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Thursday, 21 February 1980
Page: 313

Mr Ewen Cameron (INDI, VICTORIA) asked the Minister for Business and Consumer Affairs, upon notice, on 27 September 1979:

(   1 ) Does the Master Builders ' Association agreement carry the imprimatur of the Trade Practices Commission.

(2)   Has his attention been drawn to the statement of the Director of the Victorian Consumer Affairs Bureau that the Director would not sign the Master Builders' Association Agreement.

(3)   If so, is the arbitration clause of the agreement a Scott v Avery clause.

(4)   Has the New South Wales Law Reform Commission described the Scott v Avery clause as an evil clause.

(5)   Is the arbitration clause a mandatory clause.

(6)   Does a somewhat similar arbitration clause appear in the building contract of the Commonwealth Savings Bank Document No. CSBH35 19.08.74.

(7)   Will he investigate this clause and indicate whether it will be amended.

Mr Garland - The answer to the honourable member's question is as follows:

(   1 ) The Trade Practices Commission on 10 January 1979 granted authorization to the members of the Master

Builders' Association of Victoria to give effect to arrangements to prepare and publish nine different standard forms. In so doing the Commission stated:

In granting authorization the Commission is concerned that it be understood that such authorization is granted pursuant to the statutory public benefit test contained in section 90(6) of the Trade Practices Act. This determination should not be taken as implying that the forms authorized by the Commission ideally deal in all cases with the many and quite often different problems involved in negotiations between parties or that the Commission suggests that the authorized forms give proper or desirable legal protection to any particular party. In the ultimate an evaluation of these aspects is for each party to determine for himself in the context of each specific negotiation. Neither does the fact that the particular forms before the Commission have received authorization mean that other forms, perhaps quite different in their legal effect, may not also receive authorization if they comply with the test in section 90(6) of the Trade Practices Act. As has been pointed out in this determination it is the applicant, not the Commission, which takes ultimate responsibility for drafting matters. Further the Commission in this decision should not be taken as suggesting that parties should not, if they wish, utilize other forms in individual contracts or negotiate quite different individual conditions to suit specific fact situations '.

(2)   I have been informed that the Director of the Victorian Ministry of Consumer Affairs, Mr Norman Geschke in an interview on a Melbourne ABC radio programme on 2 1 May 1979 said, with reference to standard form housing contracts prepared by the Master Builders' Association of Victoria and the Housing Industry Association (containing Scott v Avery clauses): "If I was building a house I would not sign either of these contracts at the moment. I would have that arbitration clause altered so that I had the choice of going to the Bureau, to the Small Claims Tribunal, or to a Court or to an Arbitrator; but that should be written into the clause . . . "

(3)   1 understand that the arbitration clause in a number of Master Builders' Association of Victoria standard forms of contract contains a contractual stipulation known as a Scott v Avery clause, whereby an award or other step in an arbitration is a condition of a cause of action or a defence.

(4)   I understand that in its Report on Commercial Arbitration (L.R.C.27, 1976) the Law Reform Commission of New South Wales recommended that legislation should be introduced to avoid the requirements of Scott v Avery clauses.

(   5 ) I refer to my answer to question ( 1 ) above.

(6)   I understand that the Commonwealth Banking Corporation, on the advice of its solicitors, has advised that the arbitration clause in the Commonwealth Savings Bank's form of building contract is not a Scott v Avery clause.

(7)   There is nothing in the Trade Practices Act which would enable the Minister to require the Commission to seek the amendment of this clause. I have been informed that the Commonwealth Savings Bank does not propose any amendment to the arbitration clause in its standard form of building contract.

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