FEATURES

Consumer Protection
(Fair Trading) Act and Lawyers

The article addresses the scope and implications of the Consumer Protection (Fair Trading) Act in relation to legal professionals and their staff.


Last year I wrote an article for The Singapore Law Gazette entitled ‘The Changing Landscape of Consumer Law in Singapore’1 where it was suggested that landmark legislation like the Consumer Protection (Fair Trading) Act (‘CPFTA’) 2003 would result in the need for a change of mindset for consumers, business and even lawyers. This law came into effect on 1 March 20042 and indeed there has been increased concern on the scope and responsibilities required under the law. 

Lawyers have in fact questioned whether the CPFTA applies to them as well and if lawyers’ conduct will be subject to the same scrutiny as others caught by the Act. The question really is why not as the First Schedule of the Act specifically excludes certain categories but not lawyers. It is noteworthy that when s 52 of the Trade Practices Act of Australia was reviewed, it was held that professional services are covered even though it was not mentioned in the section.3 

To understand the law and its application, it is necessary to look at the background concerning the Act and its possible implications. 

Purpose of the Act

The CPFTA aims to stamp out unconscionable conduct of businesses where previously protection and remedies were unavailable for affected consumers. 

This Act, amongst other things:

1 Requires businesses to make available information that they know or ought to have known and which would affect consumers’ decisions to enter into transactions.

2 Makes businesses responsible for what they say, even what they know but do not say that might or might reasonably deceive or mislead consumers.

3 Encourages consumers to attempt to resolve any conflicts with businesses directly. Failure to do so may affect the court’s decision as to the extent of protection afforded and by the court hearing the matter.4

4 Give recalcitrant businesses an opportunity to enter into enforceable undertakings to stop engaging in unfair practices as a step to avert legal consequences of their unfair conduct but such undertakings must be entered with caution as there are in fact legal implications of doing so.5

5 Give consumers the right to ask the courts to set things right when they are victims of unfair trading practices. Resolutions may include (a) restitution (b) damages (c) specific performance. 

The CPFTA arguably departs from the previous law by moving from the principles of caveat emptor to that of ‘fair disclosure’ by business. The Act does so by stating that acts that mislead the consumer or acts of not informing the consumer on what the business knows may be regarded as unfair trading practices. Consumers will then have legal avenues for redress. Towards this end, it is significant to note that businesses or service providers, similar to lawyers, are now also held accountable for ‘omissions’ when dealing with individual or clients who are consumers. 

This is clearly an area of concern for lawyers and other professionals who may inadvertently or unwittingly omit certain information when advising a client. This is not only an unclear area but also one without clear definition as it can be difficult to determine what is material to the situation and what may not be. On other occasions, the omission could actually be due to the clients’ failure to give sufficient information. The need to keep proper records of instructions has become a necessity for service providers and whilst this method is not foolproof, it does serve as a fallback. In a nutshell, the Act protects consumers from unfair business practices; lawyers dealing with consumers must be mindful of this as there is reliance on oral evidence and which can override written evidence in so far as the Act is concerned. 

A ‘consumer transaction’ is defined in s 2 as: 

1 the supply of services by a supplier to a consumer as a result of arrangement; or 

2 an agreement between a supplier and a consumer in which the supplier is to supply services to the consumer or to another consumer specified in the agreement. 

The Act applies where (a) the consumer or supplier is a resident of Singapore or (b) the offer or acceptance is made in or is sent from Singapore.

A ‘consumer’ under the Act could include a business that receives or has the right to receive goods or services from a supplier other than when received exclusively for the purpose of business. Hence, if for example a business acquires a palm top and it is used for both personal and office use, this transaction may be covered under the Act. However, the court would, when determining damages, assess the portion of goods and services attributed to business use and which ought to be excluded (s 7(7)). This would also apply to lawyers or professionals who acquire goods which can be used for personal and business use, for example, a laptop or handphone. Lawyers could in fact also use the Act in their favour when acquiring equipment like laptops, handphones and other gadgets which may be considered personal as well. CPFTA may be evoked notwithstanding the fact that such lawyers are conducting a business. 

What is an Unfair Practice?

An unfair practice is defined in s 4 as: 

(a)    to do or say anything, or omit to do or say anything and as a result a consumer might reasonably be deceived or misled;

(b)    to make a false claim; para (b) similarly imposes an objective liability on the supplier. The supplier need not know that the claim is false but the reasonableness of the supplier’s actions will be taken into consideration by the court (s 5(3));

(c)    to take advantage of a consumer if the supplier knows or ought reasonably to know that the consumer:

(i)  is not in a position to protect his own interests; or

(ii)   is not reasonably able to understand the character, nature, language or effect of the transaction or any matter related to the transaction
      This is meant to protect the vulnerable consumer; and

(d)    without limiting the generality of paras (a) to (c), to do anything specified in the Second Schedule which lists the 20 specific unfair business practices. 

As mentioned in s 4(a), a deceptive or misleading representation may occur notwithstanding the absence of an intention on the part of a service provider to deceive or mislead a consumer as earlier stated. It is significant to note that an omission is also included in determining an unfair practice. 

This position, however, has to be considered together with s 5(3), which provides that in determining whether or not a person has committed an unfair practice, the reasonableness of the actions of that person in those circumstances is to be considered. Section 5(3) similarly applies when determining if a supplier has made a false claim as provided in s 4(b). Thus, it is significant to note that the reference in the Act, ‘omit to do or say anything’, may involve more than an obligation to disclose known facts that may influence a consumer but again targets unconscionable conduct. A service provider is not, however, required to disclose information that is not likely to affect a consumer’s decision regarding the provision of the services. 

The word ‘reasonably’ as referred to in s 4(a) suggests that a service provider is not deemed to have committed an unfair practice where only consumers who are exceptionally assumptive might have been deceived or misled by the service provider’s conduct. However, the fact that a consumer could have discerned the truth had he or she been less trusting will not exonerate the service provider from blame. In short, the service provider’s conduct will be subjected to a test of reasonableness as the Act is designed to put service providers’ conduct under the spotlight. 

Section 4(c) incorporates a mental component of actual or imputed knowledge on the part of the service provider. It requires that the supplier must know or should reasonably be expected to know the consumer’s vulnerabilities. This provision codifies the most commonly recognised situations of unconscionable conduct of a supplier towards a consumer and extends the liabilities of the supplier in a situation where he ought reasonably to know. 

The Second Schedule of the Act specifies 20 types of unfair business practices but it does not mean that only these 20 practices are unfair. The law will allow consumers to take legal action even if it is not one of the 20 practices listed as long as the practice is unfair to the consumers and satisfies s 4(c) of the legislation. The key question, then, is ‘What is the meaning of unfair?’ 

The new law also does not distinguish when the unfair practice occurs. It does not matter if it is before or after the transaction. This is again a significant shift in the law of contract where material facts emerge after the consumer transaction can now affect such a transaction. The Act considers the judge to award remedies to the consumer in circumstances where there is an agent or an employee or agent of a person linked to the business, if the unfair practice occurs in the course of the employment and the person or the agent is acting within the scope of actual or apparent authority. This is particularly important where service providers like lawyers may suddenly find that they are liable for representations or promises made by the staff of their firm. 

As long as the unfair practice results in a loss on the consumer’s part, the consumer can take legal action against the service provider to set things right. Law firms now need to give specific instructions on what their staff can or cannot represent to clients and to constrain them through an employment contract and as a matter of procedure. 

Maximum Claim

The claim is subject to a maximum of $20,000. The contractual value, however, is now not specified, that is, the contract may be of any higher value but as long as the claim is within the $20,000 limit, it is enforceable under the Act. For instance, if the value of service is $100,000, the claimant may decide to use a combination of other causes of action to put forward his case, thereby raising the quantum of claim. 

Time Limit

There is one year from the time the problem of the product or service appears (s 12) or upon discovery of the problem to commence legal action. This time frame is meant to coincide with the time bar for claim at the Small Claims Tribunals. However, s 12(1) of the Act also provides that the one-year time line can begin from the earliest date on which the consumer had knowledge that the supplier had engaged in unfair practice. This could be an area of consideration. 

Complaints Against Lawyers and Mediation

Under the IPS Inquiry Rules, clients are given the option to choose mediation over their complaint of IPS against a lawyer. If the client agrees to mediation, the solicitor cannot refuse and this is a mandatory mediation scheme. 

A mediator will be appointed by Council and he will attempt mediation of the complaint within a month. If the mediation is unfruitful, only then will the complaint go for an inquiry by a two-man Investigative Tribunal. Most complainants do opt for mediation and the rate of success is high. Council must be advised of any terms of mediation via a mediators report as required by the IPS Inquiry Rules. Mediation is also offered when the client is complaining about a breach of rules of standard set under the Professional Conduct Rules of client care standards on professional service as opposed to professional misconduct. 

It is suggested that the mediation provided under the IPS Inquiry Rules for complaints against lawyers is not sufficient for the Law Society to play a meaningful role in helping to mediate complaints against solicitors in relation to their practice under the CPFTA. An example is that of misrepresentation or omission by a lawyer or a lawyer’s staff.6 

It is further suggested that the Law Society should take steps to enlarge its scope and to provide mediation services to assist to resolve possible complaints under the CPFTA. This will allow the Law Society to better assist its members as well as to get a statistical gauge of such complaints, if any, under the CPFTA. Further to the above, the Law Society would also be able to monitor and raise the standards of practice of lawyers and at the same time do a public service through this role. 

Lawyers should also take advantage, if they haven’t yet, to implement within their organisation best practices standards, set out procedures to deal with consumer complaints and steps to resolve the same. This will in fact be an opportunity for lawyers to raise standards and introduce internal dispute resolution systems to deal with consumer dissatisfaction within the firm and also through the Law Society. In this regard, Law Society’s move to introduce such standards is timely.7 

As consumers get more knowledgeable and sophisticated, there will be more people looking to address their dissatisfaction rightly or wrongly through legal and/or extralegal means. The sooner lawyers realise that the ground they walk  on is not sacrosanct and that they will also be affected by the changing consumer law, the faster they will be on track to react and deal with the new order of things.

 

Stephen Loke

Loke & Seah
E-mail: lokeseah@singnet.com.sg

 

Endnotes 

The Singapore Law Gazette, November 2002.

2  Consumer Protection (Fair Trading) Act Government Notification 2003 dated 24 December 2003.

Bond Corporation v Thiess Contractors 71 ALR 6 at 620.

4  Section 7(9) (b) of CPFTA.

5  Section 8(2) (b) requires the undertaking that the supplier will not engage in the unfair practice which would be as good as admitting to the fact.

6  Definition of supplier includes employer or agent of person.

7  ‘Introducing PrimeLaw’,

   The Singapore Law Gazette, March 2004.