Unconstitutional conduct law held constitutional Law Reporter

Australia needs a more pragmatic approach to commonwealth powers by governments at both federal and State levels, says Professor Bob Baxt.

One of the key elements of the Government's protection of the small business community in particular has been the development of a code to prohibit unconscionable conduct. The Trade practices Act was amended in 1998 to introduce some sweeping changes to the Law in favour of small business where unconscionability (defined very widely by the legislation) was present. The Australian Competition and Consumer Commission has been given extra resources and encouragement to pursue cases involving unconscionability and indeed, it has run a number of test cases during the last six to nine months. A doubt about the provisions in the legislation, in particular section 51AA of the TPA (which prohibits unconscionability on general terms), was that it may be unconstitutional as being outside the powers of the Commonwealth Government. Perhaps this issue was not regarded as a serious "threat" until the Wakim decision by the High Court last year. Now any question raised about the constitutionality of Federal Government laws in trade practices and other areas is taken much more seriously than it may have been say 18 months ago.

So, it comes with some relief that Justice Bob French of the Federal Court has recently held that section 51AA of the TPA is constitutional. In Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (judgment delivered on 14 January, 2000) French J ruled in favour of the ACCC. His reasoning is quite detailed and will be noted in a future Law Reporter. Suffice it to say for these purposes that they provide encouragement for the ACCC in pursuing other unconscionable conduct actions in the future (the actual trial of the relevant issues in the case was delayed pending the decision by the judge on the constitutionality of the provisions). Unfortunately, the Australian Constitution continues to pose hurdles for regulators appointed at federal level. It also creates obstacles for joint federal/State and territory initiatives which rely heavily on the exercise of power by the Federal Court. The Australian Constitution is a creature not of the 20th century but of the 19th century. What we need, if we are to have sensible commercial laws operating in this country, allowing Australia to pursue efficient and sensible regulation and leadership in the Asian Pacific region, is a more pragmatic approach to federal powers by both federal and State and territory governments alike. The year 2000 promises to be a challenging year in this regard. One hopes that the High Court, if given an opportunity to review the decision of French J, will find sound reasons for supporting this evaluation of the critical issue of constitutionality raised by this case.

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