INTRODUCTION TO CIVIL OBLIGATIONS CORE AREA OF STUDY 3

Transcription

1 INTRODUCTION TO CIVIL OBLIGATIONS CORE AREA OF STUDY 3 How do civil agreements and the laws of negligence impact on citizens in a society? The law regulates private interactions between citizens in society, both planned (contract) and unplanned (negligence). The law imposes elements for a contract to be valid and for a negligence claim to be successful. Both the common law and statutory protection provide stakeholders with remedies. (QUEENSLAND LEGAL STUDIES SENIOR SYLLABUS, 2013)

2 CHAPTER 14 WHICH CURRENT LEGAL ISSUES RELATE TO AGREEMENTS AND NEGLIGENCE? FOCUS TOPICS 14.1 MEETING THE CHALLENGE OF THE MODERN AUSTRALIAN ECONOMY 14.2 THE CHANGING LANDSCAPE OF NEGLIGENCE FOCUS OBJECTIVES To understand and appreciate: Australian consumer law governs the relationships of consumers and retailers in the modern Australian economy; and more groups of people are joining together to bring a combined court action (class action) where they have a common interest. 206 LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition

3 INTRODUCTION TO CIVIL OBLIGATIONS CORE AREA OF STUDY 3 - CHAPTER MEETING THE CHALLENGE OF THE MODERN AUSTRALIAN ECONOMY Our economy relies on the law of agreements to function effectively. Australians plan their business and personal affairs around the agreements that they make to pursue their interests and their lives. The legal issues faced when the Australian government enters into international agreements are different from those which individuals enter into from day to day. For example, the Australian and East Timorese governments have an agreement about the exploitation of oil of resources in the seabed which is part of its territory. Recently, there was a dispute and the East Timorese government took Australia to the International Court in The Hague, where it successfully raised the issue that the Australian government had spied on their internal communications while at the same time negotiating the agreement. There are many other issues like this at the business and international levels. At the consumer level, there are other issues, some of which are examined here in more detail. Australians buying goods and services face a variety of challenges. There is always a range of choice as well as a range of prices for any particular good or service. Investigating the best choice for the best price can involve visiting a retail outlet or going online or a combination of both. Payment can be made for goods and services in a variety of ways by cash, credit card, cheque, or by electronic transfer. Completing an agreement to do all these things is a major challenge for the average Australian. Practical application 1. Brainstorm the types of transactions suggested by in the above collage. Add any suggested to you by the collage. [K] [I] 2. Describe the types of sellers and buyers involved in the transactions you have identified from the collage. Do you think the buyers would need assistance to understand the nature of the agreements between themselves and the sellers? In these agreements, are the buyers ever likely to be at a disadvantage? Give your reasons. [I] [R] INQUIRY FOCUS DEFINE the legal issue to be investigated. [K] Should the Australian Consumer Law (ACL) protect Australian consumers from misleading advertising? In Chapter 16 of this book, we set out the Australian Consumer Law (ACL), a part of the Competition and Consumer Act 2010 (Cth) which now applies in all Australian states and is administered by the respective State authorities. Educating businesses and consumers in the application of these laws is an important current legal issue for all Australians. LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition 207

4 ANALYSE/APPLY [I] Practical application 21 March 2014 WAS/NOW PRICING CLAIMS UNDER SPOTLIGHT South Australia s consumer watchdog is joining consumer protection agencies across the country to crackdown on misleading retail pricing claims. Retailers who advertise discounted goods with was/now pricing will be targeted by Consumer and Business Services (CBS) as part of a nationwide compliance operation. Commissioner for Consumer Affairs Paul White said retailers will be called upon to substantiate their claims about discounts in was/now advertising. Was/now pricing, also known as strike through or two-price advertising, is where a business advertises that a product was a certain price but is now on sale for a discounted price, Mr White said. Businesses often advertise a specific saving on a product in comparison to its previous non-sale price, wholesale price, a competitor s price or recommended retail price (RRP). Consumers need to be able to trust an advertisement as a true representation of the savings on offer. For example, stating that a product Was $100 Now $50 or $50 is likely to be misleading, and consequently unlawful, if that product had not been sold at $100 in a reasonable period immediately before the sale commenced. These type of advertisements can also be considered misleading if the was price wasn t a true offer, for example, if only a limited amount of the product was on offer at the higher price immediately before the sale began. CBS will be visiting businesses around the state to educate them and make sure they are not misleading consumers with was/now pricing. We will be on the lookout for bait advertising, pricing which is misleading or deceptive, overcharging and instances where the original cost, RRP or saving amount has been inflated or wasn t a true offer. The maximum civil penalty for providing false or misleading information is $1.1 million for a corporation and $220,000 for an individual. Criminal penalties for the same amounts may also be imposed. Our aim is to make both businesses and consumers more aware of their rights and obligations under the Australian Consumer Law (ACL) regarding was/now pricing. SOURCE: Attorney-General s Department, Government of South Australia (Consumer and Business Services): DATE: accessed 29/09/ Who are being targeted by CBS? [K] 2. Outline the behaviour being targeted by CBS. [K] [I] 3. In what circumstances would the target behaviour be misleading? [I] 4. Who is being protected by CBS? [K] 5. Are the laws which allow CBS to target misleading advertising in was/now pricing justified? [R] 208 LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition

5 INTRODUCTION TO CIVIL OBLIGATIONS CORE AREA OF STUDY 3 - CHAPTER 14 Practical application Fair Trading targets cashback offers NSW Fair Trading will be asking the state s retailers offering cash back incentives to substantiate their claims, as part of a national project by Australian consumer protection agencies. Fair Trading Minister Stuart Ayres said businesses sometimes offer cash back promotions to encourage consumers to buy their products but the process to reap the reward could be elaborate and in many cases, consumers would prefer the discount upfront. Cash back offers are a form of discounting where instead of marking down product prices, retailers maintain the price but offer to return some of the consumer s money after purchase, he said. From 1 January 2013 to 12 March 2014, Fair Trading received 61 complaints and 17 enquiries about cash back offers. Most complaints related to electrical and electronic goods and appliances, with other complaints received in relation to furniture, building supplies and even cosmetics and toiletries. Mr Ayres said consumers should be aware cash back offers were usually limited in time with special application conditions. Businesses using cash back offers must ensure consumers are not misled about the benefits, he said. Saying a customer will receive cash back from a purchase when they will actually receive a gift card is potentially misleading and should be avoided. Advertising should be clear and carry the price before cash back, rather than the price after cash back. A business operating a cash back promotion should make every effort to make the application process as easy as possible. It is disingenuous to make the process too long or cumbersome in the hope that claims will be abandoned. Terms and conditions, like a cap on the number of cash back offers available to be redeemed, must be clearly stated upfront. NSW Fair Trading will be conducting compliance checks around the state to educate retailers and make sure they are not misleading consumers with cash back offers, with results to be released midyear. The maximum civil penalty for providing false or misleading information is $1.1 million for a corporation and $220,000 for an individual. Criminal penalties for the same amounts may also be imposed. It is important for both consumers and businesses to be aware of their rights and obligations under the Australian Consumer Law (ACL). SOURCE: Media release. NSW government, Fair Trading. DATE: 14 March 2014(accessed 29/09/2014) 1. Outline the circumstances in which a cash back offer would be misleading advertising. [K] [I] 2. Is it fair for Fair Trading NSW to ask retailers in the state to substantiate their claims? [R] LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition 209

6 EVALUATE/JUSTIFY [R] RESEARCH In small groups, visit your local shopping centre and find examples of was/now pricing and cash back offers. If possible, survey the businesses involved to determine if any of the issues raised in the previous practical application are relevant. Do any other research you consider is appropriate, outline your findings, and make recommendations to the businesses and their customers which you think would assist both of them to reach satisfactory agreements without dispute. Answer the question posed by the legal issue defined at the beginning of this inquiry. Has your research raised other issues you consider are important for inquiry in this area? [R] 14.2 THE CHANGING LANDSCAPE OF NEGLIGENCE You will find when you study the law of negligence that there are many situations in which the courts have found that someone has been negligent and harmed another person. When this happens, amongst other things, the courts must find that the victim is owed a duty of care before being able to award compensation to the victim. It is a trite observation to say that the categories of negligence are never closed. It is always possible that a new set of factual circumstances will give rise to a new duty of care. To combat this ever growing octopus of negligence, with its variety of claims, Australian governments have tried to limit the rights of individuals to claim by both limiting the scope of the duty of care, and by putting ceilings on the amount of compensation that can be claimed. As a consequence, there are always new and current issues raised where victims demand to be compensated. An area which is of great interest is increased use by lawyers of class actions to make claims. This is where large numbers of people pursue the same or a sufficiently similar claim for the court to allow them to join a class action. Our legal system does not have the same court rules as the United States, where such actions are common. Nevertheless, in recent times there have been class actions taken or threatened in the following areas: negligent financial advice overcharging by banks asbestos related illness institutional child and sex abuse faulty breast implants CLASS ACTIONS It is however not so much the change in law but the change in the way cases are brought to court which represents one of the most significant current legal issues in the tort of negligence. It is the use of class actions in the courts to bring proceedings in negligence, which is now a significant current legal issue. The purpose of a class action is to allow plaintiffs who have the same interest in a legal case to obtain a court order in one action rather than in separate actions. This assists the administration of justice by reducing the number of cases the court may need to deal with, reducing the costs of litigation, and speeding up the court process for the litigants. In Queensland this group litigation is referred to as a representative action and not a class action which is an expression used in other jurisdictions and generally in the community to describe this type of representative action. The court will only allow one plaintiff to represent other plaintiffs if each of the plaintiffs have the same interest in the court action. 210 LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition

7 INTRODUCTION TO CIVIL OBLIGATIONS CORE AREA OF STUDY 3 - CHAPTER 14 Case Study Kinsella v Gold Coast City Council (2014) QSC 65 Facts: The plaintiffs own a house in Arundel Hills on the Gold Coast near a council dump (Suntown Landfill Facility). The plaintiffs claim that the council s operation of the dump resulted in the escape of noxious materials from its site causing damage to the plaintiffs by reducing the value of the plaintiffs land. They claim that the council was aware of the risks of the noxious materials escaping and were negligent in allowing the area in which their property is located to be developed as a residential subdivision. The plaintiffs sued as representatives of other persons who are owners of houses within Stage 3 of the estate. Approximately 80 lots were owned by those whom the plaintiffs were purporting to represent. The properties were spread along 4 streets and parts of another 4 streets. Some lots adjoined the dump. Some were up to 400 metres from it. The plaintiffs property was about 150 metres from the dump. It was pleaded by the plaintiffs that the council was negligent in that the noxious materials could have been reasonably controlled and managed by steps which were not taken by the council. It was further pleaded that each lot was worth 15 to 20% less than it would have been had the council not been negligent. The plaintiffs sought a declaration therefore that the council owed a duty of care to the plaintiffs and each of the representative lot owners and a declaration that the council had breached its duty. representative parties along with the plaintiffs to have the same interest in the proceedings. The court decided that they had the same interest. The plaintiffs and the representative parties had the same interest in the answer to the declaration sought by the plaintiffs, that is, that a duty of care was owed to the lot owners and that the council had failed to perform its duty of care. This was so notwithstanding the amount of damages might be different for each lot owner and notwithstanding each lot owner was in a slightly different position with respect to the dump. The lot owners had the same interest in the declarations and the issue of damages to be assessed for each lot owner could be dealt with in later proceedings. The case therefore proceeded with the plaintiffs acting in a representative capacity. Legal Issue: Could the plaintiffs sue as representatives of the other lot owners Decision: The court looked at the interpretation of Rule 75 (Court Rules) which required all the EXAMPLES OF CLASS ACTIONS You will see from the above case study that this case was commenced in Queensland. Most class actions in Australia however are commenced under the Federal Court of Australia s representative action rules. Regardless of where the class action is commenced there has been an increase in the number of high profile class actions and ones in which large amounts of money are at stake. The traditional area for class actions was in product liability cases, that is, cases usually directed at manufacturers for the negligent manufacture of products which have caused damage to consumers. The types of negligence cases in which class actions are now used however has broadened. These include actions for negligent financial advice, overcharging by banks, asbestos related illness, institutional child and sexual abuse, and faulty breast implants. Some further examples follow: (A) QUEENSLAND FLOOD CLASS ACTION Maurice Blackburn Solicitors have filed a class action in the Supreme Court of New South Wales on 8 July 2014 in what is referred to as the Queensland Flood Class Action. Damages LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition 211

8 are being sought for losses caused by the negligent operation of Wivenhoe and Somerset dams during the 2011 flood in southeast Queensland. There are approximately 5,000 represented by the plaintiff in that case, all suffering damage from water released from the Wivenhoe dam at the peak of the floods. It is likely that this court case will continue for a period of years. The cost of mounting such a class action is considerable. There are costs of investigations, costs of having expert reports produced and considerable legal costs as the case proceeds. The costs of this action are being paid by a litigation funder, Bentham IMF. (B) LIVE EXPORT OF CATTLE SUSPENSION It has been reported on 28 October 2014 that a class action is to be commenced for compensation by those parties suffering damages as a result of the live export of cattle suspension in June The parties that are expected to be represented in this class action are cattle producers, transport operators and others who suffered losses from the trade suspension which cut off the supply of cattle to the export market at a critical time during the cattle industry s peak trading season. (C) SHAREHOLDERS ACTION AGAINST ARISTOCRAT LEISURE LTD Shareholders of the Aristocrat Leisure Ltd brought a class action against the company alleging that the way the financial accounts of the company were done overstated the revenue of the company. Such overstating was not in accordance with ordinary accounting standards and was misleading and deceptive. The case settled in August 2008 after trial but before judgment was delivered for $136 million plus $8.5 million in costs. (D) CRANBOURNE GAS LEAKS There was a series of methane gas leaks from a landfill site in outer Melbourne. The properties of 750 owners were affected adversely by this methane gas leak. There was a negotiated settlement of $23.5 million paid by the Environmental Protection Agency and the local council, to the home owners in compensation for the fallen value of their properties, along with the loss of enjoyment of the use of their homes. You will see the similarity between that and the current case study referred to above now being conducted in Queensland. (E) BLACK SATURDAY BUSHFIRES The 2009 Black Saturday bushfires in Victoria resulted in the deaths of 173 people, personal injury to others and the loss of homes and property. More than a thousand homes were destroyed. The class action was brought against SP AusNet (whose ageing power lines were found to have caused the bushfire), the Utility Services Corporation and Victorian State Government Instrumentalities. The case settled when SP AusNet agreed to pay $378.6 million, Utility Services Corporation Ltd agreed to pay $12.5 million and the Victorian State Government agreed to pay $103.6 million. This settlement of almost $500 million is the highest class action settlement in Australia to date. 212 LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition

9 INTRODUCTION TO CIVIL OBLIGATIONS CORE AREA OF STUDY 3 - CHAPTER 14 WHAT DO YOU THINK? Are class actions here to stay? Give your reasons. [I] [R] CHANGES TO WORKCOVER LAWS Changes were made to WorkCover legislation in Queensland in One of the changes which has caused division in the community is that for all injuries from 15 October 2013 there will be no right to seek common law damages against a negligent employer unless a worker has greater than 5% degree of permanent impairment (DPI). Given that the degree of permanent impairment is not stated in parts of percentages, this in effect means that a worker must have a 6% degree of permanent impairment to be able to pursue his common law claim against his employer. This is a significant change. These changes were made despite the Queensland WorkCover scheme being highly profitable (unusually in Australia the 2012 profit was $518 million) and despite it having the second lowest premium payments in the country at the time. There had also been an enquiry into the operation on the Queensland Worker s Compensation Scheme in This enquiry was conducted by the Finance and Administration Committee of the Queensland parliament. In May 2013 the committee, made up of a majority of Liberal National Party members, released their report which recommended no major changes be made. Despite that, the Queensland Government in October 2013 made significant changes. These changes will affect a large number of workers in Queensland making common law claims. On WorkCover s own figures over half of all people injured in unsafe workplaces will now have no right to a common law claim for damages. This is a significant number. The degree of permanent impairment is determined by medical personnel appointed by WorkCover. If dissatisfied with the determination by a single doctor then an appeal can be had to the Medical Appeals Tribunal of WorkCover. There is however no further appeal. The following unreported case (December 2014) is a real life unreported example of the effect of the change. Case Study (Unreported Queensland District Court Case) Facts: A worker, a young man, 25 years of age working in a mine injured his arm. He was adjusting a piece of equipment on which a steel cable rolled. The piece of equipment had been defective in the past. As the worker was taking steps to make a change to the piece of equipment it moved. His arm was crushed. The doctors determined that he had a 2% impairment to his right upper limb. This impairment although relatively low meant that he could no longer continue to work in the mine. He elected to commence proceedings alleging that his employer was negligent in the servicing and non-replacement of the particular equipment which injured him. The case did not proceed to trial but settled for approximately $360,000. These damages were paid to him in the main for a loss of future income. If that incident occurred post 15 October 2013 then the determination of his 2% impairment would have prevented his making a common law claim and receiving the sum of $360,000. He would have received only somewhere between $5,000 and $7,000 as a statutory payment. LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition 213

10 Attorney-General and Minister for Justice The Honourable Jarrod Bleijie (Excerpts accessed 12/12/14 only) Workers Compensation Scheme to be protected Our scheme will put the focus back on injury management, rehabilitation and return to work outcomes for injured workers and a competitive premium for employers, Mr Bleijie said. Mr Bleijie said Queensland workers will continue to be protected under changes to strengthen the existing system. We are taking measures to protect businesses from outlandish claims and skyrocketing premiums. Access to common law claims will remain in Queensland, except for those with a medically assessed injury of 5 per cent or less. Every injured worker will continue to be covered under the statutory no fault compensation system which includes payment for lost wages, medical treatment and access to lump sum compensation. Since 2009, the average premium rate has increased by twenty per cent with Queensland quickly slipping back in the pack. In 2010, the board of WorkCover Queensland under former Chairman Ian Brusasco recommended that the previous Government introduce a 10-15% threshold on common law claims. While other states have thresholds as high as 30%. Over the past few months, I have listened carefully to all sides on this issue from unions, lawyers and business owners. Under these changes, we believe we ve got the balance right. With the exception of the ACT, Queensland will have the lowest threshold to access common law damages in Australia. Having a competitive premium will encourage more investment into our State which means more jobs for Queenslanders while maintaining a viable system well into the future protecting those most in need. Amendments in the legislation will include: cracking down on fraudulent claims allowing employers to have access to the claims history of applicants merging the regulatory functions of Q-COMP into the Department We don t want to just have a good workers compensation scheme; we want to have the best in Australia for both workers and employers, Mr Bleijie said. These changes will enable the best outcome for every Queenslander. WHAT DO YOU THINK? Read the above report released by the Attorney General and the unreported case on the previous page. Compare Mr Bleijie s views in his media release with the actual loss of the common law right to persons injured at work. Do you think the changes to the law are justified? Are they fair? [R] REVIEW 1. Why did the East Timorese government take legal action against the Australian government in the International Court in the Hague? 2. What are was/now pricing and cash back offers? 3. Which government organisations are responsible for administering compliance with the Australian Consumer Law? 4. What is a class action? 5. Why are class actions an efficient way to bring a claim in negligence? 214 LEGAL STUDIES FOR QUEENSLAND - Volume 1, 7th Edition