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Contact Officer and Copyright Details
Year 2000 Information Disclosure Bill
Date Introduced: 11 February 1999
Portfolio: Communications, Information Technology and the
Commencement: The Day Following Royal
To encourage the
voluntary disclosure and exchange of information about Year 2000
computer problems and remediation efforts by providing protection
from civil liability for Year 2000 disclosure statements.
What is the Year 2000
The Year 2000 problem, also known as the
'Millennium Bug', arises from the fact that in the early days of
computing a programming convention developed where the date
function used a 2-digit-year (YY) format, instead of a 4-digit
(YYYY) format, (for example 99 for 1999). Initially, this practice
was regarded as a necessity because of the high cost of computer
storage and memory. The two-digit date convention assumes that the
century is '19' and as a consequence come 1 January 2000, the '00'
will be interpreted as 1900 rather than 2000. (There are other
critical dates that may cause problems aside from 01-01-00. These
include 9-9-99 and 29/02/00).(1) It is feared that this will cause
computing systems and computer chips in equipment to malfunction
leading to breakdown in the delivery of a range of goods and
services possibly including critical infrastructure such as
telecommunications, transportation and the financial system.
The Case for Disclosure
Solving the Year 2000 problem has proven to be
time-consuming and expensive. In addition, it is reported that
preparations for the Year 2000 are being hampered by a concern that
statements relating to Year 2000 computer problems would open the
maker to legal liability in the event that the statement proved to
be inaccurate. Lawyers have been particularly concerned about the
impact of section 52 of the Trade Practices Act, perhaps the most
litigated section on Australia's statute books. Section 52
prohibits corporations from engaging in conduct that is misleading
and deceptive. In order to recover damages under this section it is
sufficient to show that loss has flowed from its breach - no lack
of good faith need be shown. This strict liability rule has led
some lawyers to advise their clients to limit their disclosure on
Year 2000 matters.
Recently released ABS statistics(2) show that
awareness of the Year 2000 problem among Australian Business is
high (90 per cent) however only 60 per cent of businesses are
undertaking work to address the problem. While almost all large
businesses are addressing Year 2000 issues, small and medium
enterprises (SMEs) are not devoting appropriate resources to the
problem. Around 20 per cent of businesses intending to carry out
Year 2000 remedial work have yet to determine the scope of their
potential Year 2000 problems.
These statistics bear out the need to
disseminate more information on the readiness of systems to cope
with the Millennium Bug and solutions to Year 2000 problem. The
Bill is designed to encourage larger business to share their
solutions to Year 2000 problems with SMEs. Disclosure on the
compliance of systems by suppliers may also reduce the cost of
contingency planning by consumers of those services. The rights of
consumers to take action in the event of a Year 2000 product or
service failure are maintained.
In October 1998, the United States Congress
passed the 'Year 2000 Information and Readiness Disclosure Act'.
The legislation is also known as the 'Good Samaritan' Act because
it encourages companies to share information on Year 2000 readiness
and contingency plans. The Act limits the extent to which Year 2000
statements can be used against their maker in all civil
In December 1998, Federal, State and Territorial
Ministers with responsibility for Year 2000 issues met with private
sector representatives including delegates from the banking,
electricity and telecommunications industries to examine ways to
improve Australia's preparedness for the Millennium Bug. At that
meeting, State and Territory governments indicated support for
'Good Samaritan' legislation modelled on the US precedent. The
State and Territorial Ministers stated that they would introduce
similar legislation in their jurisdictions as soon as possible.
Complementary legislation is necessary because of constitutional
limitations on the Commonwealth's power.
Clause 3 provides that the
commencement of legislation will be the day after it receives Royal
Assent so as to ensure that it does not have retrospective
operation. Clause 4 importantly provides a
definition of the term 'statement'. This definition excludes
statements that are not made to the public or a section of the
public and includes those that are a distinct part of statement.
The propose is to ensure that the part of a document that is
eligible for the limited liability provided by the Bill is clearly
Part 2 Year 2000 Disclosure
This Part defines the statements that will be
eligible for protection from civil liability: Original Year 2000
statements and Republished Year 2000 statements.
Clause 8 defines an original
Year 2000 statement. The definition is extensive, covering
statements that relate to the detection, prevention, remediation or
consequences of Year 2000 processing problems. In addition, it also
covers statements relating to Year 2000 contingency planning and
risk management. The statement must also provide that it is a Year
2000 disclosure statement for the purposes of the Act and that a
person may be protected by the Act from liability in relation to
An important distinction between the Bill and
the US legislation upon which it is modelled is that the Bill has
no retrospective application. The Bill covers statements made
between the commencement of the section and before July 1 2001. In
contrast, the US Act enabled statements made after January 1 1996
and before the passage of the Act to be retrospectively designated
as a "Year 2000 Readiness Disclosures".(3) Another point of
difference is that under the US legislation oral statements are
eligible for protection, in contrast the Bill only captures written
Republished Year 2000 statements are defined in
Clause 9. Republications, retransmissions or
reproductions of an original year 2000 statement will only be
eligible for the Bill's protection if done in full. This definition
extends the protection offered by the Bill to situations such as
those where a retailer photocopies a manufacturer's original Year
2000 statement and distributes it to customers.
Part 3 Protection from Civil
The key operative provisions of the Bill are
contained in clauses 10(1) and 10 (2).
Clause 10(1) gives protection for Year 2000
statements that would otherwise expose the maker to civil
liability. Clause 10(2) provides that Year 2000
statements are not admissible as evidence in litigation against the
maker of the statement.
The protection provided by the Bill is limited.
Clause 11 contains an array of exemptions from
clause 10. These categories include Year 2000
disclosures that are:
- known to be false or misleading or are made recklessly, or
- made in connection with the formation of a contract, for
example, through a warranty, or
- made pursuant to a requirement of a contract or under a law of
the Commonwealth, a State or Territory,(4) or
- made to induce consumers to acquire goods or services.
Clause 12 signals the
constitutional basis for the protection from civil liability
bestowed by Clause 10. The Bill chiefly relies on
the Commonwealth's corporations power however it also invokes
powers in relation to: interstate and international trade and
commerce; postal, telegraphic, telephonic and other like services;
territories; and the rights and liabilities of the Commonwealth and
any authority of the Commonwealth.
Clause 13 contains a device
designed to mitigate recourse to litigation. It provides that the
protection from civil liability cannot be invoked unless the person
claiming it has given the plaintiff a statement asserting the good
faith of its disclosure. The statement must establish the basis for
the argument that the Year 2000 disclosure statement was not made
in the knowledge that it was false and misleading and was not made
recklessly. This statement cannot be used in evidence except for
determining whether the requirement for a statement has been
Clause 14 deals with the
evidentiary requirements for establishing that the exception
contained in clause 11(1)(a) applies. A plaintiff
can activate this exception against a corporation by showing that a
director, employee or agent of the corporation, acting within their
actual or apparent authority, knew that the Year 2000 statement was
false or misleading or was reckless.
Where a plaintiff seeks to invoke the false or
misleading exception against a person other than a corporation, it
is sufficient to show that their employee or agent, acting within
their actual or apparent authority, knew or was reckless as to
whether the Year 2000 statement was false or misleading.
Part 4 Presumption Against
Amendment of Contracts
Clause 15 establishes a
presumption that Year 2000 disclosure statements do not amend a
contract unless there is an express provision in the contract that
they are to have that effect.
Clause 16 restricts the
application of clause 15 to contracts that may be
the subject of Commonwealth power under the Constitution.
Part 5 Exemption from s. 45
Trade Practices Act 1974
Section 45 of the Trade Practices Act prohibits
contracts, arrangements or understandings which have the effect of
restricting competition. Some lawyers have expressed concern that
firms engaged in joint activities with the objective of tackling
Year 2000 processing problems would expose themselves to liability
for breaching the Act. Clause 17 exempts such
conduct from the application of section 45. The clause will not
protect boycotts or other exclusionary dealings but only applies to
the disclosure and exchange of Year 2000 information.
Clause 18 states that there is
no intent to exclude the application of complementary State and
Territorial legislation on Year 2000 disclosure
Clause 19 acknowledges that the
Commonwealth does not possess any power in relation to State
Banking and State Insurance where that business does not extend
beyond the limits of the State in question. The Bill will have no
application to those businesses.
Clause 20 allows the
Governor-General to make regulations necessary to give effect to
The Bill appears consistent with the
Government's programs to foster industry action on the millennium
bug. Importantly, while disclosure is promoted, the rights of
consumers to take action in the event of a Year 2000 product or
service failure are maintained. States and Territories have
provided unanimous support for the proposed disclosure legislation
and have indicated a willingness to enact complementary legislation
so as to capture disclosures made by entities not subject to
Commonwealth Power - for example, State Government Agencies.
Legal criticism of the Bill has focused on three
- The protection from civil liability provided by the Bill may
mean that corporations take less care to make statements accurate.
While the volume of information disclosed on Year 2000 issues may
increase, the quality of that information may not.
- Consumers may suffer because they will be unable to claim
damages for negligent misstatement or breach of the Trade Practices
Act but instead must show that the company making the Year 2000
statement did not do so in good faith. The legislation will not
necessarily reduce the amount of litigation on Year 2000 issues
because the Bill will simply shift the focus of the legal debate
from negligence to recklessness.(5)
- The Bill does not address the question of professional
liability. It provides no protection for firms that conduct Year
2000 compliance audits.(6) Some have argued that business is
imperilled by the lack of professional indemnity cover for Year
2000 related work.(7)
While the Bill curtails the rights of consumers,
this must be offset against the value of increased disclosure to
the public in preventing the breakdown of systems and mitigating
contingency costs. There is concern that if the Bill is not passed
disclosure of information on Year 2000 readiness will be stifled.
The effect may be that the contingency planning costs may be
unnecessarily imposed due to lack of information about the
preparedness of systems.
- In older computer code date fields were sometimes used to
provide special functionality. To use less memory 9/9/99 was often
entered as a test date and meant "save this data item forever" or
"remove this data item after 30 days". In addition, there are
systems and applications that do not recognise the year 2000 as a
leap year. This will cause all dates following February 29, 2000 to
be offset incorrectly by one day. See NSW Govt Y2K homepage
www.y2k.gov.au for other
- Australian Bureau of Statistics, The Year 2000
Problem, Australia, Preliminary. Catalogue No.8151.0, February
- To gain the protection of the Act, a statement had to be so
designated within 45 days of the legislation's enactment.
- For example statements made under the continuous disclosure
requirements of the Corporations Law or the ASX's listing rules
will not be protected.
- See Stan Beer, "Good Samaritan Law Flawed, Experts Say",
Australian Financial Review, December 22 1998.
- Statements following from such audits are made in the
fulfilment of a contractual obligation and therefore excepted from
protection by Clause 11(2)(a).
- See Emma Connors,"Good Samaritan Bill Ready For Vote",
Australian Financial Review, February 9 1999.
16 February 1999
Bills Digest Service
Information and Research Services
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© Commonwealth of Australia 1999
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