Franks Stephen: Fair Trading Amendment Bill (No 3) — In Committee 
Franks Stephen: Fair Trading Amendment Bill (No 3) — In Committee 
[Volume:609;Page:6858] 
STEPHEN FRANKS (ACT NZ) 
: Part 2 contains nearly all the substance of the bill—there is nothing else in the bill that contains any substance. There are three clauses that I believe the Committee must debate. I had to leave the Chamber briefly before 6 p.m. so I am not sure whether the Minister in the chair the Hon Judith Tizard has taken a call to explain those provisions. I imagine she will because this is the bill that her colleague Minister Rick Barker described as being “fantastic”. He told us that the Commerce Committee would make many investigations into the issues it raises stating: “I want to see a very rigorous investigation of those issues and I am absolutely confident that the Labour members on the committee will dig deep on that investigation. They will drill all over the place and many things will be flushed out for the benefit of the whole community.” I imagine that those Labour members are very well equipped to answer those serious questions. 
The first asks why the definition of pyramid selling schemes catches a good deal of the ordinary franchise work that this Government has said is a large part of the future. Branding and the ability to take advantage of locally produced or international brands is a major part of any modern industry. For some reason this bill seems to want to catch franchise agencies and franchise selling and the only explanation for that from the select committee was that other provisions will mean that we do not have to worry about bad words here because most franchise schemes are fair. Of course almost any scheme can be found to be unfair in hindsight but commercial certainty or indeed the rule of law depends on knowing what the law means in advance not after one has worked out that it did not turn out the way one expected. 
The second question is the one on which I have an amendment covering what I am sure must be a manifest error. Clause 10 contains a provision stating that the court may not require an undertaking as to damages—in other words on seeking an injunction. For hundreds of years the courts have made sure that people cannot abuse power by coming and getting an urgent remedy that could cause enormous damage to the other side unless they are prepared to say that if they are wrong they will compensate for any damage. The Government has now decided that the Commerce Commission will be exempt from that. It can use injunctions for harassment or it can kill someone’s business and it does not require the commission to give an undertaking as to damages. 
Then there is the provision in the clause that I believe must be an error and I certainly ask the Minister to check with her advisers whether it is. It states that: “the Court must not take into account”—in granting an injunction—“that the Commission is not required to give an undertaking as to damages.” It is inconceivable that the Government could mean what it is saying. Surely it should be taking into account that the other side could be utterly destroyed and that the Commerce Commission will be completely free from having to compensate when the court decides whether it is in the interest of justice to give an injunction. The word “not” in that provision must be an error. I say to the Minister that I believe that not only the House but also the people who believe in the rule of law and justice would expect some sort of answer if my amendment to remove the word “not” is not accepted. 
Thirdly there is another little drafting point that I suspect is a little less obvious. It is in new section 40A to be inserted by clause 9. Subsection (1) states that the court may order a wrongdoer to pay an amount not exceeding the value of any commercial gain resulting from the contravention—that is ordinary common sense; one can work that out. The problem is that the provision does not stop there. The next subsection states that the court should work out what the gain is but the first one goes on to say: “if the court is satisfied that the contravention occurred in the course of producing a commercial gain.” As I read them those words are entirely redundant. If they are not redundant the court will have to give them some meaning. How can a contravention not occur in the course of producing a commercial gain if in fact the commercial gain results from it?