Willis Nicola; Clark DavidNICOLA WILLIS (National): I thank the Minister for addressing that question. I would invite him if he would to comment more specifically on why he rejected the alternative option put forward by officials which was to prohibit oppressive conduct. Because to the point that the Minister has just made officials advised that the definition of oppressive conduct already has a body of case law associated with it in New Zealand and to quote the officials that appears to strike a suitable balance between prohibiting conduct that is grossly unfair while not unnecessarily intervening in everyday reasonable commercial conduct." whereas the lane that the Minister has chosen to go down with unconscionable conduct creates this risk of interpretation from the courts. So I'd invite the Minister to comment on that if he would.Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Well the advice that I've received on this is that the Australian courts have found their way to putting good case law together that our courts might well look to for understanding unconscionable conduct. And that test there has proven to be a useful one. It retains the flexibility—and obviously we're wanting to be on the side of consumers and small businesses here to make sure that they are protected that the law is not too inflexible to enforce their rights and to make sure that there are not unfair terms of contract.NICOLA WILLIS (National): I thank the Minister for sharing with the committee his reasoning there. I would invite him to comment on what consideration he gave to advice he received from the Ministry of Justice about this provision because I understand that that advice raised concerns about the potential offence because there's actually a fairly high bar for what unconscionable conduct brings with it. It is not only a civil offence but it is a criminal offence. The Ministry of Justice as I understand it specifically raised that the provision could capture an overly broad range of conduct and their concern was with the significant penalties that individuals would face on conviction. Given the lack of clarity here it appears that those concerns were elevated.I also note in particular that the Ministry of Justice raised a concern about the fact that there would not need to be any explicit mens rea element to the offence. Now I was not one of the many members of Parliament who received a law degree before coming into this House but I do know enough as a bush lawyer to know that mens rea—this idea of intent—is pretty important generally in criminal law. So it does strike me that having a definition of an offence that carries criminal liability but doesn't require intent to be proven is quite a significant step. I note the Ministry of Justice raising these concerns and I'd invite the Minister to again address why he rejected the advice on that.Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Look I've asked my officials just to put that advice in front of me again so that I can give the member an exact response to the exact advice. But I think I can comfortably speak to the broad point which is that there is already guidance in our current system which points to grey terms already so that businesses can identify what might be unfair terms in their contracts. And here we have a situation where if businesses are trading fairly and are being respectful and fair in their terms they really do have nothing to hide. So in terms of a mens rea test I imagine we're talking about a pretty high bar here and I'm expecting that the way this will be interpreted will be to look to see whether the intent is unfair—whether those grey terms have been explored or brought into question. Those who are going nowhere near this really will not be affected by it of course. This is really only to address the obvious or just unfair terms where they are present in contracts. And we know that the majority of businesses want to trade in a way that is fair because they rely on the relationships in their business trading. They want to have good outcomes for the people that supply them as well as the people that consume their products. So what we're talking about here is protections against those who would deliberately go out of their way ignoring the advice that's already available around grey areas ignoring the law cases that have been interpreted and would still go ahead and seek to have unfair advantage because of their size or scale in dealing with smaller players in the market."