Litigation and Dispute Resolution

Breaking news: Court orders first Strata Renewal Plan for the collective sale of a strata scheme

14 August, 2019

The High Court recently handed down a judgement finding that a flight booking agency was in breach of competition law, by attempting to engage in price fixing for ticket sales with airlines with whom it was in competition. This judgement highlights the importance of principals and agents structuring their activities and relationships so they either, (1) are not in competition with each other, or (2) if they are in competition, ensure they act independently to set prices for goods and services.   

  • On 14 December 2016 the High Court handed down a decision which found that Flight Centre Travel Group Ltd (Flight Centre) had attempted to induce Malaysian Airlines, Emirates and Singapore Airlines (the Airlines) to engage in price fixing.[1]
  • The case was brought by the Australian Competition and Consumer Commission (ACCC), who alleged that Flight Centre had breached the Trade Practices Act 1974 (Cth) (TPA), as it was then known. The relevant prohibitions and provisions remain in the Competition and Consumer Act 2010 (Cth) (CCA).

Factual background

  • Flight Centre sold fares of the Airlines to customers on the basis that the Airlines would make flights available for sale on an electronic booking system called the Global Distribution System (GDS).
  • Flights on the GDS had a published net value. Flight Centre was free to determine the price at which it sold the fare to the customer, and would retain as commission the difference between the net value, and the price at which the fare was sold. The net value of the flight would be paid to the relevant airline. Accordingly, Flight Centre was free to sell flights at a loss.
  • The Airlines were free to offer flights directly to customers at a price lower than that published on the GDS, and were not obliged to make all seats available on the GDS.
  • Flight Centre also offered a ‘Price Beat Guarantee’ under which they would beat the price of any Australian travel agent, website or airline by $1 and give the customer a $20 voucher. As stated in the High Court judgement ‘The price beat guarantee made Flight Centre commercially vulnerable to an airline choosing to offer tickets directly to customers at a discount.’.

The allegations

  • Flight Centre sent emails to the Airlines over a period of time in which it sought confirmation that the Airlines would not sell fares directly to customers for a price that would ‘undercut’ Flight Centre in relation to its online ticket sales (the Emails). In some instances, Flight Centre threatened to stop selling the relevant Airline’s tickets if it did not do so.
  • The ACCC alleged that, by sending the Emails, Flight Centre contravened provisions of the TPA by attempting to procure the Airlines to enter arrangements which had the purpose, or were likely to have the effect, of fixing the price for flights. The alleged price fixing was in breach of section 45 and 45A of the TPA, which makes it an offence to propose an arrangement to fix prices with a competitor.

Were Flight Centre and the Airlines in competition?

The central question before the High Court was whether Flight Centre and the Airlines were in competition with each other, and what was the relevant market.

In answering this question, the High Court first examined the relationship between the Airlines and Flight Centre. Flight Centre had entered a separate agency agreement with each of the Airlines which established that Flight Centre was the agent of each of the Airlines, who each acted as principal.

Flight Centre argued that it could not be in competition with the Airlines due to this agency relationship, which allowed it to sell flights on behalf of the principal. The High Court rejected this argument holding that there is ‘potential for competition to exist between an agent and a principal’, and that this potential needs to be considered against the background of the general law of agency. The High Court discussed two factors of the general law of agency which are relevant to competition:

  • Firstly, that the duty of loyalty which may be owed by an agent to a principal could see ‘an agent lacking authority to negotiate’ and thus be unable to engage in competition with the principal; and
  • Secondly, an agent constrained by a contractual obligation to act only in the interests of the principal would ‘lack both the requisite autonomy and the requisite incentive’ to act in competition with the principal.

However, where an agent is free to exercise its discretion to act in its own interests, as Flight Centre was in the present case, the mere existence of an agency relationship does not preclude the agent from competing with the principal.  The High Court held that as Flight Centre was able to determine the price at which they sold the Airline’s tickets, and were not required by contract to prefer the Airline’s interests, the relevant competition existed between the parties.

The High Court held that the market in which the competition existed was the ‘market for supply, to consumers, of contractual rights to international air carriage’, with Flight Centre and the Airlines competing with all sellers of these tickets, including other airlines and other travel agents.


Having established that the relevant element of competition was present, the High Court found that on the basis of the Emails, Flight Centre was in breach of sections 45 and 45A of the TPA, which prohibits proposing to enter an arrangement to fix prices with a competitor.

The implications of the High Court’s decision are significant for business, particularly those businesses who use a ‘dual distribution’ model, involving direct and indirect distribution of goods or services. There is a real risk that ‘principals’ and ‘agents’ in such a relationship may be found to be ‘competitors’, in which case they must be careful to ensure they do not engage in price fixing. It is therefore critical that the parties structure and manage the relationship so that:

  • they are not in competition; or
  • if they are in competition, they refrain from collaborating or engaging in any behaviour which could be construed as price fixing. They should ensure that they act and communicate as ‘supplier’ and ‘distributor’ and not as ‘suppliers of goods or services to customers’.

As reinforced by the High Court in this judgement, the terms of the contract between the ‘principal’ and ‘agent’ is important in determining whether the parties compete with each other within their given market, as is their actual conduct.

[1]Australian Competition and Consumer Commission v Flight Centre Travel Group Ltd [2016] HCA 49

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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