Senator MURRAY (12:31 PM) —by leave—I move:

(1) Schedule 2, item 1, page 6 (lines 6 and 7), omit the item, substitute:

1 Section 51AA

Repeal the section, substitute

51AA Unfair conduct

(1) A corporation must not, in trade or commerce, engage in conduct that is, in all the circumstances, unfair.

(2) Without in any way limiting the matters to which the Court may have regard for the purposes of determining whether a corporation has contravened subsection (1), the Court may have regard to all or any of the following:

(a) the harshness of the result;

(b) any influence or pressure exerted on, or any tactic used against, a person by the corporation or a person acting on behalf of the corporation;

(c) whether or not a person suffered from any disability;

(d) whether or not there was a disparity in bargaining power between the parties;

(e) whether or not, as a result of conduct engaged in by the corporation, a person was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the corporation;

(f) whether or not the other person was able to understand any documents;

(g) the amount for which, and the circumstances under which, a party could have acquired identical or equivalent goods or services from a person other than the corporation;

(h) the extent to which the supplier was willing to negotiate the terms and conditions of any contract for supply of the goods or services with the business consumer;

(i) the extent to which the conduct of the corporation is consistent with its conduct towards other persons who have entered into transactions or commercial relationships with the corporation that are the same as, or substantially similar to, the transaction or the commercial relationship between the corporation and the other person;

(j) the requirements of any code of practice applying to participants in the area of trade or commerce in which the corporation is involved and which have been approved by the Australian Competition and Consumer Commission in accordance with section 51ABA;

(k) the extent to which the corporation has made prior disclosure of any of its intentions affecting the interests of the other party and of the risks involved to that party;

(l) in relation to a contract, the extent to which the corporation was prepared to negotiate with the other person in relation to the terms and conditions of the contract; and

(m) the good faith of the parties.

(3) A corporation is not to be taken for the purposes of this section to engage in unfair conduct in connection with the supply or possible supply of goods or services to a person by reason only that the corporation institutes legal proceedings in relation to that supply or possible supply or refers a dispute or claim in relation to that supply or possible supply to arbitration.

(4) For the purposes of determining whether a corporation has contravened subsection (1):

(a) the Court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and

(b) the Court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.

(5) A reference in this section to the supply or possible supply of goods or services is a reference to the supply or possible supply of goods or services to a person whose acquisition or possible acquisition of the goods or services is or would be for the purpose of trade or commerce.

(6) The Court must not make an order in respect of a contravention of this section unless the parties to the proceedings have attended a conference with a mediator to seek to resolve the matter in dispute.

(7) Subsection (6) does not apply if :

(a) either party has already sought to use the dispute resolution procedures set out in the applicable industry code; or

(b) either party has already unsuccessfully engaged in or sought mediation with the other party; or

(c) further delay in resolving the matter would result in substantial damage to the business of the applicant or the respondent such that the matter should be resolved without delay.

(8) The Court may, at the request of either party or of its own volition, terminate the mediation under subsection (6) and proceed to determine the matter.

(9) For the purposes of assessing costs in relation to an action for a contravention of subsection (1), the Court may have regard to the good faith in which parties have participated in a conference under subsection (6) or prior to the application being made.

(10) An application to the Court under this section cannot be made by a person if that person has already made an application under section 51AC in relation to the same contravention, whether or not that application has been finally determined or otherwise disposed of.

(2) Page 9 (after line 7), at the end of the Bill, add:

Schedule 3—Amendments relating to enforcement and remedies

Trade Practices Act 1974

1 At the end of paragraph 76(1)(a)

Add:

", sections 51AA or 51AB of Part IVA, or Division 1 or Division 1A of Part V".

2 Subsection 76(3)

Omit "two or more provisions of Part IV", substitute "two or more of the provisions referred to in paragraph (1)(a)".

3 Subsection 82(1)

After "Part IV", insert ", IVA".

4 Subsection 87(1B)

Omit "Part IVA or V", substitute "Part IV, IVA or V".

These amendments really follow on and to some extent mirror the earlier amendments put by the opposition, but with one crucial difference: we do not strike out the government's provision; we attempt to add to it. The difficulty with any new legislation, such as that which the Reid committee was proposing, is determining how the courts will interpret it. Senator Ian Campbell has clearly indicated the government's view on that matter.

When section 51AA was inserted into the Trade Practices Act in 1992, it was to outlaw unconscionable conduct in commercial transactions. But it never really worked, because the courts read the provisions very narrowly, modifying the long-established case law of unconscionability, which relies on some special disability of a contracting party in order to work. Indeed, there were even doubts expressed as to whether the unconscionability provisions were constitutional. We will not get into that one. For this reason, when the Democrats first proposed a replacement provision, we preferred to speak of a doctrine of economic duress. The then Labor government steered clear of unconscionability as well, outlawing harsh and oppressive conduct. But their proposal never made it into law.

The Reid committee's decision to come down firmly on the side of small business and argue that conduct which is in all the circumstances unfair should be outlawed was pilloried by many big business groups and their legal firms. They argued that it would lead to legal and contractual uncertainty and was likely to increase the contractual costs for businesses dealing with small business and make big business more contractually aggressive towards small business. These concerns may be valid in certain respects. Only the introduction of fair conduct law could test such contentions. But the Reid committee was alert to these dangers and proposed a criteria to help set standards of fair or unfair conduct. Those were the very standards that the Labor Party put into their amendment and which we are putting into ours. They also proposed that industry specific codes of conduct be developed to further clarify what was fair.

The government has returned, however, to the concept of unconscionability and deliberately supports picking up existing case law and the narrow readings of the courts. The minister's deliberate restriction of the effect of the change to the law means that small business may not get everything—or even anything—that it expects from these changes. What the minister has done is to go a step further by adopting the Reid committee's approach of giving legislative guidelines on unconscionable conduct. He has gone further by moving in the codes of conduct area. So that should assist quite considerably.

But we remain concerned that, by setting the standard as `unconscionable conduct', we would end up with no real advance for small business and no enforceable standards. If Minister Reith has not provided a real improvement, big business is going to end up very happy and small business will have been deliberately deceived. Alternatively, if he has delivered an improvement, but only a modest one, it means that small business will be hammering on the doors of parliament yet again fairly soon.

We believe that the Reid fair trading report's recommendation should be given a chance to be tested in the courts. We recognise that there is an argument that presenting two standards—one of unfair conduct and one of unconscionable conduct—could provide for some confusion and some difficulty in determining exactly which provisions should be pursued and what each is intended to mean. It is for that reason, amongst others, that we have recommended in our amendment—in fact the amendment mandates it; I am reading from paragraph 10 of amendment 1—that `an application to the court under this section cannot be made by a person if that person has already made an application under section 51AC in relation to the same contravention, whether or not that application has been finally determined or otherwise disposed of'.

Someone who wants to take this matter to court must choose either unconscionable conduct or unfair conduct. They may not plead them in the alternative. We hope that that method would provide the ability to begin to build up some case law on unfair conduct and some background in this area. I accordingly commend my amendments 1 and 2 to the committee.