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The High Court has recently held that a civil claim for damages under the Fair Trading Act 1986 (“FTA”) is not capable of being assigned: Swindle v Withers  NZHC 578 (Associate Judge Doogue, 26 March 2014). Doogue AJ was therefore prepared to strike out the relevant FTA claims at an interlocutory stage (refer paragraphs 50 to 70 of the judgment).
This holding followed the approach taken in Australian decisions regarding the equivalent to the FTA, the Australian Trade Practices Act 1974: Park v Allied Mortgage Corp Ltd (1993) ATPR 53,468 (FCA), Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd  FCA 1352, (2006) 236 ALR 720. The Court noted that the enactment of the FTA in New Zealand followed the Australia/ New Zealand Closer Economic Relations Treaty of 1982 which was part of an overall plan to harmonise consumer protection law between the two countries. The Court held that In light of this policy background, it would not make sense if New Zealand were to adopt a different approach to the assignment of FTA causes of action.
A civil FTA claim is a common feature of a “transaction gone wrong” case in New Zealand, typically forming part of a bundle of claims which may also include breach of contract, misrepresentation (giving rise to rights of relief under the New Zealand Contractual Remedies Act 1979) and potentially also negligent misrepresentation in tort. It is significant that there is now a New Zealand decision which holds that in any situation where the original claimant has purported to assign the underlying claim to an assignee, any FTA claim will need to be stripped out of the relevant bundle of available claims. This will be welcome news to any liability insurer facing the consequences of such a claim, because of the Court’s broad powers of relief under the FTA once a finding of liability has been established.