Litigation and Dispute Resolution

Statutory liability as a director: Part 2

20 February, 2018

In recent weeks the Federal Court of Australia has made interlocutory orders in two different sets of proceedings relating to applications for preliminary discovery brought against Google. The applicants are seeking that Google divulge the identities of anonymous online users who the applicants allege have made defamatory statements against them. While the Federal Court has not substantively determined the application for preliminary discovery in either case, these decisions highlight a growing trend of preliminary discovery applications to identify anonymous online users for the purpose of defamation proceedings.

Live by the keyboard, die by the keyboard – defamation in the digital age

In order to succeed in an action for defamation, an applicant must establish that their reputation has been damaged as a result of a false statement to at least one third party.

The application of defamation law in the digital age is an emerging frontier in Australian jurisprudence. The publication of defamatory content on the internet is becoming an increasingly litigated area in the modern age, especially on social media platforms and with respect to online reviews.

A major development in the law came in 2019 by virtue of the decision of Voller v Nationwide News Pty Ltd; Voller v Fairfax Media Publications Pty Ltd; Voller v Australian News Channel Pty Ltd [2019] NSWSC 766 (Voller).

In Voller, Rothman J of the Supreme Court of New South Wales determined, as a preliminary question in the proceedings, that the defendants (three different media organisations) were the publishers of third-party comments posted under links to articles on their Facebook pages for the purposes of the law of defamation. It should be stressed that the Court was not tasked with deciding whether the other elements of defamation had been satisfied and made no findings in that regard. However, the decision has paved the way for a successful defamation claim against the operator of a Facebook page for comments made by third parties on their page in the future.

Following Voller, in the case of Bailey v Bottrill (No 2) [2019] ACTSC 167, the Supreme Court of the Australian Capital Territory found that an individual had actively participated in the publication of defamatory material by sharing a link to a defamatory YouTube video on her personal Facebook page.

Whodunnit? Preliminary discovery to identify a prospective respondent

Preliminary discovery is a process that can be utilised by a prospective applicant before commencing proceedings to ascertain the identity of potential respondents.

While each jurisdiction in Australia has its own specific requirements for an order for preliminary discovery, the general principles are the same.

The relevant rule applicable to the Federal Court of Australia is rule 7.22 of the Federal Court Rules 2011 (Cth), which provides that the Court may make an order for preliminary discovery to identify prospective respondent if it is satisfied that:

  1. There may be a right for the prospective applicant to obtain relief against the prospective respondent (for example, the right to damages for defamation);
  2. The prospective applicant has been unable to identify the prospective respondent despite having made reasonable enquiries; and
  3. A third party (being the respondent to the application for preliminary discovery) knows or is likely to know the identity of the prospective respondent, or has or is likely to have control of a document that would help identify the prospective respondent.

If those matters are satisfied, the Federal Court has the power to order the third party to do any of the following:

  1. Attend Court to give evidence as to the identity of the prospective respondent;
  2. Produce any document or thing to Court in the third party’s control that relates to the description of the prospective respondent;
  3. Give documents to the prospective applicant in the control of the third party that relate to the description of the prospective respondent.

#trending – preliminary discovery applications against Google

In the recent decision of Kabbabe v Google LLC [2020] FCA 126, Murphy J of the Federal Court of Australia considered an application to serve an originating application seeking preliminary discovery of the identity of a prospective respondent on Google, which is based in the United States.

Mr Kabbabe is a dentist in Victoria who has been aggrieved by an unfavourable review of his dental practice that was posted on Google by an anonymous user. Mr Kabbabe has filed an application for orders for preliminary discovery from Google with respect to the identity of the user who posted the review.

In this decision, Murphy J made orders allowing Mr Kabbabe to extrajudicially serve the originating process on Google by post.

Although Murphy J did not make orders requiring Google to identify the user (whether by documents or oral testimony), his Honour was satisfied that Mr Kabbabe has a prima facie case for preliminary discovery with respect to the user’s identity pursuant to rule 7.22 of the Federal Court Rules 2011 (Cth). This is because:

  1. Mr Kabbabe may have a right for damages against the user for defamation;
  2. Mr Kabbabe has made reasonable enquiries to ascertain the identity of the user, including by requesting the information from Google; and
  3. Google is likely to have control of documents that would help identify the user.

In another recent decision, Prasad v Google LLC [2020] FCA 67, Wheelahan J of the Federal Court of Australia considered an application to transfer an interlocutory application for preliminary discovery brought pursuant to rule 7.22 of the Federal Court Rules 2011 (Cth) to the Supreme Court of Victoria. The application was not opposed by Google.

The applicants in this case received emails from a Gmail address that contained materials that they allege amount to both defamation and misleading and deceptive conduct for the purposes of the Australian Consumer Law. In similar factual circumstances to the Mr Kabbabe’s case, the applicants in this case are seeking orders for preliminary discovery from Google with respect to the identity of the operator of the Gmail address.

Ultimately, Wheelahan J ordered that the proceedings be transferred to the Supreme Court of Victoria, which has the power to make orders for preliminary discovery under its own rules.

Again, the Federal Court neither heard nor determined the application for preliminary discovery orders. However, Wheelahan J did opine that the requirements of rule 7.22 of the Federal Court Rules 2011 (Cth) were prima facie satisfied.

Watch this (cyber)space

While the Federal Court has not made orders for preliminary discovery against Google in either of these decisions, they are a sign of things to come; it is likely that Australian courts will become more inclined to order internet providers and social media platforms to identify prospective respondents to proceedings.

There is the potential for this trend to open the floodgates for proceedings being brought against (otherwise anonymous) online users for defamatory posts that they have published on the internet (including in online reviews).

McCabes Litigation and Dispute Resolution group has expertise in prosecuting and defending defamation proceedings in different courts, including in appellate courts.  We have also given legal and strategic advice to clients in respect of potentially defamatory publications.

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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