 35(2) & (3), 40, 238, 259, 461(2) and 489.
11. Clauses 73 ff, 192(2)(b).
12. See cls 84, 385 and 473.
- Irwin
Toy Ltd v Quebec (Attorney-General) [1989] 1 SCR 927 (SCC).
- RJR-MacDonald
Inc v Canada (Attorney-General) [1995] 3 SCR 199 (SCC); see on this point
the dissenting judgment of La Forest J.
- Richard
Claydon and Hugh Tomlinson, The Law of Human Rights (Oxford University
Press, Oxford, 2000), Vol.1, 15.171 – 15.176. An example is the European
Court of Human Rights’ decision
in Markt Intern Verlag GMBH and Klaus
Beermann v Germany [1989] ECHR 21; (1989) 12 EHRR 161, para. 32.
- New
Zealand Stock Exchange v Commissioner of Inland Revenue [1992] 3 NZLR 1
(PC), at [6], and R v Javid [2007] NZCA 232, at [45(d)].
- Tranz
Rail Ltd v Wellington District Court [2002] NZCA 259; [2002] 3 NZLR 780 at [790].
- See,
for instance, cls 84, 223 and 446.
- See,
many of the infringement offences in this Bill (see footnote 25 below) or, for
example, the offences in cls 35, 190, 198 and
489.
20. Clauses 103, 137, and 411.
21. Clause 223(4)(c) and (j), and cl 430(4)(a).
- See
new s 117(2) for the applicable offence provision, which is discussed above in
relation to s 25(c) of the Bill of Rights Act.
- New
Zealand Stock Exchange v Commissioner of Inland Revenue [1992] 3 NZLR 1
(PC), at [6], and R v Javid [2007] NZCA 232, at
[45(d)].
24. See cls 190(3), 370, 419(1),
461(2), 619 and 658.
25. See cls 47, 49, 71, 80, 81, 96, 109, 128, 152,
155, 176, 178, 196, 197, 200, 202, 203, 205, 206,
208, 211, 216, 218, 219, 280, 290, 291, 305, 334, 503, or 696.
- The
infringement fee is set by regulations, see cl 522(1)(f).
- R
v Wholesale Travel Group 84 DLR (4th) 161, 188 citing R v Oakes
[1986] 1 SCR 103.
- For
example, in case of the infringement offence for failing to keep a register in
cl 200, the defendant is best placed to prove why
a register has not been
maintained and/or that the defendant has taken reasonable steps to comply (for
example, the defendant is
likely to more easily access evidence showing that a
register was being maintained but was lost due to an unforeseen event such as
a
fire or serious IT failure). The defence in this case involves a straightforward
question of fact.
- Clause
4(2)(e) and (f) of Schedule 1.
- Clause
5(2) of Schedule 1.
- 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.
- 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].
- 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].
- 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.
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