The Solar Industry and the Australian Consumer Law...

Introduction

I have over 25 years dealing with legislation and compliance issues and since being admitted as a lawyer have had the privilege to be working in the Australian Renewable sector as an in-house lawyer for the past three years.

In that time I have seen the ongoing expansion of solar PV and particularly off-grid systems in Australia. This is in part due to ongoing improvements in battery, panel and inverter technology that has seen a significant decline in the costs of system installation resulting in larger scale adoption.

One consequence of this is that residential, on and off-grid systems are starting to drop under the threshold that brings them within the scope of the Australian Consumer Law. This body of law was enacted in 2012 created broad and sweeping changes to consumer legislation in Australia. The body of law itself can be found in Volume 3 of the Competition and Consumer Act and outlines these obligations, a summary for small businesses and legal practitioners can be found here (see particularly pages 33-34,29). This article seeks to outline my observations on some of legal issues for both suppliers and manufacturers that the ACL presents, particularly when it comes to liability for consequential damages and additional costs arising out of a failure of a component or product in a PV system.

General Observations

At this stage, my observations are that there is almost universal non-compliance by manufacturers across the industry. This is either due to a systemic knowledge gap and to some extent wilful blindness on behalf of manufacturers and suppliers, particularly in relation to their obligations in relation to installation costs, repairs and consequential damages attributable to them under the Australian Consumer Law.

It has been my experience that even when their liabilities are expressly pointed out to them, the default position of these manufacturers is to repudiate their legal obligations and simply deny the liability and insist on operating under their internal warranty policies. These warranty documents almost universally expressly deny any liability for the types of damages clearly permitted by the ACL in the form of liability to pay for incidental costs and consequential damages due to failure.

This is despite it being clearly brought to their attention that these clauses are invalid under the ACL as the ACL contains provisions that state a company or person cannot simply contract their way out of their legislative responsibilities. Notwithstanding this information, many simply maintain their stance of denying liability.

What the Australian Consumer Law Says

The Australian Consumer Law is a comprehensive and well-drafted piece of legislation that from a legal sense is quite clear where obligations lie. In the event that a product is faulty the legislation seeks to put the customer, installer and supplier in the position they would have been by placing ultimate liability upon the manufacturer in the event of a faulty product.

This is achieved by the legislation outlining that the installer in the first instance is liable for placing the customer in the position they would have been but for the product failure. The Act allows for replacement of the product at no cost to the customer and also requires parties to pay consequential damages to the customer for losses due to unreasonable delay. The Act then through the operation of s274 indemnifies the installer in favour of the manufacturer if it is as a result of a product failure. Thereby intending the installer to be reimbursed for any costs associated with the failure of the product.

It is simply the unfortunate reality that s274 and its effects are frequently either ignored or blatantly repudiated by the supplier or manufacturer and the installer is left shouldering the financial cost (or having to fight for reimbursement) for the failure of a manufacturers product.

Regulatory Response

Unfortunately the situation in relation to consumer affairs regulation in Australia is one where even when the legislation clearly places an obligation on a manufacturer, the stance of the Australian consumer regulators is effectively hands off.

Despite repeated notifications and examples of non-compliance being brought to their attention, to date I have become completely disenfranchised with the regulatory effect of any of these bodies when it comes to solar manufacturers.

The relevant bodies simply states that despite clear breaches and there being legislative powers that they can exercise about false and misleading statements (such as warranty documents), their view fundamentally is that it falls upon the installer to pursue manufacturers and suppliers through the courts to attempt to recover their losses. This is both an undesirable and unfortunate situation as many small installers and electricians have neither the resources, experience or the time to pursue a remedy of this nature.

Findings

My experience and observations are that breaches of the Australian Consumer Law by suppliers and manufacturers in the solar industry are not just common, but systemic. And unfortunately, this is having a flow on affect on the quality of customer service that is flowing to consumers. In my view these issues are fundamentally due to the lack of enforcement by the regulatory bodies with respect to the industry.

Currently the Clean Energy Council is effectively a self-funded self-appointed peak industry body that puts in place a self-regulating scheme including a code of conduct for installers, but has neither legislative authority nor the ability to enforce legal provisions on large manufacturers, instead focusing on compliance of the consumer laws by retailers and installers.

Conclusion

In my submission, there is an urgent need for an audit of the warranty policies and documents provided by any manufacturer or suppliers looking to sell PV products in Australia.

In the first instance an amnesty period should be provided for them to conduct an internal audit, change their policies and re-draft their warranty procedures to harmonise with their liabilities under the ACL.

After the expiration of the amnesty period, a random audit should be put in place across the industry and the focus of this audit should be to ensure that these documents do not contain any clauses that are false or misleading or in conflict with their obligations under the ACL.

It is my firm belief that this is an essential requirement to ensure that both consumers and installers are afforded proper protections under the ACL and that once these are resolved, it would see a significant flow-on effect in seeing better consumer outcomes, especially given the projected rate of future expansion of the Australian Solar Industry.

About the Author

Richard Scholl is an admitted lawyer with over 25 years of law-enforcement, and legal experience the last three being focused on the Australian Consumer Law and its application to the renewable industry in Australia. In addition to working as an in-house lawyer for a green energy company he also works and provides legal services through his association with a Townsville law firm. Richard is available to provide consultancy services and speaking engagements and has performed work in this capacity for private, government and industry bodies.