COVID-19, Litigation and Dispute Resolution

Changes to the high income threshold and compensation limit for unfair dismissal claims

3 July, 2017

In an effort to stem the spread of COVID-19, the Australian and state governments have implemented a number of restrictions on the operations of Australian businesses. In these challenging times, it is important for both businesses and individuals to be aware of their rights and responsibilities in relation to the provision of goods and services, including with respect to cancellations and refunds.

The ACCC has established a special taskforce to address consumer complaints and ensure that businesses are complying with their obligations to provide refunds or other relief to consumers due to cancellations or suspension of services.

The Taskforce is dealing with a large number of complaints and enquiries from both consumers and businesses and has adopted an early intervention strategy to resolve issues now, rather than taking enforcement action down the track.

Know your rights and obligations

The relationship between businesses and their consumers is governed by the terms of any contract between them, as well as the provisions of the Australian Consumer Law (ACL).

Businesses and consumers must continue to comply with the terms of their contracts, subject to the operation of:

  1. Any termination clause (see our previous article on this topic in the context of COVID-19);
  2. Any force majeure clause (see our previous article on this topic in the context of COVID-19); and
  3. The contractual doctrine of frustration (see our previous article on this topic in the context of COVID-19).

Irrespective of the terms of any consumer contract, the ACL protects consumers by establishing their fundamental rights and entitlements, which cannot be abrogated by contract. Of particular relevance during this time, the ACL provides for consumer guarantees, which are rules that automatically apply to all goods and services purchased by consumers in Australia. There are different consumer guarantees for goods and services.

The ACL establishes a number of obligations on businesses, including:

  1. To comply with consumer guarantees;
  2. To not mislead consumers (including with respect to their contractual and statutory entitlements);
  3. To not act unconscionably when dealing with consumers; and
  4. To not seek to rely on unfair terms in standard form contracts with consumers.

The ACL defines “consumer” to mean a person (including a business) who:

  1. Purchases goods or services that cost less than $40,000; or
  2. Purchases goods or services that cost more than $40,000, but are of a kind ordinarily acquired for domestic, household or personal use or consumption; or
  3. Purchases a commercial road vehicle used primarily to transport goods on public roads.

In this article, we provide an overview of the consumer guarantees under the ACL and explain how the ACL applies to topical issues facing businesses and consumers in the midst of COVID-19.

Consumer guarantees

Good grief! – consumer guarantees applicable to the sale of goods

There are a number of guarantees that businesses need to comply with in relation to the provision of goods in Australia, including:

  1. That the goods are of acceptable quality (e.g. are free from defects, have an acceptable appearance, are fit for the purposes for which the goods would normally expect to be used, etc.);
  2. That the goods are fit for any specific purpose that the business communicated to the consumer before purchase (either expressly or by implication);
  3. That the goods match their description;
  4. That the business will have spare parts or repair facilities available for a reasonable period of time (unless the consumer has been advised otherwise);
  5. That the business will comply with any express warranty given with respect to the goods;
  6. That the goods are free from any hidden securities or charges.

The manufacturer of the goods is also required to comply with some of these guarantees.

In those instances, if there has been non-compliance with the guarantee, the consumer has the choice of pursuing a remedy from either the supplier business or the manufacturer.

All of these guarantees also apply to second-hand goods and goods purchased online. Some of them apply to goods purchased at auction.

However, these guarantees will generally not apply to goods purchased from overseas sellers or one-off purchases from private sellers.

At your service – consumer guarantees applicable to the provision of services

Businesses need to comply with the following consumer guarantees in relation to the provision of services in Australia:

  1. That the services will be provided with due care and skill;
  2. That the services will be reasonably fit for their purpose and will achieve the result that the consumer wants them to achieve; and
  3. That the services will be supplied within a reasonable time.

However, these guarantees do not apply to contracts of insurance, contracts for financial services, or contracts for the transportation or storage of goods for commercial purposes.

Consumer remedies

If a business has breached any of the consumer guarantees, the consumer may be entitled to a remedy.

The type of remedy that the consumer is entitled to will depend on how egregious the noncompliance with the guarantee was.

If the breach is minor and can be resolved in a reasonable period of time, the seller can choose to offer one of the following remedies:

If the breach is major, the consumer is entitled to choose one of the following remedies:

In the current climate, consumers may understandably have a preference for receiving a full refund from a business that is unable to provide the goods or services in question. However, both consumers and businesses should be mindful that consumers are not automatically entitled to a full refund in these circumstances.

Let’s get topical – common consumer issues in a COVID-19 world

Cancellation of travel, functions or events

If travel plans, functions or events have been cancelled due to government restrictions, the ACCC has advised that it is unlikely that consumers will be entitled to a refund pursuant to the consumer guarantees under the ACL.

However, consumers may be entitled to certain remedies in accordance with the terms of their contract, which includes the terms and conditions of event tickets. Businesses are not permitted to retrospectively change any terms and conditions to alter the contractual rights of consumers at the time the contract was entered into (or when the ticket was purchased).

Furthermore, consumers may be entitled to other remedies at common law.

Gym memberships and subscription services

Gyms and providers of subscription services are not entitled to continue charge fees when there are reasonable grounds to believe that the services will not be supplied (unless the consumer consents). This is the case irrespective of whether the contract allows payments to be suspended. Consumers who have had fees deducted during periods when those services could not be supplied are entitled to be refunded.

Consumers may also have rights under the terms and conditions of their contracts.

In order to comply with government restrictions, gyms and subscription service providers may offer alternative services during the closure period (for example, online classes). Where these alternatives constitute material changes to the services that the business was contracted to provide, consumers will generally be entitled to cancel the contract.

Inability to deliver goods due to supply chain issues

If a business is unable to deliver goods to consumers as a result of supply chain issues, the consumers will generally be entitled to a full refund from the business.

However, if the business never received the goods from its supplier, the business may be entitled to be reimbursed by the supplier in accordance with the terms of their contract.

Price increases

Generally, pricing of goods and services is set by the market and businesses are free to set prices as appropriate based on supply and demand.

However, in some circumstances, excessive pricing (or ‘price gouging’) can constitute unconscionable conduct under the ACL.

Furthermore, businesses may be liable for misleading and deceptive conduct under the ACL if they make false or misleading representations about the reason for the price increases.

Finally, as of 31 March 2020, it is an offence under the Biosecurity Act 2015 (Cth) to sell prescribed essential goods (including, disposable facemasks, disposable gloves, alcohol wipes, and hand sanitiser) for more than 120% of the price that the goods were purchased for. This only applies if the goods were purchased after 30 January 2020. The Australian Federal Police have enforcement powers in relation to the offence provisions. The relevant provisions will be in force until at least 18 June 2020 but may be extended as long as COVID-19 remains a biosecurity emergency.

Country of origin labels

Given disruptions to supply chains and international trade, businesses may be required to source their supplies from other sources and countries.

In those cases, businesses should update the labels on their products to accurately reflect the manufacturing process and supply chain of their products. Failure to do so could constitute misleading and deceptive conduct under the ACL.

Key takeaways

The ACL and consumer guarantees apply the same now as ever – COVID-19 has not changed their operation.

However, in these unprecedented and trying times, businesses should be more conscious than ever to make sure that they are complying with the ACL and if unsure – should seek legal advice.

McCabes has experience in advising its clients and resolving disputes in relation to the Competition and Consumer Act and the Australian Consumer Law, as well as advising its clients in relation to their contracts including unfair contract terms. Get in touch today.

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Litigation and Dispute Resolution

Canadian Court elevates thumbs-up emoji to signature status

In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract.   Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed.   Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)."   Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and   The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and   The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter.   Judgment At paragraph [36], Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship.   Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph [63]: "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest.   What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.

Published by Foez Dewan
29 August, 2023

Venues NSW ats Kerri Kane: Venues NSW successful in overturning a District Court decision

The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane [2023] NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty.  The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.

Published by Leighton Hawkes
18 August, 2023
Litigation and Dispute Resolution

Expert evidence – The letter of instruction and involvement of lawyers

The recent decision in New Aim Pty Ltd v Leung [2023] FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.

Published by Justin Pennay
10 August, 2023