Mr Koutsantonis initially stated the legislation was based on an improved model of the existing Victorian Small Business Commissioner. However, concerns have been raised within the industry that the Bill provides the Commissioner with significantly broader powers than the Victorian model.
The Bill confers power on the Minister to prescribe that an industry code, such as the Franchising Code of Conduct, or particular provisions of an industry code, be adopted into South Australian Law under the Fair Trading Act 1987.
The regulations may then declare that a contravention of a prescribed industry code or a prescribed provision of an industry code is a civil penalty contravention and subject to a civil penalty.
The Bill provides that the Commissioner may commence proceedings in the Magistrates Court within 3 years of the alleged contravention for a civil penalty order. Civil penalty orders may be up to:
1. $50,000 for a body corporate; and/or
2. $10,000 for an individual.
The regulations may (instead of a civil penalty order) fix an “expiation fee” (i.e. a penalty) for a contravention of a prescribed industry code or a prescribed provision of an industry code, in which case the Commissioner may serve a civil expiation notice on the person alleged to have committed the contravention.
The regulations may fix expiation fees up to:
1. $6,000 in the case of a body corporate; and
2. $1,200 in the case of an individual.
The Bill also confers on the Commissioner the power to compel a person to provide information necessary for the Commissioner’s functions, subject to a maximum penalty of $20,000.
The main concern of franchise industry opponents to the Bill is the potential for the Minister to unilaterally change the franchising rules in South Australia to that of the rest of the nation. Different rules would complicate national franchise operations, and this could discourage franchisors from pursuing franchises in South Australia. However, these opponents have enjoyed a significant win, with the South Australian Government agreeing to include a provision in the Bill requiring a mandatory consultation period with relevant stakeholders before regulating any such changes.
As a result of this amendment, the take-home message for the franchise industry is that for the time being it is business as usual in South Australia, as no changes to the franchising rules can be made without advanced warning and consultation with stakeholders.
There was a very different outcome in Western Australia on 2 November 2011, with Liberal MP Peter Abetz’s Franchising Bill 2010 being narrowly defeated in the Legislative Assembly. The Bill proposed several state-based changes that would act in addition to the Franchising Code of Conduct, including providing for injunctions and civil penalties for breaches of the Bill, and a statutory duty on the franchisor to act in good faith in connection with a franchise agreement. The Western Australian Parliamentary Committee recommended against adoption of the Bill earlier this year, and the Bill has now been defeated by a single vote.
For further information, please contact:
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Tony Garrisson
Partner | Melbourne P +61 3 8644 3542
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Elisabeth Ritchie
Partner | Sydney P +61 2 9334 8649
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Peter van Rompaey
Partner | Melbourne P +61 3 8644 3506
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Corinne Attard
Special Counsel | Sydney
P +61 2 9334 8705
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