Litigation and Dispute Resolution

Consumers and Businesses Beware: Standard Contracts

16 August, 2022

In Part 1 of this two-part series, we looked at how you can be personally liable as a director for your company’s breach of taxation laws, company laws, and workplace laws. We also considered the ways in which directors may be held accessorily liable for their company’s contraventions of industry specific statutes, such as the Protection of the Environment Operations Act 1997 (NSW), Heavy Vehicle National Law (NSW) and Liquor Act 2007 (NSW). You can access this article here.

In Part 2, we will delve into how your company’s contravention of competition laws, privacy laws, spam laws and marketing laws may expose you to personal liability as a director.

Breach of the Competition and Consumer Act 2010 (Cth) by your company

The Competition and Consumer Act 2010 (Cth) will impact upon many facets of your company’s dealings, whether it be competitive practices, interactions with customers, or the pricing of goods or services. This includes ensuring that the information, prices and descriptions of your products and services are accurate, clear and complete – not only on your website, but in any advertising or other material circulated by your company.

Failing to comply with the Act may lead to an action being brought against you as an accessory under sections 224, 232 and 246 of the Australian Consumer Law (ACL), which is contained in schedule 1 of the Act. These provisions enable a court to make orders against a person who has been ‘involved’ in a contravention of the Act, including a director or officer of a company.

By way of example, the Australian Competition and Consumer Commission recently prosecuted three online suppliers of e-cigarettes – Joystick, Social-Lites and Elusion, for falsely representing that their e-cigarettes did not contain carcinogens or other harmful substances. The suppliers did not have any scientific evidence for their claims, and failed to make reasonable enquiries to verify their claims. The Federal Court found in each case that the online retailers had breached provisions of the ACL relating to misleading or deceptive conduct, false or misleading representations, and conduct that could mislead the public about the nature or characteristics of goods. Each of the companies was fined $50,000. The directors of each of the companies were also fined between $10,000 and $15,000 for their involvement in the contraventions.

More serious contraventions of the ACL may also result in disqualification as a director. In the recent decision of Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 2) [2016] FCA 528, the sales director of Colgate, who had engaged in anti-competitive practices including cartel conduct, was disqualified from managing corporations for a period of seven years and ordered to pay $75,000 towards the ACCC’s costs of the proceedings. The director escaped a more severe pecuniary penalty due to the adverse impact that the proceedings had upon him, his co-operation throughout the proceedings, and the impact that the disqualification order would have upon him.

Privacy is paramount

The Australian Privacy Principles that are enshrined in the Privacy Act 1988 (Cth) may impact your company if it manages or trades in personal information, and has an annual turnover of $3 million (or an annual turnover less than $3 million, but falls within one of the exceptions).

The Privacy Principles require organisations to manage personal information in an open and transparent way, take steps to prevent personal information from unauthorised access and misuse, not collect personal information unless the information is reasonably necessary for one or more of the organisation’s functions or activities, and not use personal information that is held about an individual for the purpose of direct marketing (unless one of the exemptions apply).

A new mandatory data breach reporting scheme will commence on 22 February 2018 which will make it mandatory to report privacy breaches. This scheme will replace the voluntary data breach reporting system that is currently in place. Under the new laws, an entity must notify “eligible data breaches” to the Information Commissioner and affected individuals, and where appropriate, take prompt action to remedy the data breach.

Being aware of whether your company needs to comply, and if you do, understanding your obligations so you can put in place appropriate measures is critical. Directors can be held liable for their participation in a corporation’s contravention of one of the Australian Privacy Principles or a provision of the Privacy Act under section 80V of the Act. Penalties for contraventions include fines of up to $2.1 million for corporations and $420,000 for individuals.

Spam sent to email addresses

Almost every business sends marketing material via email to advertise, promote, and offer to supply their products or services. However, company directors need to be aware that such communications are likely to constitute ‘commercial electronic messages’, and that sending unsolicited commercial electronic messages is prohibited under section 16 of the Spam Act 2003 (Cth). Harvesting electronic addresses is also prohibited under section 22 of the Act. Company directors and officers may be held liable for being involved in the company’s contraventions of these provisions.

To avoid liability, you should obtain the consent of the recipient before pressing ‘send’. You may also be able to rely on the ‘conspicuous publication defence’, if the consent of the relevant electronic account-holder can be reasonably inferred from the conduct, business or other relationships of the individual or organisation. This means that the relevant electronic account-holder is taken, for the purposes of the Act, to have consented to the sending of commercial electronic messages to that address.

Where the consent of the recipient is not obtained, there may be severe penalties for the directors of the company. An extreme example is Australian Communications and Media Authority v Clarity1 Pty Ltd (2006) FCA 1399, where the Court held that the managing director of the company had breached the Spam Act by authorising the company to send more than 270,000,000 unsolicited commercial electronic messages and harvest electronic addresses. The director was held personally liable for his involvement in the company’s contraventions, and ordered to pay $1,000,000. The company was also ordered to pay $4,500,000. It is worth noting that the maximum penalty that could have been ordered against the director for his contraventions of subsections 16(9) and 22(3) was $9,900,000.

Numbers listed on the Do Not Call Register

The Do Not Call Register Act 2006 (Cth) makes it an offence to make telemarketing calls and send marketing faxes to numbers that are listed on the Do Not Call Register without the consent of the account-holder. People and businesses can register their telephone, mobile and fax numbers on the Register to avoid receiving certain unsolicited calls and faxes. The Act also makes it an offence to be involved in the making of an unsolicited telemarketing call or the sending of an unsolicited marketing fax. Exemptions apply for certain types of calls and faxes, such as telemarketing calls authorised by a government body or charity, and calls made by the supplier or prospective supplier of goods and services.

A company and its sole director were penalised by the Federal Court for making telemarketing calls that were contrary to the Do Not Call Register Act. The evidence showed that more than 12,000 infringing calls were made to various numbers during a period of around one month, and that the company director had authorised the infringing conduct. The Court fined the company $120,000, and would have fined the director for her involvement in the company’s conduct had she not been bankrupt. Both respondents were also restrained for a period of 5 years from engaging in any business which relied upon the regular use of telemarketing calls without the consent of the Australian Communications and Media Authority.

What can you do? 

Part 1 and Part 2 of this series highlight the importance of understanding not only the laws that apply to company directors, but also those that impact companies operating in specific industries or engaging in certain practices.

Understanding which laws apply to you and your company is an integral first step in devising strategies to prevent your company from infringing these laws, and reducing your exposure to personal and accessorial liability as a director.

The best way to achieve this is through obtaining proper legal advice. McCabes can assist in helping you to understand which legislation is applicable to you and your company, the obligations that apply to you as a director, and ways to reduce your risk of personal liability.

McCabes also provides free legal health checks for companies. Click here to start the process.


McCabes will be running a ‘Deepwater and Safe Harbours’ seminar series commencing in March 2018. The first seminar in the series will focus on navigating your way as a director and will provide practical guidance on how to stay out of deep water and how to find safe harbours. If you are interested in attending this seminar, please contact [email protected] to register for the details.

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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