Canadian case law: Arora et al v Whirlpool Canada LP and ...

Contracts Act 1981 and the Hire Purchase Act 1971. TheCCCFA expands the definition of “credit” contracts tocatch agreements that are “in substance” credit arrangements.12 It focuses on protecting the interests of consumersrather than businesses. 13The prevailing approach to consumer protection underthe 2003 Act is to require adequate levels of informationdisclosure in order to allow consumers to make the bestdecision for themselves. 14 The Act aims to protectconsumers by providing meaningful disclosure of keyinformation before the consumer becomes irrevocablycommitted to the contract. In addition there are somelimits imposed on the conduct of lenders. For example,there is a prohibition on unreasonable fees and oppressivecredit contracts and there is some protection forconsumers in cases of unforeseen hardship. 15 There is,however, no requirement that lenders behave responsiblywhen loaning money to consumers.Research published in late 2008 showed that manyNew Zealand consumers make seemingly poor choicesabout how much to borrow and on what terms. 16 In 2011a New Zealand Financial Summit brought togetherpeople from community groups, budgeting services,NGOs, banks, financial regulators, and credit providersto consider appropriate responses to irresponsible lending.The participants concluded that the CCCFA 2003 isnot providing sufficient consumer protection from unscrupulouslenders. They supported the idea of followingAustralia’s lead by introducing legislation to requireresponsible lending. 17In 2012 a Draft Exposure Credit Contracts andConsumer Finance Amendment Bill was released. ThisBill, if enacted, will introduce the principle of responsiblelending. Lenders of credit to consumers will beexpected to exercise reasonable care and skill in theproviding of credit. Not only must they provide consumerswith adequate information expressed in a clearconcise and intelligible manner, they must also ensurethat the terms of the credit contract are not undulyonerous. 18 The lender will be required to make reasonableinquiries as to the consumer’s financial position andtheir credit requirements and be satisfied that the creditcontract is appropriate and affordable for the consumer.19 Unlike the approach taken by a further proposedcredit reform in Australia, the New Zealand Billdoes not include a cap on interest rates. 20 New Zealandpolicy-makers are counting on the initiatives in the Billto adequately encourage lenders to behave more responsiblyand thus drive interest rates down without the needfor specific bright-line caps. 21 Once submissions on theExposure Bill have been assessed, the Bill will befinalised and introduced into the New Zealand Parliament.Consumer Law Reform Bill 2011Consumer Credit is not the only area of New Zealandconsumer law undergoing review. New Zealand hasrecently conducted a general and wide-ranging reviewof many other consumer statutes. 22 The review hasculminated in the Consumer Law Reform Bill 2011,aimed at revising and updating New Zealand consumerlaws. It passed its first reading on 9 February 2012.This review of New Zealand consumer laws has beeninformed by the Australian Productivity Commissionreview of Australia’s consumer policy framework andthe development of the Australian Consumer Law. 23 Oneof the stated policy objectives of the Bill is to achievealignment with the Australian Consumer Law, as appropriate,in accordance with the Government’s agenda of asingle economic market with Australia. 24 Nevertheless,the Bill does not follow the most fundamental reformadopted by Australia, the introduction of a prohibitionon unfair terms. This reform was recommended by theNew Zealand Ministry of Consumer Affairs (the Ministry)in its 2010 Discussion papers on the Consumer LawReform, but is absent from the Bill. 25The Explanatory Note to the Bill states that thecurrent consumer laws are generally sound, albeit havingsome gaps and out-of-date laws. The Bill consequentlydeals largely with reorganising and modernisingexisting consumer laws rather than introducing a raft ofsubstantively new consumer laws. In fact, the review isbased on the debatable premise that moving toward lessregulation is an important policy goal for New Zealand. 26The main changes made by the Consumer Law Billare:• The incorporation of four narrowly-focused statutesinto the Fair Trading Act 1986. The fourstatutes that will be repealed and incorporated intothe amended Fair Trading Act are the AuctioneersAct 1928, the Door to Door Sales Act 1967, theLayby Sales Act 1971 and the Unsolicited Goodsand Services Act 1975.• An extension of the Consumer Guarantees Act 1993to cover new goods sold by traders in traditionaland online auctions. 27 This change means consumersmust purchase auctioned goods with statutoryguarantees rather than take their chances andobtain the product at a possibly cheaper price withno guarantees as to quality. The update makessense because it is difficult to rationalise providinga lower level of consumer protection simply becausethe sale occurs in an online auction or traditionalauction rather than in a shop.• The inclusion of new “purposes” clauses for theFair Trading Act 1986, Consumer GuaranteesAct 1993 and the Weights and Measures Act 1987.australian product liability reporter October 2012 303