The Polish Club case: A win for the Independent Liquor and Gaming Authority

22 June, 2015

The Australian Competition and Consumer Commission (ACCC) was recently successful in its action against Oscar Wylee Pty Ltd (Oscar Wylee), with the Federal Court ordering a $3.5 million penalty for its contraventions of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law or ACL).

Background

Earlier this year, the ACCC commenced proceedings against the national eyewear retailer, alleging that it had misled its consumers about its charitable initiatives. To find out more about the allegations, as a precursor to this article, please read our short article “Not seeing through its charitable promises? The ACCC takes national eyewear retailer to court“, published earlier this year.

Despite initially denying the allegations, three weeks before the scheduled hearing, the parties had reached an agreement meaning that the ACCC’s application would no longer run contested. Oscar Wylee accepted liability, resulting in an agreement as to the facts and joint submissions were made, including on Oscar Wylee’s conduct and orders on pecuniary penalties.

The admitted contraventions

Katzmann J of the Federal Court found that between the period of 13 January 2014 and 31 December 2018 (the Relevant Period), Oscar Wylee had breached sections 18, 29(1)(h) and 33 and of the ACL by engaging in the following conduct.

Pair for a Pair Representations

Oscar Wylee represented in multiple ways that for each pair of glasses purchased, it would donate an additional pair of glasses to someone in need (Pair for a Pair Representations). The Court found that this was a “deliberate marketing choice” and was a “substantive feature of the Oscar Wylee website and its marketing” during the Relevant Period.

However, Oscar Wylee failed to meet its ‘pair for a pair’ promise as it sold 328,010 glasses, but only donated 3,181 frames (that is, without prescription lenses). It was only until after the Relevant Period that Oscar Wylee started to make substantial donations, as in 2019, 333,404 frames were donated to charities and other organisations, and $80,000 was donated to charitable causes.

Accordingly, Oscar Wylee admitted that it engaged in conduct that was:

misleading or deceptive, or likely to mislead or deceive (s 18 of the ACL); and
liable to mislead the public as to the quantity of the goods being donated (s 33 of the ACL).

Rose Charities Representations

Oscar Wylee represented in multiple ways that it was closely affiliated, and had “partnered”, with Cambodian charitable organisation, Rose Charities (Rose Charities Representations). However, only $2,000.00 and 100 pairs of frames (again, without prescription lenses) had been donated to Rose Charities, and those donations had ceased entirely by the end of 2014.

By at least June 2013, a director of Oscar Wylee was aware that some of Oscar Wylee’s marketing contained inaccurate images and information in respect of its charitable donations and affiliations.

Accordingly, Oscar Wylee admitted that it engaged in conduct that was:

misleading or deceptive, or likely to mislead or deceive (s 18 of the ACL); and
false or misleading to the public as to a particular affiliation (s 29(1)(h) of the ACL).

Katzmann J accepted and described Oscar Wylee’s admissions as “well-founded”.

The orders

In assessing the proposed agreed orders, Katzmann J accounted for the fact that Oscar Wylee had not previously contravened the ACL, they were co-operative with the ACCC during the investigation, and also noted that the charitable donations they made in 2019.

However, notwithstanding Oscar Wylee’s cooperation and belated donations, Katzmann J took the appropriate opportunity to describe Oscar Wylee’s conduct:

“Oscar Wylee improperly exploited the good nature of consumers to its advantage by contriving to enhance the value of its brand by falsely associating it with altruistic pursuits”;
“Its conduct was a betrayal of that promise”.

A summary of some of the key orders is as follows.

Pecuniary relief

The parties jointly submitted that Oscar Wylee pay $3.5million in pecuniary penalties under s 224(1) of the ACL, which comprised of:

$2,100,000 in respect of the Pair for Pair Representations for contravening s 33 of the ACL; and
$1,400,000 in respect of the Rose Charities Representations for contravening s 29(1)(h) of the ACL.

In reaching that number, the parties had accounted for the multiple contraventions of s 29(1)(h) and s 33 through various platforms (i.e. website, social media, direct emails to consumer, and promotional merchandise) when forming the figure.

Katzmann J accepted the “accuracy of the parties’ agreement” and that the total amount was “just and appropriate” to deter Oscar Wylee from re-offending and others from following suit.

Corrective notice

Oscar Wylee was also ordered under s 246(2)(d) of the ACL to publish a clearly visible corrective notice on its primary forms of online marketing, being the homepage of its website, Facebook and Instagram pages, for a period of at least 30 days.

Compliance training

In relation to the ongoing competition and consumer compliance training, the Katzmann J ordered under s 246(2)(b) that Oscar Wylee must, for a period of three years and at its own expense, have its existing ACL compliance program reviewed annually by an independent expert in the field of competition and consumer law. It is required that the independent expert:

not be involved in designing or implementing Oscar Wylee ACL compliance programs;
was never employed by or a director of Oscar Wylee;
had never consulted Oscar Wylee in any matters relating to competition or consumer law other than conducting the review required by Katzmann J’s orders;
has no significant shareholding or other interest in Oscar Wylee.

Within one month after the completion of each review, Oscar Wylee must ensure that any changes considered necessary by the expert are implemented, and that the ACCC are notified in writing identifying the changes and confirming that they have been made.

Costs

Katzmann J accepted the order that Oscar Wylee contribute $30,000 to the ACCC’s costs of the proceedings, on the basis that its cooperation justified the discount.

Key takeaways

This case serves as an important warning to businesses that any claims regarding philanthropic efforts in marketing material (including on social media and online marketing) need to be able to be substantiated to avoid contraventions of the ACL. You can get ‘ahead of the curve’ by making detailed and contemporaneous records of your timely donations.
Backtracking on your charitable promises won’t get you out of trouble. Ensure your donations are made as promised, and in a timely manner.
Carefully consider how the public may reasonably construe your charitable promise. It is best practice to make the public clearly aware of the terms of all promotions, not just your charitable promises. In relation to its Pair for Pair Representations, Oscar Wylee should have clearly explained to the public that frames without prescription lenses would be donated and adjusted the marketing of its promotion accordingly.
As described in our earlier article, the ACCC have wide-spanning information gathering powers through its s 155 notice, which it may have deployed to obtain the information from Oscar Wylee giving rise to these proceedings. Head to our article “Facing the music of the ACCC’s section 155 notice” to read more about the tool.

The Litigation and Dispute Resolution group at McCabes have conducted competition and consumer law training programs with businesses of different sizes and operate within varied industries. We have also been engaged to facilitate an ACL compliance program, as part of a Federal Court judgment. Feel free to get in touch with us to find out more about our competition and consumer law offering.

published by

Andrew Lacey

Managing Principal

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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 dictionary.com 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

Government

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