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Australian Consumer Law changes opens door to new liabilities
Changes to Australian consumer law may see companies and insurers potentially liable for claims which they previously had no liability for, according to an Australian law firm.
Grace Ormsby
HWL Ebsworth has explained a recent change to section 63(a) of the Australian Consumer Law, “the main aim of which was to give consumers the full protection of the consumer guarantees where they receive delivery of, transport or store goods for personal use, such as when their personal effects are lost or damaged by transport providers while in transit.”
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Prior to the new law, section 63(a) of the ACL stated that the consumer guarantees relating to services do not apply to “services that are, or are to be, supplied under a contract for or in relation to the transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored”.
HWL Ebsworth’s partners Teresa Torcasio and Richard Westmoreland, senior associate Marian Ngo, and graduate Basimah Memon explained that “wording of the exception was ambiguous,” in particular, the words “by the person for whom the goods are transported or stored.”
This made it unclear whether the reference to “the person” was intended to mean the person sending the goods or the person receiving the goods.
Ultimately, a High Court decision in Wallis v Downard-Pickford (North Queensland) 14 Pty Ltd [1994] HCA 17 had the “arguably unintended” effect of preventing a consignee for whom goods are being transported or stored for a personal purpose from relying on the consumer guarantees for services, where the goods were also transported or stored for the purposes of the consignor’s “business, trade, profession or occupation”.
This exception and the effect of the Wallis decision was critiqued in the 2017 Consumer Affairs Australian and New Zealand report on Australia consumer law.
HWL Ebsworth said “the CAANZ Report recommended a number of changes to the ACL, including a proposal that the exception be amended to ‘clarify’ that it cannot be relied on where the consignee is not carrying on or engaged in a business, trade, profession or occupation in relation to the goods being transported or stored.”
It was reported that the clarification was recommended so individual consumers “do not have to rely on traders to raise issues with the shipper or transporter” but, rather, can “employ rights and remedies directly against the third party.”
The new law, which came into effect on 25 October of this year, amended the exception through clarification:
“(2) To avoid doubt, subsection (1)(a) does not apply if the consignee of the goods is not carrying on or engaged in a business, trade, profession or occupation in relation to those goods.
Note: This subsection was inserted as a response to the decision of the High Court of Australia in Wallis v Downard-Pickford (North Queensland) Pty Ltd [1994] HCA 17.”
An explanatory memorandum also explains the exception should only apply “where both the consignor and consignee are a business”, not where “the consignee is a consumer.”
It was explained by HWL Ebsworth’s lawyers that “while the decision in Wallis dealt with the transport of goods which were at all times owned by Wallis, the example given in the explanatory memorandum relates to a scenario where goods are purchased by a consumer from a vendor.”
They cited the issue explored by Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd [1986] HCA 72, where “the High Court concluded that when the brewery delivered the beer it supplied both goods and services, however as the definition of services in the ACL excludes any rights connected with the supply of goods, this rendered the supply as wholly a supply of goods,” therefore restricting reliance on consumer guarantees in relation to services, depending on whether goods are being acquired for a business purpose or not.
The lawyers explained that as a result of the new law, “companies and insurers that previously relied on the High Court’s interpretation of the exception in Wallis may find themselves potentially liable for claims for which they were previously not liable.”
They noted that “providers of transport services to large business customers (such as department stores) may find that they are liable to those businesses under the consumer guarantees for transport services, where the consignee (the department store’s customer) is acquiring goods for personal use.”
In such a scenario, it was explained that the transport service provider’s terms and conditions purporting to limit their liability “would be of no effect and worse, potentially misleading or deceptive.”
