CHANGES TO THE AUSTRALIAN CONSUMER LAW RELEVANT TO AIRLINES AND OTHER OPERATORS

29 JANUARY 2019

Late last year, a suite of amendments to the Australian Consumer Law (ACL) came into force, a number of which will directly affect interactions between consumers and airlines/operators.

The amendments follow the publication in April 2017 of a report by Consumer Affairs Australia New Zealand (CAANZ), which proposed 19 amendments to the ACL. The final report from CAANZ can be accessed here.

The key amendments that will affect airlines and other operators are summarised below.

Narrowing of exemption for goods damaged in transit

Prior to October 2018, section 63(a) of the ACL stated that certain consumer guarantees regarding the provision of services did not apply to services that were supplied under “a contract for … the transportation or storage of goods for the purposes of a business … carried on … by the person for whom the goods are transported or stored”. These “consumer guarantees” include a guarantee that services be supplied with due care and skill.

The wording of section 63(a) was ambiguous as in practice it was not clear whether the “person” referred to was intended to mean the person sending the goods (the consignor) or the person receiving the goods (the consignee). The High Court addressed this issue in Wallis v Downard-Pickford (North Queensland) Pty Ltd1, where it held that the “person” could be either the consignor or the consignee.

On the recommendation of CAANZ, section 63(a) has now been amended to clarify that it cannot be relied upon 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. The rationale for the change is that individual consumers should not have to rely on traders to raise issues with the shipper or transporter but should be able to employ rights and remedies directly against the third party.

The amendment potentially opens transport providers up to liability in claims for which they would not have been previously liable, including providers of transport services to large businesses where the consignee is a customer of the large business purchasing goods for personal use. In such circumstances, the transport provider should ensure that its terms and conditions of carriage remain compliant with the law.

However, a question remains as to whether CAANZ’s view that individual consumers (as consignees) have the right to enforce consumer guarantees directly against transport or storage service providers, particularly in circumstances where existing case law from the High Court has concluded that the supply of a good (the product) and a service (the delivery or transport of that product) were to be considered as a bundled supply of goods because the definition of services in the ACL excluded any rights connected with the supply of goods.2

Gift cards and vouchers

The ACL has also been amended to introduce a national regime for the regulation of gift cards. The amendment brings a uniform national approach to regulation following the introduction of similar laws in New South Wales and South Australia.

Gift cards now have a minimum three-year expiry period, require expiry date information to be disclosed and bans the charging of post-supply fees (such as activation, balance enquiry, inactivity and other administrative fees that are not part of the cost of processing a payment).

Contraventions of any of the above requirements now carry a maximum penalty of $30,000 for corporations, bringing it into line with similar consumer protections in the ACL.

The changes to gift card/voucher expiry dates do not affect the expiry dates of airline and operator-issued flight coupons or travel credits as these do not fall within the definition of a gift card under the ACL.

A number of airlines have already taken steps to amend the terms and conditions of their gift card offerings to account for three-year expiry periods following the commencement in March 2018 of the NSW gift card regime, however all operators should now ensure they are compliant nationally, with a compliance deadline of 1 November 2019.

Unconscionable conduct and publicly listed companies

Publicly listed companies can now avail themselves of the protection against unconscionable conduct under the ACL as a result of the recent amendments.

The protection was initially only available to consumers, then was extended to business transactions, and now to publicly listed companies.

Power to obtain information, documents and evidence

Section 155 of the Competition and Consumer Act contains compulsory information gathering powers that enable the ACCC to obtain information, documents and evidence in relation to its enforcement functions, certain authorisation and notification decisions and regulatory matters.

The section has now been amended to provide the ACCC with additional investigative powers in relation to unfair contract terms, which the ACCC is able to use in determining whether to apply to a court for a declaration that a term is “unfair”.

The new powers are a timely reminder for airlines and operators to review their terms and conditions to ensure compliance with the ACL. Currently there are no penalties for using unfair contract terms, however the ACCC has made airline terms and conditions a particular focus of its enforcement, obtaining undertakings from the four major passenger airlines in Australia in December 2018. More information on that action can be found in our separate newsflash.

Norton White has extensive experience in reviewing terms and conditions of carriage on behalf of transport providers. If you have any questions regarding the above information please do not hesitate to contact us: