Consumer rights Reforming statutory implied conditions and warranties

Access to remedies

Whatever the remedies available to consumers for breaches of implied terms, they cannot be effective as mechanisms for consumer redress if consumers cannot access them in a timely and cost effective way.

As has been noted, the costs of court action relative to the average value of consumer goods mean that matters are unlikely to go to court.¹²² Clarifying supplier obligations and consumer rights and the remedies available will assist consumers seeking redress, as they will be in a better position to present an incontrovertible case to retailers and manufacturers.

However, it is unrealistic to assume that all disputes will be resolved in this way. Therefore, CCAAC considers it desirable that consumers have access to an efficient, low cost and timely process for resolving disputes about their consumer rights. CCAAC notes that this view is shared by a number of submissions.¹²³

Tribunals

Tribunals can be an effective mechanism for achieving timely consumer redress, by reducing the need for court proceedings while allowing all parties to a dispute to have their claims assessed.

There are currently a number of tribunal systems operating in Australian States and Territories, for example, the Victorian Civil and Administrative Tribunal (VCAT). These tribunals consolidate previous, more specific tribunals into a single tribunal scheme. Each of these tribunals has a civil jurisdiction allowing it to hear contractual disputes, such as disputes about compliance with implied terms.

Other jurisdictions have specific tribunals that can hear consumer disputes. NSW, for example, has a Consumer, Trader & Tenancy Tribunal, while Queensland has a Small Claims Tribunal (which will be rolled into a Queensland Civil and Administrative Tribunal on 1 December 2009). Still other jurisdictions have small claims lists or divisions in their local or magistrates courts. For example, there is a Small Claims Division in the NT Local Court and in the SA Magistrates Court, and there is a Minor Civil Claims Division in the Tasmanian Magistrates Court. In WA, the Magistrates Court hears smaller claims.

These courts and tribunals vary across jurisdictions, in terms of procedures, claim limits and filing fees. For example, there is no claim limit for most claims in VCAT¹²⁴, a consumer claim in the WA Magistrates Court cannot exceed $50,000¹²⁵, while a minor civil claim in Tasmania can be no more than $5,000.¹²⁶ Filing fees may vary from $14.50 for a claim of less than $500 in the Queensland Small Claims Tribunal¹²⁷ to $190.50 for a claim of between $10,000 and $50,000 in the WA Magistrates Court.¹²⁸

There is no specialist Commonwealth body with jurisdiction to hear complaints about compliance with implied terms in contracts. Commonwealth tribunals review the merits of administrative decisions, rather than consider disputes between private parties. There are constitutional limitations on the scope for Commonwealth tribunals to make binding decisions of the kind that, for example, VCAT makes.

Alternative dispute resolution

Not all consumer dispute resolution takes place in the adversarial or quasi adversarial context of a court or tribunal hearing. There are a number of industry specific dispute resolution processes — for example, those provided by ombudsman services in the telecommunications and financial services industries — which can be effective mechanisms for providing consumers with redress.

While statutory consumer rights may not always be relevant to disputes brought to ombudsmen or other dispute resolution bodies, they often will be. The existence of a clear legislative basis for consumer rights, rather than rights which rely on the law of contract, will allow consumers to build stronger cases when bringing a matter to an ombudsman or other body. This may be a significant improvement to this important mechanism for redress.

Enforcement under the Australian Consumer Law

As the Federal Chamber of Automotive Industries (FCAI) noted, the state and territory tribunals and small claims courts are already operating effectively, but there is scope for improving their responsiveness to consumer disputes, raising the standards of the system to best practice.¹²⁹ Specifically, CCAAC considers that Australian governments should give consideration to the best way to harmonise, across jurisdictions, the dispute resolution processes available to consumers seeking redress.

CCAAC has not considered, in the course of this review, how best a nationally consistent dispute resolution system might be constructed to give consumers better access to redress when their rights under the implied terms have been breached. This is an area that merits further investigation in the future, after a national approach to consumer guarantees has been implemented.

Elsewhere in this paper, CCAAC has recommended that key aspects of the NZ model of ‘consumer guarantees’ be adopted in the ACL. It is worth noting that the consumer guarantees are accompanied by a successful tribunal system for dealing with consumer disputes. CCAAC considers that the NZ tribunal model may provide a useful basis for considering how to develop nationally consistent dispute resolution processes in Australia.

Whatever system is settled on, the consumer guarantees under the ACL should be enforceable by consumers by means of a uniform, simple, timely and low cost mechanism for resolving disputes and achieving redress.

Findings 7.1 All consumers should have access to low cost dispute resolution mechanisms, such as tribunals or small claims processes, to facilitate timely resolution of claims. 7.2 Ideally, State and Territory governments should develop a consistent approach for all existing small claims court and tribunal processes so as to give consumers a consistent and distinct pathway to access dispute resolution mechanisms for statutory consumer guarantees in all Australian jurisdictions, and in New Zealand.

7.3 In doing this, State and Territory governments should review existing dispute resolution processes in each jurisdiction, together with New Zealand, and develop consistent and uniform approaches to procedural issues including: uniform claim limits; uniform remedies and order making powers; and uniform filing fees and administration processes.

7.4 State and Territory governments, in conjunction with the ACCC and ASIC, should develop and publish clear, consistent information about consumers’ options for resolving disputes about statutory consumer guarantees.

7.5 As part of the development of administrative arrangements in the enforcement of the Australian Consumer Law, state and territory consumer agencies with the ACCC and ASIC , should identify emerging consumer issues concerning statutory consumer guarantees and coordinate regulatory and enforcement responses to these issues.

Findings (continued) 7.6 To clarify consumer understanding and business obligations about statutory consumer guarantees, Australian governments should agree to include a provision in the Australian Consumer Law which reflects the existing section 53 of the Trade Practices Act 1974, and particularly paragraph 53(g) which prohibits: a false or misleading representation concerning a: statutory consumer guarantee; any other condition, warranty or guarantee; or right or remedy; and a false or misleading representation concerning any actual or implied requirement by a person to pay for a contractual right equivalent to a statutory consumer guarantee or any other statutory right or benefit that person may enjoy.

7.7 Given the limited application of paragraph 53(g) to date in preventing retailers and manufacturers/importers from misrepresenting consumer rights under Part V, Divisions 2 and 2A of the Trade Practices Act 1974, a consistent body of law around the Australian Consumer Law will need to be developed. CCAAC considers that the law would benefit from the pursuit and publication of test cases under the new provisions in the Australian Consumer Law recommended in finding 7.6.

7.8 CCAAC views the role of the Australian Competition and Consumer Commission, the Australian Securities and Investments Commission and state and territory agencies as continuing to enforce the false, misleading and deceptive conduct provisions of the new Australian Consumer Law as they apply to the new statutory consumer guarantees. Any issues relating to enforcement and dispute resolution for consumer guarantees should be considered as part of the review of enforcement and administrative arrangements under the intergovernmental agreement for the Australian Consumer Law.

7.9 CCAAC considered various ways to encourage compliance by retailers and manufacturers. These include imposing criminal liability, imposing liability for civil pecuniary penalties, providing consumer agencies with the power to secure compensation in respect of any systemic failure to honour guarantees and providing consumer agencies with power to secure redress for consumers in respect of a failure to honour a statutory guarantee at the discretion of the relevant consumer agency. CCAAC considers that it would not be appropriate for consumer agencies to apply civil or criminal penalties in respect of failures to honour consumer guarantees. CCAAC favoured an approach whereby consumer agencies would have the power to take action on behalf of consumers to enforce their statutory consumer guarantees, where such an action would encourage compliance with the law.