Commercial Law

An important decision was handed down in 2019 by the New South Wales Supreme Court in Voller v Nationwide News Pty Ltd (and others) which is highly relevant to any business which uses social media to promote its activities.

In essence:

• the matter concerned Dylan Voller, a young man who was featured in an ABC Four Corners story on abuse in youth detention centres
• subsequent articles written about Voller were posted on the public Facebook pages of media companies News Corporation and Fairfax
• Facebook users were allowed to post comments under the articles on Facebook, and Voller successfully pleaded that the users’ comments were defamatory
• the Court held the media companies were the “publishers” of the comments and therefore responsible for any defamatory imputations contained in them even though they were not the authors of the comments
• the Court held the media companies were liable because they knew, or ought to have known, that defamatory comments were being posted, and they did not remove the comments even though they had the power to moderate their public pages by deleting user comments

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Does your business charge consumers a surcharge for processing credit and debit card payments?

If so, changes to the Competition and Consumer Act in 2016 mean companies are prohibited from charging customers excessive payment surcharges if:

• it relates to a payment method covered by the Reserve Bank standard or regulations (this includes EFTPOS, Visa, MasterCard and Amex cards issued by an Australian financial service provider); and
• the amount of the payment surcharge exceeds the permitted amount in the Reserve Bank standard or regulations (which generally must be no greater than the cost to the business of processing the payment)

2019 saw the first litigation brought by the ACCC under these laws. Previously it had dealt with contraventions by issuing infringement notices.

In the Federal Court case ACCC v CLA Trading Pty Ltd (trading as Europcar):

• Europcar admitted to breaching the excessive surcharge laws in relation to 63,012 customers
• although the amount over-charged was $67,215.59 (amounting to slightly more than $1 overcharged per customer), Europcar was ordered to pay a $350,000 penalty to the ACCC in addition to refunding the affected customers

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During 2019 we received many enquiries from small businesses looking to get out of contracts with “automatic rollover” provisions.

An automatic rollover provision is a clause in a contract which provides that the contract will automatically renew for an additional term unless one of the parties opts out by giving notice to the other party of its intention not to renew. These clauses raise concerns for small businesses as:

• often the party is not aware of the automatic rollover provision when they sign the contract
• the further term may be exceedingly long (eg, 3-5 years)
• the notice period in order to opt out of the renewal may also be exceedingly long (eg, no less than 12 months before the expiry of the current term of the contract)

The good news is that a small business may have a remedy under the Australian Consumer Law’s unfair contract terms provisions if the following conditions are satisfied:
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2019 saw a continued trend of record-breaking fines imposed against companies for breaches of the Australian Consumer Law – for example:

• Cornerstone Investments Pty Ltd (trading as Empower Institute) was fined $26.5 million – then the highest ever aggregate penalty order imposed under the Australian Consumer Law for misleading or deceptive conduct and unconscionable conduct
• this was topped later in the year by Volkswagen’s record fine of $125 million for false and misleading representations in contravention of the Australian Consumer Law

Both cases involved particularly egregious breaches of the law as:

• Empower Institute was found to have engaged in unconscionable conduct by using unethical sales tactics (eg, offers of “free laptop computers”) to sign up disadvantaged clients to expensive private education courses – the clients were mostly Indigenous, had poor literacy and numeracy skills, were from disadvantaged remote communities, and the company knew or ought to have known that most of their clients were unlikely to pass the courses but would be saddled with large student debts

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In response to the Banking Royal Commission, Parliament passed amendments to the Corporations Act which came into effect on 13 March 2019.

The effect of these changes is to significantly increase the maximum civil and criminal penalties which apply to breaches of the Corporations Act as follows:

Other changes and responses include:

• civil penalties now apply to a wider range of breaches under the Corporations Act
• a new remedy of relinquishment (also known as “disgorgement of profits”) is available in civil penalty provision proceedings – this remedy is available in addition to pecuniary (criminal) penalties

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Recap

By way of refresher from our article earlier this year:

• new whistleblower legislation commenced on 1 July 2019
• it modified laws relating to corporations, the banking industry and insurance companies in order to:
• provide significantly stronger protections to whistleblowers who make disclosures about matters such as corporate misconduct (e.g. fraud), criminal activity, or any other conduct that represents a danger to the public or financial system
• expand the scope of persons who may make protected whistleblower disclosures and the circumstances in which these disclosures may be made
• permit and protect anonymous disclosures
• impose substantial civil and criminal penalties on any breaches of whistleblower protections (such as disclosing the whistleblower’s identity and/or causing the whistleblower detriment through victimisation)
• the protection obligations apply to all disclosures made on or after 1 July 2019 even if the disclosure relates to suspected conduct occurring prior to that date

Mandatory Policy

Critically, the legislation requires that all public companies and large proprietary companies MUST have in place a compliant whistleblower policy by 1 January 2020 with a “large proprietary company” being a proprietary company that satisfies 2 of the following 3 criteria:
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