I was fascinated recently to come across a principle for the regulation of professional services that said simply, “You must act with integrity”.

It caused me to wonder if a professional conduct principle that was so broadly stated could ever be of much use. I guess it all depends on how well-attuned the profession already is to the requirement; and on the extent to which “integrity” is already understood as a standard of normative behavior, wound round by stories about the circumstances in which the standard was met and, perhaps more importantly, by stories about when it wasn’t.

The principle is one of the key regulatory provisions administered a body no less august than the Solicitors Regulatory Authority for England and Wales. Of course it is not the sole provision; and is only part of the foundation upon which the regulation of solicitors is now built in that jurisdiction. You will have to make up your own mind about whether it contributes to a solid foundation; but it did cause me to wonder how the principle might transpose in other regulatory settings – especially where the intent was to regulate professions (and emerging professions) that are people-focused, strongly relational, and which rely upon the ability to develop and sustain significant levels of trust. Yes, the private employment services profession came to mind; and it seemed to me that, in its more commercial context, we might take more from a compound principle such as, integrity and good faith.

So imagine that you were regulated by a principle that said, “You must act with integrity and good faith”. What would it require of you? Could you relate to those requirements? Could you build a coherent appreciation of what it might require of you? Let’s have a closer look at what Australian courts might think.

Integrity & Good Faith are terms that are often not defined; but they can be described and are easily understood by reference to their opposites – trickery and sharp practice.

In one recent case, the Full Court of the Federal Court of Australia observed:

Trickery and sharp practice impede commerce by decreasing trust and increasing risk. Good faith and fair dealing promote commerce by supporting the central conception and basal foundation of commerce: a requisite degree of trust. Business people understand these things.

“Business people understand these things”. I liked that!

In that case, various over-limit, late payment and dishonour fees charged by a bank were challenged as being unconscionable in contravention of the Australian Securities and Investments Commission Act 2001. In the course of evaluating whether the bank’s conduct was unconscionable, the court had to consider whether the parties had acted in good faith. The court eventually found that there was “no basis to conclude that, against [the bank’s customers], or generally, the [fees] were unfair or the transactions unjust”.

Special leave has been granted to the bank’s customers to appeal to the High Court and what follows might not be the final word on the topic of good faith. Nevertheless, the following statements of general principle are helpful in understanding the scope of the integrity and good faith requirement as it presently understood in an Australian commercial and consumer context.

The working through of what a modern Australian commercial, business or trade conscience contains and requires, in both consumer and business contexts, will take its inspiration and formative direction from the nation’s legal heritage in Equity and the common law, and from modern social and commercial legal values identified by Australian Parliaments and courts.

…It does not involve personal intuitive assertion. It is an evaluation which must be reasoned and enunciated by reference to the values and norms recognised by the text, structure and context of the legislation, and made against an assessment of all connected circumstances. The evaluation includes:

• a recognition of the deep and abiding requirement of honesty in behaviour;
• a rejection of trickery or sharp practice;
• fairness when dealing with consumers;
• the central importance of the faithful performance of bargains and promises freely made;
• the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage;
• a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience;
• the importance of a reasonable degree of certainty in commercial transactions;
• the reversibility of enrichments unjustly received;
• the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and
• the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon.

Now if the requirement to act “with integrity and good faith” can be made to mean all that, perhaps the principle can provide a solid foundation and the regulatory challenges presently facing the employment services industry are not so much about setting up licensing schemes, as finding out what can be agreed and built on that foundation. I guess we will have to wait and see.

Andrew C. Wood