VCAT must set out its reasons: Dimatos v Coombe & Ors [2011] VSC 619

The matter of Dimatos v Coombe & Ors [2011] VSC 619 was an appeal from VCAT to the Supreme Court of Victoria before Beach J. The matter in VCAT concerned an allegation by the applicant that the respondents had defectively serviced the applicant's Torana motor vehicle, causing loss and damage.

Beach J noted that although the judgment in VCAT was voluminous and consisted of 292 paragraphs, the 'path of reasoning' for making the particular findings was not apparent. Beach J noted that the VCAT judgment set out the evidence without reference to the issues, and then the VCAT judgment went on to make findings of fact based on the evidence without providing the reasons for these findings of fact.

At [20] Beach J set out a summary of the authorities concerning the statutory requirement in s117 VCAT Act 1998 for VCAT to give reasons:

20 Having made final orders dismissing the substantial parts of the appellant’s claims, the tribunal was required to give reasons.[2] Whilst the extent of the reasons in any case will depend upon the circumstances of the case, the reasons should identify the issues in dispute; deal with the substantial points which have been raised; include findings on material questions of fact; refer to the evidence or other material upon which those findings are based; and provide an intelligible explanation of the process of reasoning that has led the tribunal from the evidence to the findings and from the findings to the ultimate conclusion.[3] Failure to expose this path of reasoning is an error of law.[4] Further, as has been said on a number of occasions, in general, the mere recitation of evidence followed by a statement of findings, without commentary as to why the evidence is said to lead to the findings, is “about as good as useless”.[5]

Beach J held that the reasons in the matter were deficient as no path of reasoning has been exposed. Beach J held that whilst VCAT recited the evidence, little or no explanation was given as to why a particular piece of evidence, or all of the evidence, is said to lead to the critical findings leading to the final result (at [21]):

21 Unfortunately, the reasons in the present case are deficient. No path of reasoning has been exposed. The failure to expose a path of reasoning is, as I have said, an error of law. Accordingly, the appeal must be allowed, and the orders made below must be set aside. Whilst the judgment below contains a substantial recitation of the evidence given, little (if any) explanation has been given as to why any particular piece of evidence (or the evidence as a whole) is said to lead to the critical findings leading to the final result. Much of the present problem may have been avoided if there had been a concise statement of the issues in dispute (including the parameters of each dispute) at the commencement of the judgment with the evidence (conflicting or otherwise) then being analysed by reference to those issues. 

Employee v Contractor: Elazac Pty Ltd v Shirreff [2011] VSCA 405

The matter of Elazac Pty Ltd v Shirreff [2011] VSCA 405 (Elazac v Shirreff) was an appeal before the Court of Appeal of the Supreme Court of Victoria (Redlich and Mandie JJA, and Beach AJA). It was an appeal in respect of issues under the Occupational Health and Safety Act 1985. The point of interest that this article concerns is the discussion of whether or not the plaintiff was the defendant's employee. 

In Elazac v Shirreff, the plaintiff (Shirreff) fell down a lift well and sued the defendant (Elazac) claiming that the defendant was his employer. The defendant alleged that the plaintiff was a contractor, and denied liability on that basis. In the trial, Robson J found that the plaintiff was the defendant's employee and found that the defendant was liable for the plaintiff's injuries. The quantum was reduced to reflect contributory negligence. 

Some of the characteristics of the relationship between the plaintiff by the defendant were: 

• The plaintiff was in a business partnership with his wife since 1984 as an electrical contractor. 
• Mr Morgan, a representative of the defendant, requested the plaintiff do work at his various company addresses and his home. 
• The defendant, thrugh Mr Morgan, engaged the plaintiff as a project manager to manage the refurbishment of one of the defendant's buildings. 
• By the time the accident occurred, the plaintiff was working almost exclusively for the defendant. 
• When the plaintiff threatened to resign, he entered into a new contract with the defendant, set out in a file note. The contract provided for payment to the plaintiff's business, authorisation of certain expenses by Mr Morgan and gave the plaintiff a wage of $450 per day. The contract noted that the plaintiff had employees and allowed an hourly rate for these employees. 
• Invoices were rendered to the defendant charging out the labour of the plaintiff and his employees. 
• If further people were needed for the job, they were initially employed by the plaintiff and then transferred to the defendant. 
• Mr Morgan gave the plaintiff directions what to do on a daily basis. However the plaintiff was the one to decide how to perform a task and who was to perform it. 

Robson J found that the plaintiff was the defendant's employee for the following reasons: 

In doing so I have taken into account the totality of the relationship between Mr Shirreff and Elazac, and particularly that between Mr Morgan and Mr Shirreff. There are several factors that are of particular importance. I have considered the matter on a practical basis which takes into account how the parties conducted themselves, irrespective of the formal contract between them. In other words, I have considered substance over form. On a practical level Mr Morgan demanded and expected, and Mr Shirreff tacitly accepted, complete authority by Mr Morgan over Mr Shirreff’s activities. Mr Morgan gave him instructions on a daily basis and sometimes hourly. Mr Shirreff’s duties as project manager of the projects being undertaken by Mr Morgan at his home and at 401 and 411 Collins Street were not delegable by him but had to be personally performed by him. Mr Shirreff was remunerated for the time he spent on Mr Morgan’s projects but not on the basis of his output or the tasks he performed. True it is that Mr Shirreff had flexibility in the hours he worked, but they were required to average 8 hours per day. Mr Shirreff was primarily supervising the employees of Elazac who were themselves under the control of Elazac. I accept the plea of Mr Shirreff in his amended statement of claim that Mr Morgan exercised a high degree of control over Mr Shirreff.

The Court of Appeal disagreed with the characterisation of the relationship and held that the plaintiff was a contractor. The Court first set out the matters to be considered when faced with a question of whether an employment relationship exists (at [30] to [31]):

30 His Honour commenced this part of his judgment with a detailed and careful analysis of the relevant authorities.[5] Whilst earlier authorities often regarded ‘control’ as the determinative factor in deciding whether someone was an employee or an independent contractor, later authorities have recognised that control (or, more particularly, the right to exercise control) is only one of a number of possibly relevant factors (albeit an important one) in determining the issue. Modern authority is to the effect that it is the totality of the relationship between the parties which must be considered. Relevant factors in determining the nature of the relationship between a person who engages another to perform work and the person so engaged include:

(a) the degree of control which the former can exercise over the latter;

(b) whether what is being supplied is the work and skill of a person (contract of service) or the supply of equipment or its performance (contract for services);

(c) whether or not the person engaged can set their own hours of work;

(d) the method of payment (and, in particular, whether payment is determined by hours of service or output or production);

(e) whether or not income tax is deducted and holiday pay or long service leave or superannuation paid;

(f) whether or not the person engaged employs employees and/or conducts his business in partnership;

(g) whether or not there is a power to delegate (send someone else to perform the work); and

(h) whether or not the person engaged considered the relationship as one of independent contractor.

31 Further, whilst earlier authorities supported the proposition that if a person engaged had more technical or specialist skill than the person who engaged him, then the person engaged was more likely to be an independent contractor, more modern authority recognises that it is relatively commonplace to employ employees who have particular technical skills or expertise that are not possessed by those employing them. The fact that a person engaged to perform work has particular expertise no longer, of itself, provides any great support for a conclusion that that person is an independent contractor.

The Court of Appeal considered that an important matter was that the plaintiff had a high degre of control over what he did and the defendant did not have any control as to how a task was to be performed by the plaintiff (at [35]):

35 The issue of control falls to be considered not merely by reference to what control was actually exercised, but also by reference to the level of control which could be exercised. Undoubtedly, Mr Morgan did exercise a great deal of control as to when the performance of particular tasks should be performed. Clearly, when Mr Morgan wanted something done immediately then it had to be done immediately. However, the evidence does not disclose any basis for concluding that Mr Morgan was capable of exercising control (or did exercise control) over how a relevant task was to be performed. Whilst it can be accepted that Mr Morgan was very interested in particular jobs being undertaken and completed immediately following the giving of an instruction to do the work, there is no evidence that Mr Morgan took any interest in how the task was to be performed. Mr Morgan was only interested in work being performed to his satisfaction when he wanted it performed, rather than the mechanics of its performance.

However the most significant issue was that the plaintiff had his own employees, and the Court of Appeal said that because of this it would be 'unusual' if the plaintiff was actually an employee of the defendant (at [36] to [39]):

36 In our view, the most significant feature in relation to the issue of whether the plaintiff was an employee or contractor is the plaintiff’s employment of his own employees at the work sites at which he was required to perform work. Whilst it may not be absolutely inconsistent with a relationship of employer/employee that an alleged employee employs on site his or her own employees, in our view this would certainly be unusual.[8] Looking at the totality of the relationship between the plaintiff and the defendant, we have little doubt the plaintiff was a contractor and not an employee of the defendant. Not only did the plaintiff consider himself to be self-employed, everything he did in the course of his work suggested that this was so: he employed employees; his tax returns and financial documentation disclosed he was operating a business in partnership with his wife; he could determine who he employed and where they worked; he performed additional work (in working hours) for an organisation unrelated to the defendant (and sent his employees to work there from time to time); and finally, the defendant did not deduct taxation from the plaintiff’s pay and did not pay him holiday pay, sick leave, long service leave or superannuation.

37 In the plaintiff’s written submissions,[9] it was submitted that ‘it is conceptually possible that one man may work for another, at different times and undertaking different tasks, on the one hand under a contract for services, and on the other hand under a contract of service. Reliance was placed upon the decision of Barnes v Dawson.[10]

38 The facts in Barnes may be briefly stated as follows. The claimant, in partnership with his son, employed a third person to assist them with various kinds of rural work which they undertook and for which equipment belonging to the partnership was used. Accounts rendered by the partners for work done were based on a daily rate for each person involved and for equipment used, with adjustments for supplies and similar items received from the person for whom the work had been done. Whilst engaged on certain fencing work for the putative employer, the claimant was asked by the putative employer to assist him and some of his employees to brand and mark some calves. The claimant acceded to this request and, whilst engaged on this task, sustained injury. An account was rendered on the usual basis. The claimant later made application for workers’ compensation in respect of the injury, but this was dismissed.

39 In remitting the claimant’s claim for reconsideration, the Full Court of the Supreme Court of New South Wales acknowledged the possibility that a person performing work in the course of his or her business may become an employee for the purpose of performing some other specified task which was under the control, or the direction, of another. However, that is not this case. The evidence in this case discloses that the plaintiff was performing the tasks he was performing at the time of the accident as part of his overall agreement with the defendant. His Honour did not conclude (and there would have been no basis for concluding) that whilst the plaintiff was a contractor of the defendant during 2002, he became an employee for the purpose of fixing the lift on the afternoon of 25 June.

Elazac v Shirreff is useful as it summarises the modern authorities on what constitutes an employment relationship, and reiterates that control is a significant consideration when faced with a question of whether or not a relationship is employer-employee. It also points out that where an alleged employee employs his own employees to work on the alleged employer's tasks, then this is normally not indicative of an employment relationship between the alleged employee and the alleged employer.

Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156

The matter of Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156 was an appeal to the Full Court of the Federal Court of Australia (Dowsett, Foster and Yates JJ) on 30 November 2011 from the decision of Bennet J on 13 October 2011 to grant an injunction in favour of Apple concerning Samsung's Galaxy Tab 10.1 product. I published a post on the decision of Bennet J, which is here.

The appeal was completely successful, and it appears that Samsung may have a Merry Christmas in preference to Apple. However this may be short lived, as the High Court (Heydon J) granted a stay of the Full Court's decision.

The Full Court undertook an extensive analysis of the authorities and commentary on interlocutory injunctions between [52] and [74]. I have not extracted this as it is a very lengthy discussion by the Court.

The High Court granted a stay of the decision of the Full Court. The stay is in place until 9 December 2011, at which point the High Court has scheduled a hearing for special leave. 

Confirming Codelfa: Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45

The matter of Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45 was an application for special leave in the High Court of Australia. The matter concerned the construction of a letter of agreement concerning the Gloria Jeans franchise. The issue on appeal was a leading decision by Macfarlan JA in the New South Wales Court of Appeal to the effect that a court should not disregard unambiguous language in an agreement even where to do so would result in a more commercial operation of the agreement.

The High Court (comprised of Gummow, Heydon and Bell JJ) dismissed the application for special leave, referring to the decision of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337. In Codelfa, Mason J said at p352 the following of the Court admitting evidence of the surrounding circumstances:

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

The High Court's decision to dismiss the application for special leave is short, and I have set out an extract below (citations omitted):

1. GUMMOW, HEYDON AND BELL JJ. This is an application for special leave to appeal from a decision of the New South Wales Court of Appeal, in which Macfarlan JA gave the leading judgment. The dispute concerned the construction of cl 3 of a "Letter of Agreement" concerning the franchising in Australia of Gloria Jean's Gourmet Coffee Stores. In the passage in which he found error in principle in the reasons of the primary judge, his Honour said:

"A court is not justified in disregarding unambiguous language simply because the contract would have a more commercial and businesslike operation if an interpretation different to that dictated by the language were adopted."

His Honour added that the primary judge appeared:

"to have acted on the basis that the provision would make more sense from a commercial point of view"

if it were construed as the primary judge did construe that provision. These statements by Macfarlan JA since have been applied by the New South Wales Court of Appeal in Miwa Pty Ltd v Siantan Properties Pte Ltd.

2. The primary judge had referred to what he described as "the summary of principles" in Franklins Pty Ltd v Metcash Trading Ltd. The applicant in this Court refers to that decision and to MBF Investments Pty Ltd v Nolan as authority rejecting the requirement that it is essential to identify ambiguity in the language of the contract before the court may have regard to the surrounding circumstances and object of the transaction. The applicant also refers to statements in England said to be to the same effect, including that by Lord Steyn in R (Westminster City Council) v National Asylum Support Service.

3. Acceptance of the applicant's submission, clearly would require reconsideration by this Court of what was said in Codelfa Construction Pty Ltd v State Rail Authority of NSW by Mason J, with the concurrence of Stephen J and Wilson J, to be the "true rule" as to the admission of evidence of surrounding circumstances. Until this Court embarks upon that exercise and disapproves or revises what was said in Codelfa, intermediate appellate courts are bound to follow that precedent. The same is true of primary judges, notwithstanding what may appear to have been said by intermediate appellate courts.

4. The position of Codelfa, as a binding authority, was made clear in the joint reasons of five Justices in Royal Botanic Gardens and Domain Trust v South Sydney City Council and it should not have been necessary to reiterate the point here.

5. We do not read anything said in this Court in Pacific Carriers Ltd v BNP Paribas; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd; Wilkie v Gordian Runoff Ltd and International Air Transport Association v Ansett Australia Holdings Ltd as operating inconsistently with what was said by Mason J in the passage in Codelfa to which we have referred.

6. However, the result reached by the Court of Appeal in this case was correct. Further, even if, as the applicant contends, cl 3 in the Letter of Agreement should be construed as understood by a reasonable person in the position of the parties, with knowledge of the surrounding circumstances and the object of the transaction, the result would have been no different. Accordingly, special leave is refused with costs.

Penalties without a breach: Ange v First East Auction Holdings Pty Ltd [2011] VSCA 335

The matter of Ange v First East Auction Holdings Pty Ltd [2011] VSCA 335 was an appeal in the Victorian Supreme Court of Appeal before Neave and Tata JJA and Sifris AJA. The questions for the Court of Appeal concerned whether a fee payable on withdrawal of art from an auction was payable or not, including whether the fee was unenforceable as a penalty.

The Court of Appeal considered the question of whether a fee can be a penalty even when a breach had not occurred. That is, if a large fee is charged in the normal course of the contract, such as where a withdrawal fee is charged, can it be unenforceable as a penalty? The Court of Appeal held that it could not.

At [85] to [94] the Court of Appeal set out its reasoning, relying on the decision of the New South Wales Court of Appeal in Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd [2008] NSWCA 310:

85 The trial judge held that clause 11 of the Agreement, which provided for the imposition of a withdrawal fee, was not an unenforceable penalty because the doctrine of penalties only applies to contractual terms requiring payment in the event of breach. According to Export Credits Guarantee Department v Universal Oil Products Co[33], AMEV-UDC Finance Ltd v Austin[34] and more recently, Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd,[35] a term imposing an obligation to pay money on the occurrence of a specified event, other than breach, is not a penalty.

86 The trial judge held that since clause 11 of the Agreement did not provide that withdrawal of an item from auction constitutes a breach, the doctrine of penalties had no application to the term requiring payment of a fee for withdrawing an item from auction. His Honour considered that the distinction between the two types of clauses was firmly established in the case law and it was not open to a judge at first instance to apply the penalty doctrine to the withdrawal fee term in these circumstances.

87 Grounds 3, 4, 5 and 6 of the Amended Notice of Appeal are directed towards the trial judge’s finding that clause 11 was not void as an unenforceable penalty. Mrs Ange contends that the trial judge erred in law in finding that the clause was not void as an unenforceable penalty, failing to find that clause 11 took effect upon breach, failing to find that withdrawal of the paintings by Mrs Ange was in breach of the Agreement and failing to find that the law of penalties was not limited to breaches of contract.

88 The submissions for Mrs Ange on the penalty issue centred on the correctness of the decision in Interstar. In that case, a judge of first instance in the New South Wales Supreme Court held that the doctrine of penalties extended beyond a term providing for the consequences of a breach of contract. The decision of Brereton J was subsequently reversed by the New South Wales Court of Appeal. After examining the conflicting authorities, Allsop P (with whom Giles and Ipp JJA agreed) held that the better view was that the payment complained of must be conditioned on a breach of contract.

89 In written submissions, counsel for Mrs Ange submitted that the Court should find the approach taken by the New South Wales Court of Appeal was plainly wrong and that the reasoning of the primary judge in the matter should be preferred. However, at the hearing of the appeal, Counsel properly acknowledged that the Court of Appeal’s decision was not plainly wrong. He did not abandon the point, but rather suggested that it was a matter that should be dealt with by the High Court (if necessary), rather than an intermediate appellate court.

90 Counsel for Bonhams submitted that there were compelling reasons for following the decision of the Court of Appeal in Interstar and that this Court should not depart from the practice of following the decision of another State’s appellate court on a common law principle.

91 The current state of the law in Australia is that a term of a contract that imposes an obligation on a party to pay money on the happening of a specified event which is not a breach of contract does not constitute a penalty. Primarily, this is because it is not the role of the court to relieve a party from a bad bargain.

92 In Interstar, in reversing the decision of Brereton J, the President of the New South Wales Court of Appeal, Allsop P said:

[106]In my view, the expression of view by the primary judge that the doctrine of penalties (distinguished from relief against forfeiture) in the common law of Australia (using that expression to mean, relevantly here, the general law encompassing common law and equity) was not limited to circumstances of breach of contract was not open to his Honour. The intermediate appellate authorities in Australia, the persuasive view of a unanimous House of Lords, existing High Court authority and other views expressed in the High Court constrained the primary judge (and constrain this court) to limiting the application of the doctrine of penalties to circumstances of breach of contract. If a wider doctrine is to be enunciated in the form of that appearing in [75] of his Honour’s reasons, it is for the High Court of Australia to enunciate it. This is so not least because of the need to resolve the views of a number of justices of the High Court, including but not limited to a majority of the court in IAC (Leasing).[36]

93 The decision of Allsop P is, with respect, careful, considered and comprehensive. The paragraph referred to above clearly represents the present state of the law. It is also consistent with the approach followed by the Full Court of the Supreme Court of South Australia in Diakos v Mason.[37] 

94 Accordingly, it is not for this Court to determine that the jurisdiction to set aside a term as a penalty extends to circumstances beyond a breach of contract.[38]
95Grounds 3, 4, 5 and 6 are therefore not made out.

I know that reliance is being placed on this decision in ANZ Bank class action in the Federal Court of Australia, because the plaintiffs to that class action are alleging that the doctrine of penalties extends beyond a breach. That is, to the extent that overdrawing, dishonouring, etc is not a breach by the customer, then the fees charged by ANZ are penalties in any event.

It will be interesting to see the outcome of the ANZ class action in light of the decision in Ange.

Floyd Landis convicted of hacking related charges relating to doping allegations

Cyclingnews revealed this morning that Floyd Landis, the disgraced cyclist who was stripped of the 2006 Tour de France winner's yellow jersey, has been convicted of receiving documents from the hacking into a French drug laboratory's computers. Apparently Landis was charged with ordering the hacking, but he was convicted of a lesser charge and received a 12 month suspended sentence.

This all came about in an attempt by Landis to defend himself against allegations of doping from a test during the 2006 Tour de France which resulted in him being stripped of the title.

Here's the extract from Cyclingnews:

Floyd Landis has been convicted in a French court on charges he obtained documents that had been hacked from the computers of a French laboratoyr and given a suspended jail sentence.

The once 2006 Tour de France champion was charged with ordering the hacking into computers of a WADA-accredited lab, but was found guilty only of receiving the hacked documents after prosecutors could establish no link between the cyclist and the confessed hackers. He could have been handed an 18 month sentence but was given 12 months.

AFP reported that, “prosecutors say Landis and coach Arnie Baker masterminded a plot to hack into the lab’s computer system to obtain documents as they sought to defend the cyclist’s name.”

Last year Landis was issued with an arrest warrant but remained in the US.

Landis tested positive for testosterone during the 2006 Tour de France. His doping controls were handled by the Chatenay-Malabry laboratory. In November 2006, the lab reported that its computer systems had been infected with a "Trojan Horse" virus, which was used by someone to access the lab's confidential documents. The lab said that data had been removed or changed, allegedly in an attempt to discredit the work of the organisation.

An email carrying the virus was alleged to have been sent from a computer with the same IP address as that of Landis' coach Arnie Baker. Both Landis and Baker denied any involvement in the hacking, but authorities maintain that the pair made use of pilfered documents in Landis' defense argument.

The investigation by the French Interior Ministry in 2009 led to the arrest of a French national living in Morocco named Alain Quiros, who confessed to hacking into the lab, according to the New York Times. He said he'd been paid several thousand euros to hack into the AFLD computer as well as several other European corporations including Greenpeace France - the hacking scheme was instigated by a former French intelligence agent Thierry Lorho, head of Kargus Consultants.

Lorho reportedly handed off the data lifted from the lab computer to a man named Jean-François Dominguez, who then delivered it to another person who has not yet been identified. The confidential data then made its way to the news media and was used by Landis and Baker to form the basis of his defense against charges of doping.

Last spring, the French subpoenaed Landis and his coach Arnie Baker to travel to France and testify on this matter. Neither of them went to France.

The most awful thing about the Landis matter was that he set up the 'Floyd Fairness Fund', which was a fund to defend himself against the doping allegations. Many contributed to this fund. He later admitted to extensive doping.

Supreme Court of Victoria practice note 9 of 2011 - citation

The Supreme Court of Victoria has issued Practice Note 9 of 2011 concerning citation of judgments, including electronically sourced judgments.

It reads as follows:

1. Practice Notes No 3 of 2004 and No 1 of 2006 are hereby revoked. 
2. Where a judgment is reported in an authorised series of law reports, all references and citations must be to, and any copy provided to the Court must be a copy of, the authorised report. 
3. Where a judgment is not reported in an authorised series of law reports but is available electronically, reference must be made to its medium neutral citation. Reference may also be made to any report in an unauthorised series of reports. 
4. Any copies of judgments provided to the Court which are printed from an electronic source must be printed from the Rich Text Format (RTF) or Portable Document Format (PDF) of the judgment where available. Judgments delivered in Australia are generally available in one or both of these formats, with a medium neutral citation, on various websites including the Australasian Legal Information Institute at: www.austlii.edu.
5. At present, to obtain a judgment in RTF or PDF from the above website, it is necessary to take the following steps: 
1. Click on the link to view the judgment. 
2. Choose the “Download” option in the toolbar above the case citation.
3. Click on the “Rich Text Format (RTF)” or “Portable Document Format (PDF)” hyperlink below the heading “Available Data Formats”. 
4. Print the document and provide in this format.
6. Where a judgment is not reported in an authorised series of law reports and is not available electronically with a medium neutral citation, references and citations may be to, and any copy provided to the Court may be from, an unauthorised series of law reports.
7. If a party intends to rely upon a judgment which is not reported in an authorised or unauthorised series of law reports and is not available electronically, a copy of this judgment must be provided to all other parties, and to the Court, as soon as it is reasonably practicable to do so.
8. A copy of a judgment provided to the Court must be printed in portrait, as opposed to landscape, orientation. Copies must not be provided in a reduced size.
9. Where a judgment is divided into numbered paragraphs, all references to that judgment must be to the relevant paragraph or paragraphs and, where the judgment has been published in hard copy, the page on which those paragraphs commence. For example:

• Smith v Jones (2010) 28 VR 415, 420 [45]-[55].
• Smith v Jones [2010] VSCA 14, [56] (medium neutral citation, where 14 is the number of an unreported judgment of the Court of Appeal and 56 is the paragraph in which the cited passage is found).

Reading between the lines, part of the Practice Note suggests that the Court is unhappy with the practice of being provided with screen prints from AustLII and other electronic resources, which is understandable. The Practice Note otherwise reflects the ongoing position that authorised reports are preferred over unauthorised reports.

Expert reports - how important is it that the expert has read the code of conduct?

Rule 44.03 of the Supreme Court (General Civil Procedure) Rules 2005 concerns the instructing of experts to give evidence in a trial, and sets out what matters must be in that expert's report if a party intends to adduce evidence from that expert.

Rule 44.03(1) requires the provision of the Form 44A code of conduct to the expert 'as soon as practicable after the engagement of the expert and before the expert makes a report under this Rule'. Rule 44.03(2)(b) requires the expert, in its report, to acknowledge that he or she has read the code of conduct and agrees to be bound by it.

There seems to be a paucity of authority in Victoria concerning the admissibility of expert reports for failure to read the code before authoring the report. However the New South Wales Supreme Court has dealt with this issue in great detail.

The relevant provisions of the New South Wales Uniform Civil Procedure Rules 2005 provide as follows:

31.23 Code of conduct

(cf SCR Part 39, rule 2; DCR Part 28A, rule 2; LCR Part 38B, rule 2)

(1) An expert witness must comply with the code of conduct set out in Schedule 7.

(2) As soon as practicable after an expert witness is engaged or appointed:

(a) in the case of an expert witness engaged by one or more parties, the engaging parties, or one of them as they may agree, or

(b) in the case of an expert witness appointed by the court, such of the affected parties as the court may direct,

must provide the expert witness with a copy of the code of conduct.

(3) Unless the court otherwise orders, an expert’s report may not be admitted in evidence unless the report contains an acknowledgment by the expert witness by whom it was prepared that he or she has read the code of conduct and agrees to be bound by it.

(4) Unless the court otherwise orders, oral evidence may not be received from an expert witness unless the court is satisfied that the expert witness has acknowledged, whether in an expert’s report prepared in relation to the proceedings or otherwise in relation to the proceedings, that he or she has read the code of conduct and agrees to be bound by it.

The New South Wales rules are certainly more prescriptive than the Victorian Rules when describing the effect of non-compliance on the admissibility of the evidence referred to in the report. However when a Victorian Court is faced with a similar issue of non-compliance, it is likely to be persuaded by the decisions in the New South Wales Supreme Court.

I have included a summary of several matters dealing with this issue below:

• Barak v WTH [2002] NSWSC 649 - an expert was called to give evidence in circumstances where his report did not state that he had read and agreed to be bound by the code of conduct. The expert was cross examined and said he was aware of the code and had read it before making the report and in making the report he sought to comply with the code. Barrett J admitted the evidence stating at [5] 'the intent of the rule of ensuring that only reports by experts who have proceeded in accordance with stated norms of conduct should be relied upon can be seen to be satisfied'.
• Commonwealth Development Bank of Australia Pty Ltd v Claude George Rene Cassegrain [2002] NSWSC 1314 - an expert who had not acknowledged having read or agreed to be bound by the code gave evidence that he adhered to the evidence in his report having regard to the obligations imposed under the code, but there was no evidence that he had read and considered the code before he prepared his evidence. Einstein J rejected the report saying at [5] the 'Expert Witness Code of Conduct was promulgated with the clear intent that only reports by experts who have proceeded in accordance with the stated norms of conduct, should be relied upon and may be admitted into evidence'.
• United Rural Enterprises Pty Ltd v Lopman Pty Ltd [2003] NSWSC 870 - an expert had not been given a copy of the code before preparing his report but was given it when he swore his affidavit. In that affidavit the expert said that his report complied with the code and he undertook to be bound by it. Campbell J pointed to the risk that an expert might form an opinion without appreciating the full extent of his obligations, but might find it difficult to retreat from or qualify that view upon a full consideration of those obligations. Because there was no real risk that the Court would be misled or the opposite party prejudiced, Campbell J admitted the report.
• Investmentsource v Knox Street Apartments [2007] NSWSC 1128 - the defendant sought to rely on a report prepared before the litigation which provided a valuation of a property which was prepared without reference to the code of conduct. McDougall J considered it was a business record under s69 Evidence Act, but that it was excluded under the rules because, amongst other things, the expert did not prepare his report with a conscious appreciation of the obligations imposed by the relevant code of conduct.
• CJD Equipment v A & C Construction [2009] NSWSC 1085 - a report by an expert did not contain an acknowledgement of having read the code, but in a later affidavit of the expert that expert said that the report had been prepared in accordance with the code. McDougall J admitted the report, but warned (at [17]) that the Court was not condoning any practice of ex post facto adoption of the requirements of the code.
• Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 49 - an expert prepared a report which was sought to be tendered in evidence. In the report the expert did not acknowledge the code or agree to be bound by it as the report was prepared before the litigation. Once again referring to quality control issues, Barrett J rejected the report for the particular purpose sought, although the Court partially admitted the report for another limited purpose.

It is likely that a Victorian Court will be guided by s135 Evidence Act 2008 (Vic) when faced with an issue of non-compliance, as there appears to be no express rule dealing with the rejection of expert evidence because of a non-compliant report. The considerations are likely to be those discussed in the New South Wales cases above.

Expectation damages - Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64

I was involved in a matter yesterday where the parties were debating whether loss of profit is capable of being recouped in a contractual damages claim where there is no defined contract price for the term of the contract. This reminded me of the discussions in Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, and I thought I would give a brief case note on this.

Amann was a company that entered into a contract with the Commonwealth to provide aerial coastal surveillance for 3 years. The contract provided that if Amann failed to carry out the contract or comply with a condition to his or her satisfaction, the Commonwealth had power to give notice to Amann to show cause why the contract should not be cancelled.

Amann spent a lot of money purchasing aircraft for the contract, however when Amann commenced work under the contract, it didn't have enough aircraft to perform the work. The Commonwealth served a show cause notice, which was invalid. Amann alleged that the show cause notice was a repudiation of the contract and Amann terminated the contract. Amann sought damages for breach.

The primary Judge held that if the contract ran its full term Amann would have made a profit of $820,000 but because there was a 50% chance of the Commonwealth terminating the contract, the damages had to be reduced by half. The primary Judge awarded Amann damages for loss of profit but declined to award wasted expenditure, which represented the bulk of the damages claim. On appeal the Full Court awarded Amann damages inclusive of wasted expenditure. On appeal to the High Court, Amann was allowed wasted expenditure.

Referring to Robinson v Harman (1848) 1 Ex. 850, Mason CJ and Dawson J (at p80) set out the principle for the recovery of expectation damages (which usually takes the form of loss of profit):

The general rule at common law, as stated by Parke B. in Robinson v Harman, is "that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed". This statement of principle has been accepted and applied in Australia. 

The award of damages for breach of contract protects a plaintiff's expectation of receiving the defendant's performance. That expectation arises out of or is created by the contract. Hence, damages for breach of contract are often described as "expectation damages". The onus of proving damages sustained lies on a plaintiff and the amount of damages awarded will be commensurate with the plaintiff's expectation, objectively determined, rather than subjectively ascertained. That is to say, a plaintiff must prove, on the balance of probabilities, that his or her expectation of a certain outcome, as a result of performance of the contract, had a likelihood of attainment rather than being mere expectation.

In the ordinary course of commercial dealings, a party supplying goods or rendering services will enter into a contract with a view to securing a profit, that is to say, that party will expect a certain margin of gain to be achieved in addition to the recouping of any expenses reasonably incurred by it in the discharge of its contractual obligations. It is for this reason that expectation damages are often described as damages for loss of profits. Damages recoverable as lost profits are constituted by the combination of expenses justifiably incurred by a plaintiff in the discharge of contractual obligations and any amount by which gross receipts would have exceeded those expenses. This second amount is the net profit.

CPD event - Social Media and Blogging for Barristers and Solicitors

I've been invited to be on a panel to address a group of interested barrister and solicitors over the benefits of social media to the profession. The seminar is on Tuesday 8 November 2011 at 5.15pm at Pitcher Partners in Melbourne.

Here's the flyer...

Here's a link to the RSVP registration

I'll be there with Stephen Warne (www.lawyerslawyer.net) and Elizabeth Boros (corporatelaw.net.au). We'll be speaking about our blogs, including how we set them up, how we maintain them and what benefits we get out of them. 

Hopefully I'll see you there.

Apple Inc. v Samsung Electronics Co. Limited [2011] FCA 1164

The patent battle between Apple and Samsung over their respective tablet products was won (at least for now) by Apple. On 13 October 2011, Bennett J of the Federal Court of Australia granted an injunction in favour of Apple concerning Samsung's Galaxy Tab 10.1 product.

Once again the Federal Court of Australia has done a great job in providing a summary of the matter at the beginning of the judgment. An extract of the summary follows, which avoids the need for me to provide a summary of the decision!

1 In accordance with the practice of the Federal Court in some cases of public interest, importance or complexity, the following summary has been prepared to accompany the publication of the Court’s reasons for judgment. This summary is intended to assist in understanding the outcome of this proceeding and is by no means a complete statement of the conclusions reached by the Court. The only authoritative statement of the Court’s reasons is that contained in the published reasons for judgment which will be available on the internet at http://www.fedcourt.gov.au/ together with this summary. 

2 The respondents (Samsung) intend to launch in Australia a version of a tablet device known as the Galaxy Tab 10.1 (the Australian Galaxy Tab 10.1). The applicants (Apple) have brought proceedings alleging that the Australian Galaxy Tab 10.1 infringes certain claims in 13 of Apple’s patents, will contravene certain provisions of the Australian Consumer Law and will involve passing off of Apple’s iPad 2. Samsung denies these allegations. It has filed a cross-claim seeking to revoke certain of the patent claims relied upon by Apple and alleging that Apple has infringed certain patents held by Samsung. 

3 When the matter is heard on a final basis, the decision to grant or refuse to grant a permanent injunction restraining the sale of the Australian Galaxy Tab 10.1 will depend on a determination of Apple and Samsung’s competing claims. 

4 Apple seeks an interlocutory injunction restraining Samsung from releasing the Australian Galaxy Tab 10.1 until Apple’s claims and Samsung’s cross-claim are heard on a final basis (the interim injunction). Samsung argues that the interim injunction should not be granted. 

5 The primary issue with which this judgment is concerned is whether to grant the interim injunction. Both parties expressly asked me not to come to a final decision in this judgment, in part because of a desire to file further evidence. I have not done so. 

6 As is commonly the case in applications for an interlocutory injunction, Apple did not seek to rely on all of the claims it has made against Samsung. This does not prejudice Apple’s right to rely on these claims at a final hearing. 

7 In support of its claim for the interim injunction, Apple initially sought to rely on the alleged infringement of five patents. Apple no longer seeks to rely on one of these patents. Samsung has undertaken not to include the features of two of these patents in the Australian Galaxy Tab 10.1 until a final judgment is delivered or a further order of the Court is made. Accordingly, Apple’s claim for the interim injunction relates to the alleged infringement of three claims of two patents:
• Claim 6 of Australian Standard Patent No 2005246219, entitled “Multipoint touchscreen” (the Touch Screen Patent); and
• Claims 1 and 55 of Australian Standard Patent No 2007286532, entitled “Touch screen device, method, and graphical user interface for determining commands by applying heuristics” (the Heuristics Patent). 

8 As set out by the High Court in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, there are two main inquiries to undertake in determining whether to grant an interim injunction. 

9 The first inquiry is whether Apple has made out a “prima facie case” in the sense that there is a probability that at a final hearing it will be entitled to relief. The requirement of a “prima facie case” does not require Apple to show that it is more probable than not that it will succeed at trial. Apple needs to show that it has a sufficient likelihood of success. 

10 The second inquiry, often referred to as the “balance of convenience”, involves a consideration of whether the inconvenience or injury that Apple would be likely to suffer if an injunction were refused outweighs or is outweighed by the inconvenience or injury which Samsung will suffer if the injunction were granted. 

11 The Court is required to determine whether to grant the interim injunction within this legal framework. 

12 As to the “prima facie case” inquiry, Apple has explained why it contends that Samsung has infringed claims of each of the two patents. Samsung has explained why it denies that the invention of those claims is present in the Australian Galaxy Tab 10.1. It has also submitted that the claims of the Touch Screen Patent are revocable for want of novelty by reason of two prior publications, which is relevant to Apple’s “prima facie case” for infringement of that patent. 

13 Despite the force of Samsung’s submissions, I have found that Apple has established a “prima facie case” for the infringement of claims of both the Touch Screen Patent and the Heuristics Patent within the O’Neill test. That is, it has established a probability, not necessarily in a mathematical sense, that it will, on the present evidence, succeed at trial. That evidence may be supplemented and further submissions advanced, which may explain why neither party asked me to determine the questions finally. 

14 As to the “balance of convenience” inquiry, the parties addressed me on many different factors. In summary:
• I have found that the detriment to Apple from a refusal to grant the interim injunction would be significant. So too would be the detriment to Samsung from a grant of the interim injunction. I have weighed this factor evenly.
• I have found that damages would not be an adequate remedy for either party for the detriment that they will experience from an adverse outcome. I have weighed this factor evenly.
• Given that both parties agree that the Australian Galaxy Tab 10.1 would, like other tablet devices, have a short life cycle, an adverse outcome for either party on the application for the interim injunction would be equivalent to denying that party some form of final relief to which it may be found, at the final hearing, to be entitled. In Apple’s case, I have found that, if I were to refuse the interim injunction but Apple were to prevail at a final hearing, by that time a final injunction would be of little practical effect to Apple as the Australian Galaxy Tab 10.1 would be likely to have been superseded by other Samsung products. This will effectively have deprived Apple of its statutory rights to prevent the exploitation of a product that infringes the claims of valid patents. In Samsung’s case, I have found that, if I were to grant the interim injunction but Samsung were to prevail at a final hearing, by that time the product would, as the evidence suggests, be “obsolete” and Samsung’s success in being able to sell the Australian Galaxy Tab 10.1 would be of little practical effect. However, I have found that Samsung’s unwillingness to be available for a limited early final hearing in November 2011 contributed to this factor. Accordingly, I have weighed this factor in Apple’s favour.
• I have given no weight to Apple’s argument that I should preserve what it describes as the status quo in the Australian tablet market.
• I have found that Samsung’s allegations of delay by Apple in commencing proceedings were not made out. I have given this factor no weight.
• I have found that from 15 April 2011, when Apple commenced proceedings involving the Galaxy Tab 10.1 in the United States, Samsung proceeded with its “eyes wide open” in respect of the launch of the Australian Galaxy Tab 10.1. I have weighed this factor in favour of Apple, but I have given it slight weight.
• I have found that the existence of a “prima facie case” in respect of two separate, registered patents strengthens Apple’s overall prima facie case for relief. I have weighed this factor in favour of Apple. 

15 Although I have found that the “balance of convenience” was almost evenly weighted, there were several factors which favour Apple. Accordingly, I have concluded that the “balance of convenience” falls in Apple’s favour. 

16 Overall, considering that Apple has established a “prima facie case” with respect to two separate patents and that the “balance of convenience” is marginally in its favour, I am satisfied that it is appropriate to grant the interim injunction. I propose, again, to give the parties the opportunity of an early final hearing this year on the issues presented in this application, without prejudice to their rights to a later final hearing on all other issues.

The summary shows how close the balance of convenience argument was. At this stage it appears that Apple is going to have a merry Christmas.

Law Council publication - Federal Court of Australia Case Management Handbook

The Law Council of Australia has just released a handbook for case and hearing management in the Federal Court of Australia. The handbook is 79 pages and draws on the experience of the Law Council of Australia, senior practitioners and the judiciary to provide a user friendly guide to running cases in the Federal Jurisdiction.

A link to the media release and the handbook is here.

The foreword is authored by the Honourable Chief Justice Keane, and it reads as follows:

This Handbook is a very important development in the ongoing dialogue between the Federal Court of Australia and the legal profession who practise before it about how best to manage the cases which are commenced in the Court.

The Federal Litigation Section of the Law Council of Australia and the members of that Section who gave so generously of their time to author the individual chapters which make up the Handbook are to be congratulated.

It is a first class product and contains a wealth of information, guidance, ideas and suggestion about the tools and techniques available for use in the Court. It garners the experience of judges and practitioners alike and provides a valuable insight to case management in litigation in the Federal Court.

I commend the Handbook to all practitioners and encourage them to make full use of this outstanding resource.

I suggest my readers download a copy and review it, as the handbook really is a great practical resource for any sort of litigation, particularly in the Federal Court of Australia.

Compensation orders: LSB v Werden [2011] VSC 74

I'm involved in a compensation order application for damage to property in respect of a criminal proceeding. This is a quasi civil remedy which is available after a finding of guilt in a criminal proceeding. s86 of the Sentencing Act 1991 (Vic) is the relevant provision concerning compensation for property damage, which provides as follows at s86(1):

(1) If a court finds a person guilty of, or convicts a person of, an offence it may, on the application of a person suffering loss or destruction of, or damage to, property as a result of the offence, order the offender to pay any compensation for the loss, destruction or damage (not exceeding the value of the property lost, destroyed or damaged) that the court thinks fit.

The matter of LSB v Werden [2011] VSC 74 was an application by the LSB under s86 for compensation in respect of defalcations by a solicitor found guilty of theft and obtaining financial advantage by deception. The application was before Beach J in the Supreme Court of Victoria. 

The application for compensation was made at least 2.5 years after the finding of guilt, and the defendant submitted the LSB was out of time as an application must be made 'as soon as practicable after the offender is found guilty, or convicted, of the offence' (at s86(5)). The LSB justified its delay by saying that at the time of the finding of guilt, the defendant did not appear to have any assets, and it was the LSB's policy not to pursue compensation in those circumstances. The defendant succeeded in its submission that the LSB was out of time. 

Click 'read more' below for extracts and a discussion of the case.

Are Google ads misleading - ACCC v Trading Post [2011] FCA 1086

The matter of Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd [2011] FCA 1086 (ACCC v Trading Post) was a hearing before Nicholas J in the Federal Court of Australia in which the ACCC alleged that both Google and the Trading Post had engaged in misleading or deceptive conduct by advertising.

The ACCC published a helpful press release on its site concerning the outcome of this hearing, as follows:

Court decision on Google clarifies misleading advertisements 

The Federal Court has dismissed allegations by the Australian Competition and Consumer Commission that internet search engine Google engaged in practices likely to mislead consumers. 

The ACCC alleged that by failing to adequately distinguish advertisements from search results, Google had engaged in misleading or deceptive conduct. 

Justice Nicholas found that the use of the word “advertisement” or an abbreviation of that word, rather than “sponsored links”, might eliminate or reduce confusion in the minds of some users. 

However he held that the presentation of Google’s search results did not breach consumer law as most users would have appreciated that “sponsored links” were in fact advertisements. 

Since the ACCC instituted these proceedings, Google has changed the description of its advertisements on its search results pages from “Sponsored Links” to “Ads”. 

The ACCC was the first regulatory body to seek legal clarification of Google’s conduct from a trade practices perspective. However Google has been scrutinised over trademark use in the United States, France and Belgium. Google has also faced scrutiny overseas, particularly in the EU, in relation to competition issues concerning its search results business. 

The ACCC also alleged, and Justice Nicholas found, that the publication of a number of advertisements on Google’s search results page in which the headline of the advertisement comprised the business name, product name or web address of a business not sponsored, affiliated or associated with the advertiser was misleading or deceptive. Trading Post, as responsible for some of the advertisements, was found to have made false or misleading representations and engaged in misleading or deceptive conduct. 

The ACCC alleged that as a result of Google’s significant input into advertisements which appear on its search results pages, it was not only the advertiser but also Google which made the representations found to have breached the Act. However, Justice Nicholas found that Google was “merely communicating” the representations without adopting or endorsing any of them. 

“This case is important in relation to clarifying advertising practices in the internet age,” ACCC Chairman Rod Sims said. 

“All businesses involved in placing advertisements on search engines must take care not to mislead or deceive consumers.” 

The ACCC also notes that on the first day of the hearing, 8 March 2010, Google released a “Business Names Policy” which prohibited advertisers’ use of unrelated business names in the first line of ad text, when they are using that name to imply a special relationship with any unrelated third party. This policy was initially applied by Google in Australia and New Zealand only and was expanded to apply to all countries in mid-July 2010.

I have included below a sample page of a Google search to demonstrate what the Federal Court is referring to in its decision, together with explanatory arrows and titles.

The ACCC case against Google is set out succinctly at [12] and [13]:

12. Thus, there are two parts to the ACCC’s case against Google. The first part of the case is concerned with the overall layout and appearance of the results page which, it is said, fails to distinguish sufficiently between organic search results and advertisements. This part of the ACCC’s case extends to both advertisements which might appear on the left hand side of the results page immediately above the organic search results and to those advertisements which appear to their right, on the right hand side of the results page. The second part of the case is concerned with the use of what are said to be misleading keywords in the headlines of particular advertisements which may also appear on the left or right hand side of the results page.
13. The second part of the ACCC’s case is based upon eleven distinct claims involving various advertisers and sponsored links which Google is alleged to have published on its results pages. In particular, it is the ACCC’s case that these sponsored links were misleading or deceptive or likely to mislead or deceive because in each instance they included a headline consisting of a trading name, a product name or a website address of the advertiser’s competitor but which also serves as a clickable link to the advertiser’s website.

The allegation at [13] is more specifically explained at [10] as follows:

10. Sometimes the headline to an advertisement will consist of keywords selected by a user of the Google search engine that corresponds with keywords selected by the advertiser which may, according to the ACCC, also be a business or product name of the advertiser’s competitor. The ACCC alleges that when the user clicks on the headline consisting of such keywords, he or she is likely to be taken to a website that has no association with the keywords selected.

The advertiser referred to is the Trading Post. One of the allegations made by the ACCC is that the Trading Post engaged in misleading or deceptive conduct by advertising its business on Google with a headline 'Kloster Ford', a competitor of the Trading Post.

A summary of Google's response to these allegations is set out at [15] and [16]:

15. As to the first part of the ACCC’s case, Google simply says that there is nothing that is misleading or deceptive or likely to mislead or deceive in the way in which it presented advertisements on its results pages. It says that the expression “sponsored links” and the overall design and layout of its search page sufficiently distinguished such advertisements from organic search results.
16. As to the second part of the ACCC’s case, Google raises various answers. First, Google says that to the extent that any of the twenty sponsored links that are the subject of the second part of the ACCC’s case might be found to convey a representation that is misleading or deceptive or likely to mislead or deceive then any such representation was made by the advertiser and not by Google. Secondly, Google says that it has not in any event been established that any of the twenty sponsored links the subject of the second part of the ACCC’s case conveyed any representation that was misleading or deceptive or likely to mislead or deceive. Thirdly, Google says that if it is established that Google has by publishing a particular advertisement made any representation that is misleading or deceptive or likely to mislead or deceive, then it has a defence under s 85(3)of the Act.

The proceeding is brought under s52 and s53 of the Trade Practices Act 1974 (Cth) as the alleged conduct occurred prior to 1 January 2011. The Federal Court found that Google did not engage in misleading or deceptive conduct in relation to the sponsored links in the yellow box (at [166]):

It seems to me that the inference which ordinary and reasonable members of the class would draw from the appearance on the results page of the caption “sponsored links” when it is used to describe top left sponsored links is that the entries in the coloured box so described are links for which businesses seeking to promote their goods or services made payments to Google. They would therefore understand that these top left sponsored links are in the nature of advertisements.

The Federal Court also found that Google did not engage in misleading or deceptive conduct in relation to the advertiser's links on the right hand side (at [167]):

Similarly, in the case of the right side sponsored links, it seems to me that users would appreciate that they were also in the nature of advertisements. In particular, I do not accept the ACCC’s argument that the absence of the coloured background in the area of the results page where the right side sponsored links appear is likely to mislead or deceive users into thinking that the right side links are not advertisements. My own impression is that right side sponsored links are clearly distinguishable from the organic search results appearing to their left.

The Federal Court also found that Google did not engage in misleading or deceptive conduct in relation to the use of the term 'sponsored links' (now 'ads') and their position on the Google search page (at [173]):

In my view the representation conveyed by the use of the term “sponsored links” in the context in which it was used was that each of the links so described was a form of advertisement. Accordingly, I do not accept that users would have been likely to understand that sponsored links were the same as organic search results or that their position on the results page was determined by the same considerations that determined the position of organic search results. I do not intend to suggest by this that sponsored links are not “search results”. In one sense they are. What sponsored links will appear on a results page depends upon, among other things, the content of the search query. But I do not accept that in publishing “sponsored links” Google represented to users that they were organic search results, that they were the same as organic search results or that their appearance on the page was determined by the same considerations that determine when and where results which were not identified as sponsored links appeared on the page.

The Trading Post was found to have engaged in misleading or deceptive conduct by representing an association between it and Kloster Ford which did not exist (at [130] and [131]) and by representing that information relating to Kloster Ford could be found at the Trading Post Website (at [135] and [136]).

However Google was not found to have made the Trading Post representations (or any other advertiser's representations) by including these advertisements in the Google search (at [195]). The reason for this is set out by Nicholas J at [194] as follows:

Once it is accepted that the ordinary and reasonable members of the class would have understood, as was the fact, that the Kloster Ford advertisement and the Charlestown Toyota advertisement were advertisements, then it seems to me to follow that they would be most unlikely to have understood that any information conveyed by those advertisements was endorsed or adopted by Google. They would have understood that the message conveyed was a message from the advertiser which Google was passing on for what it was worth.

A summary of the findings made by Nicholas J is set out at [354] to [356] as follows:

354.  I am satisfied that there should be a declaration that Trading Post contravened s 52(1) of the Act by, in trade or commence, engaging in conduct that was misleading or deceptive or likely to mislead or deceive by publishing the Kloster Ford advertisement. This is on the basis that by publishing the Kloster Ford advertisement Trading Post made various representations which were misleading or deceptive, or likely to mislead or deceive, in the respects that I have identified. I am also satisfied that Trading Post contravened s 53(d) of the Act by representing, contrary to the fact, that it had an affiliation with Kloster Ford. I will make declarations to that effect in appropriate terms. The case brought against Trading Post based upon its publication of the Charlestown Toyota advertisement has failed due to the evidentiary deficiencies that I have previously identified.
355. I am not satisfied that Google contravened s 52 of the Act by failing to sufficiently distinguish advertisements (sponsored links) from organic search results on its search results pages. Nor am I satisfied that Google contravened s 52 of the Act by making any of the representations that the ACCC alleged Google made by the publication of the Kloster Ford advertisement, the Charlestown Toyota advertisement or any of the other advertisements about which the ACCC complained in this proceeding.

The result in ACCC v Trading Post will come as some relief to Google, which is a company under a lot of pressure at the moment concerning its market power. However the case has shifted some of Google's behaviour. For instance Google has renamed 'sponsored links' to 'ads' on its search engine to more clearly distinguish what are search results and what are advertisements.

ANZ penalties class action trial commenced on 3 October 2011

On 3 October 2011 the class action initiated by Maurice Blackburn against ANZ commenced at trial in the Federal Court. The trial has been split into stages, the first of which is to determine if the various fees charged by the ANZ are penal in nature.

I wrote a blog article on this proceeding awhile back over an issue concerning an expert report: the ANZ was seeking time to file and serve an expert report explaining how the fees are calculated, and the court was critical of this because of the delay. The applicants suggested that the fact that a forensic report was needed to explain the fees suggested the fees had no basis and were arbitrary.

The Age website has a useful summary of the first day of trial, with Justin Gleeson SC giving submissions concerning the applicants' case against the ANZ. I have included an extract from the Age article below:

THE first stage of Australia's biggest class action has begun in the Federal Court with lawyers representing 34,000 ANZ customers arguing that certain fees charged by the bank amounted to an improper imposition of a penalty.

There is a way to go before any of those customers learn if they can get compensation from the bank since each stage of the class action is likely to run to appeal.

This week the court is considering if fees levied by the bank were, as the customers argue, penalties - and not, as the bank says, a service charge for applying its discretion about extending credit or honouring overdrawn accounts.

Lawyers for the ANZ customers told the court yesterday the bank appeared to have developed ''a nice little earner'' in levying fees against overdrawn accounts.

Counsel for the customers, Justin Gleeson, SC, traversed more than 700 years of legal history as he argued the law on penalties and contracts, at least as far as Australia is concerned, is not entirely settled.

Over five hours, the court heard about penal bonds in the 14th century, a dispute between two English fishmongers in 1670 after one disparaged the other's fish, developments after the passing of the 1875 Judicature Act, and was treated to some lines from The Merchant of Venice.

It also heard about 17 specific instances between 2004 and 2010 when ANZ charged ''honour'' or ''dishonour'' fees for overdrawing cheques or credit accounts, for late payments on credit cards and for exceeding specified limits on credit cards. The 17 instances are being used as quasi test cases as the court determines if the fees were in fact penalties. Outside the court, lawyer Andrew Watson of class action specialists Maurice Blackburn Lawyers, said the history of the law in this area demonstrated that ''a penalty provision will not be enforced by the courts''.

He said while the law indicated it was entirely appropriate in a breach of contract for an aggrieved party to recoup damages, the fees charged by the bank did not represent a genuine estimate of the loss or damage caused.

Mr Watson said while Maurice Blackburn was not yet aware of the precise level of fees ''we know it runs into hundreds of millions of dollars''. ''If we are successful, the bank will be required to pay back the excessive amount of fees.''

Anderson & Ors v Xie [2011] VSC 486

The matter of Anderson & Ors v Xie [2011] VSC 486 was a freezing order application before Dixon J in the Supreme Court of Victoria. This matter is an example of a freezing order obtained in circumstances where there is delay, after judgment, in having costs taxed. Here the plaintiff sought to freeze the defendant's assets to prevent the defendant from dissipating her assets to thwart the judgment.

I have included a brief summary and extracts below.

Grand final scalping injunction

In my haste to get into chambers this morning, I misread this morning's printed 'the Age' newspaper and assumed that that the injunction hearing for the alleged Grand Final ticket 'scalping' company 'Ticket Flinders' was to be heard today (being 27/9/11). I was in the Practice Court today and feared that because of this hearing, my matter wouldn't be reached, or at least would be heard in the afternoon.

To my relief, it appears that the injunction hearing was heard before Kaye J yesterday (26/9/11) and an injunction was obtained restraining the businesses 'Sion Events' and 'TPTG Holdings' from selling tickets to the Grand Final.

Here's the extract from the Age online version:

VICTORIA'S Supreme Court has placed an injunction on an allegedly dodgy ticket agency that is scalping tickets for this Saturday's AFL grand final for up to $1750.

The injunction, issued by Justice Stephen Kaye, relates to an internet ticket broking agency called Ticket Finders which is not authorised to sell highly sought-after tickets to the event. 

Justice Kaye has also ordered that the directors of the business, operating as Sion Events and TPTG Holdings - Tom Gilmartin and David McGuire - refrain from advertising, selling, re-selling or distributing tickets to the event.

The injunction was sought by the state government's Department of Planning and Community Development, which administers the Major Sporting Events Act to ensure there is transparency and fairness in the manner in which tickets are sold to the general public for popular sporting events. 

Grand final tickets cannot be sold without written AFL permission or resold at a premium, with offenders facing fines of up to $6000 for individuals and $30,000 for companies.
An affidavit states the Ticket Finders website is selling grand final tickets that have been sourced from ''various suppliers within the industry'' and include a premium charged by the source whom the organisation has bought the tickets from. The agency is also accused of illegally advertising and selling tickets to last year's JB Were Masters golf tournament.

Google's US antitrust hearing on 21 September 2011

On 21 September 2011 a hearing took place in the US capital before the Senate Judicial Committee's antitrust subcommittee concerning Google's market power. The hearing inquired about whether Google is abusing its market power by prioritising its own businesses ahead of its competitors' businesses when users conduct a search using the Google search engine.

I have included a discussion of Google and the antitrust hearing below.

Late service of expert reports - Thomas v Powercor Australia Limited (Ruling No 3) [2011] VSC 391

The matter of Thomas v Powercor Australia Limited (Ruling No 3) [2011] VSC 391 is an application by a plaintiff for the Supreme Court of Victoria to accept an expert report served by the plaintiff on the third day of a trial. The trial concerns the Black Saturday Horsham bushfires and the application was before J Forrest J. The trial commenced on or about 3 September 2011 with the issue of liability concerning a conductor falling from a pole on a power line. 

The plaintiff was required to serve its expert report in April 2011 and the experts were ordered to meet and prepare a joint expert report by late June 2011. On the third day of the trial the plaintiff delivered an expert report. The expert opinion in the report concerned the manner in which a coach screw was fixed to the pole, which was considered to be material to the issues.

The report was rejected by the Court. I have included a case discussion and extracts below.

Waiver of privilege in a pleading - Towercom Pty Ltd v Fahour [2011] VSC 455

The matter of Towercom Pty Ltd v Fahour [2011] VSC 455 was an appeal from an Associate Judge to Macaulay J of the Supreme Court of Victoria. In the proceeding the defendant alleged that the plaintiff caused it loss by selling a property at an undervalue. The defendant sought disclosure of an expert report prepared for the plaintiff. The expert report was said to be the report which arrived at the loss alleged in the statement of claim. The only element from the report that was disclosed in the statement of claim was the loss, being the difference between the sale price and the alleged market value.

The defendant sought disclosure of the report under s26(1) of the Civil Procedure Act 2010 (Vic) (the CPA) and, by reason of the refusal to disclose, sought an order under s29. The plaintiff claimed privilege over the report, but the defendant said that privilege had been waived by inclusion of the loss figure from the report in the statement of claim.

The Court held that the inclusion of the loss figure was not inconsistent with the maintenance of privilege, and therefore declined to order its disclosure. I have included a discussion and extracts of this matter below.

Reasonable apprehension of bias - Bahonko v Moorfields Community [2011] VSCA 259

The matter of Bahonko v Moorfields Community & Ors [2011] VSCA 259 (Bahonko) was an appeal in the Court of Appeal before Buchanan, Redlich and Mandie JJA. The appeal was from the dismissal of the plaintiff's proceedings in the County Court of Victoria on the basis that the trial judge is disqualified by reason of apprehended bias on the basis of views expressed in a Law Reform Committee submission concerning vexatious litigants.

I have included a case discussion and extracts below.

NSW postpones introduction of 'reasonable steps' pre-litigation requirements

The New South Wales government has announced that is is postponing the introduction of its 'reasonable steps' pre-litigation requirements which it introduced in Part 2A of the Civil Procedure Act 2005 (NSW).  The postponement was announced by the NSW Attorney General, Greg Smith SC on 23 August 2011. Part 2A was originally set to apply to matters filed on or after 1 October 2011, however the government has announced a postponement of 18 months.

I have included a discussion on this below.

The evolution of discovery - Matthews v SPI Electricity Pty Ltd & Ors [2011] VSC 401

The matter of Matthews v SPI Electricity Pty Ltd & Ors [2011] VSC 401 was a hearing before Zammit AsJ in the Supreme Court of Victoria concerning discovery. I have referred to the case below because of the handy summary of the evolution of the procedures and tests for discovery. The matter itself is a class action against a power company SPI in respect of the Kilmore East-Kinglake bushfire on 7 February 2009.

The extract and a brief discussion is set out below.

iPad software review for lawyers - Goodreader

I find that my iPad 2 is an invaluable tool for my legal practice. I use it in Court, mediations and conferences to take notes, draft documents and research legislation, cases and commentary. I got most of my tips on how to set it up from Kyle McDonald, another blawging barrister. His site Quis custodiet ipsos custodes? is full of reviews and tips on how to set up an iPad.

I thought I'd have a go at giving a review of Goodreader which is an app that I find to be very valuable for my practice. The review is set out below.

Dasreef Pty Ltd v Hawchar [2011] HCA 21 - expert reports

The matter of Dasreef Pty Ltd v Hawchar [2011] HCA 21 (Dasreef v Hawchar) was an appeal to the High Court in respect of a ruling to admit an expert's report under s79 of the Uniform Evidence Act (the NSW version). The matter is interesting because of the High Court's discussion of the matters which must be demonstrated for expert opinion evidence to be admissible under s79.

I have included a case summary and discussion below.

Total failure of consideration - JD No 6 (Dava) Pty Ltd v P Battlay Holdings Pty Ltd [2011] VSC 353

The matter of JD No 6 (Dava) Pty Ltd & Anor v P Battlay Holdings Pty Ltd & Anor [2011] VSC 353 (JD No 6 v P Battlay Holdings) was a trial before Croft J in the Supreme Court of Victoria which concerned an option agreement for a contract of sale of land. The option was exercisable by the payment of $400,000 to the first defendant, which was to be applied to the deposit for the purchase of land under the contract of sale of land. 


Pursuant to the option agreement the first plaintiff paid $400,000 to exercise the option. Subsequent to the exercise of the option, the first defendant failed to perform its obligations, by reason of the impossibility of performance, and the first defendant resisted repaying the amount of $400,000 to the first plaintiff. The Supreme Court of Victoria ordered repayment on the basis that there was total failure of consideration (at [53]).


I have included a case summary and extracts concerning the principles of total failure of consideration below.