Litigation and Dispute Resolution

The concept of reasonable time in contract law: the Court of Appeal resets the clock in Donau v ASC

30 July, 2019

Many Australians would be familiar with Trivago. Simple but memorable marketing campaigns have encouraged consumers to think “Hotel? Trivago” when planning their travel. However, the Trivago brand may be on track to be memorable for a very different reason. Last week, the Federal Court of Australia found that hotel comparison website had contravened the Australian Consumer Law for engaging in misleading and deceptive conduct.

Put simply, Trivago is an online tool to be used by prospective travellers to compare prices on hotel rooms. The website functions like a search engine, whereby a consumer enters the city they wish to travel to, along with the date ranges they are travelling and the type of room they are seeking, and the Trivago website returns a series of results showing different hotels, a star rating, and reviews for each of those hotels. This itself is nothing unique, however where Trivago distinguishes itself from online booking sites is that it aggregates prices from multiple other providers to allow the user to compare prices and pick the best deal for the hotel room.

How does Trivago work?

In a nutshell, consumers are invited to use Trivago to identify the best deal for a hotel room, rather than browsing online providers such as a hotel’s own website, Wotif, Expedia,, TripAdvisor and the like.

By way of example, in the judgment of Moshinsky J of the Federal Court of Australia, his Honour includes a number of typical screenshots of Trivago’s website, including the following:

<p>The way Trivago displays its results has slightly changed (including that the red text is no longer struck-through), however, for present purposes this is a typical example of Trivago’s results that the Court considered.</p>
<p>In the left column, we can see the hotel details, location, and review score. In the middle column, we see a list of deals for what can be reasonably inferred to be the same room. Then in the final column on the right, we can see a prominent price in red and in strike-through text, and another prominent price below it in green for a specific online booking service. This column on the right is described as the “Top Position” offer.</p>
<h4><strong>What did the ACCC allege?</strong></h4>
<p>The ACCC commenced proceedings in the Federal Court of Australia alleging that Trivago was engaging in misleading and deceptive conduct. Essentially, the ACCC alleged that Trivago was making the following representations (expressly or implicitly) through their marketing and their website and they were misleading:</p>
<li>Trivago quickly and easily identifies the best price for a hotel.</li>
<li>The Top Position offer is the cheapest and most attractive offer for the hotel.</li>
<li>The struck-through (or red) price is the price for the same room (or an equivalent) at the hotel as the green Top Position price (that is, the green and red prices are different prices for the same class of room).</li>
<h4><strong>How does Trivago make money?</strong></h4>
<p>Trivago is, of course, a business that is seeking to return a profit. Any user of Trivago would be familiar with the fact that they do not pay to use the service. So who pays Trivago?</p>
<p>Trivago’s business model is one where it generates revenue from the hotels or online booking sites in exchange for “clicks” through to their website. Trivago gets paid irrespective of whether the consumer purchases a hotel room or not. Online booking sites essentially pay a cost per click (<strong>CPC</strong>) to Trivago.</p>
<p>Each booking website enters a CPC “bid” to Trivago to have their website listed. If their website does not meet a minimum threshold (which Trivago does not disclose to the website), then their offers are not listed. The CPC threshold can also vary between online booking sites. So, it is possible for an online booking site to have the cheapest rate available for a given room, and put in a bid to Trivago, but because it did not bid highly enough it is not listed (in the Top Position or otherwise).</p>
<p>As to what offer makes it into the Top Position, one would think that Trivago is listing the cheapest price. However, expert evidence was adduced as to the process. The upshot is that price is a factor that the algorithm takes into account, however, a “very significant factor” is the CPC amount. That is, how much the online booking site is bidding per click to have their deal displayed. The court accepted expert evidence that at least 66% of the time, the price in the Top Position offer was not the best price.</p>
<h4><strong>What did the Court find?</strong></h4>
<p>It is perhaps unsurprising that the Court found that this business model may mislead and deceive consumers.</p>
<p>In relation to each of the three representations, the Court made the following findings:</p>
<li>Trivago was representing that it was impartial, objective, and transparent as a price comparison tool. In the Court’s words, the “whole point” of Trivago is to quickly and easily identify the cheapest rates for a hotel room. Because Trivago did not display an offer if the offer did not exceed the CPC threshold, and because at least 66% of the time the Top Position offer was not the cheapest offer, consumers may be led into error when using Trivago.</li>
<li>Trivago was representing that the Top Position offer was the cheapest offer for a given room at a hotel. However, for the same reasons above, consumers may be led into error when considering the Top Position offer.</li>
<li>Trivago was representing the strike through or red text was a higher price for the same room as the green Top Position offer. In reality, this higher price was often for a different category of room, and accordingly was not comparing apples with apples. Consumers may be led into error when comparing the high price with the lower price.</li>
<p>The Court has not yet made orders as to orders to make against Trivago, including any fines. Penalties for breaches of the Act found against Trivago can be as high as $10,000,000, three times the benefit gained, or 10% of the annual turnover of the company.</p>
<h4><strong>What does this mean to me?</strong></h4>
<p>This is a stern reminder of the strong consumer protections we have in Australia. Businesses must exercise caution and seek legal advise that the services they provide, and the representations they make (through marketing or otherwise) do not fall afoul of these strict protections and come to the attention of the ACCC.</p>
<p>Time will tell how high the penalty will be from the Court, and whether this result leads to a change in consumer perception of Trivago in Australia.</p>
<p><a href=McCabes has experience in advising its clients and representing them before the courts in all manner of consumer law matters, including misleading and deceptive conduct.

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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