After failing to sell Dick Smith as a going concern,
receivers Ferrier Hodgson are now trying to sell the company's
New Zealand and Australian assets, including customer databases.
But does the Privacy Act 1993 allow it?
The legal position
A receiver or liquidator is bound by the provisions of the
Privacy Act 1993.
Principle 11(g) of the Act enables a vendor to release personal
customer information for due diligence purposes and to the eventual
purchaser but only when disclosure is necessary on reasonable
grounds and only when the business is being sold as a going
concern. That provision is no longer applicable in this case.
The Act enables agencies to disclose details about individuals
who may be clients or customers where goodwill forms part of the
consideration for the sale or other disposition. The Act also
allows agencies to disclose information about employees, where the
person taking over the business proposes to continue or novate some
or all of their employment agreements.
Dick Smith's website contains an option for customers to
sign up to email alerts for special deals with the promise that
"Dick Smith will never sell or share your information".
does allow disclosure to certain third parties (such as accountants
and suppliers) with whom Dick Smith has commercial relationships
for business, marketing and related purposes.
However, the policy does not say anything about disclosure to
prospective purchasers of the business.
Chapman Tripp recommends
It's always best to try structure the sale of a business as
a going concern – then the exception to non-disclosure would
If that's not possible, principle 11(d) of the Act enables
disclosure if authorised by the individual concerned.
So if a receiver intends to include customer databases in any
sale, they would have to alert the affected customers first and
obtain their permission – as the receivers have indicated
that they will do in this case.
There may be practical implications - like a smaller database if
customers chose to unsubscribe, or fail to respond to the request
However, getting consent avoids potential issues for the
receiver or liquidator. It might also result in a higher return to
the extent that potential purchasers may put greater value on the
data if they are not concerned that their ability to use it may be
compromised because they received it in breach of the Privacy Act.
They can also have more confidence that there will be no public
backlash from the sale.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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