News

News

'Win the battle, lose the war: A Costs Perspective on Litigating Defamation'

12-Aug-15 10:54

This article is an overview of the recent defamation actions by The Hon. Joe Hockey MP. The article explores the necessity for publishers to check the accuracy of statements made on social media and the need for plaintiffs to ‘focus’ their lawsuit to avoid cost related issues.

Hockey v Fairfax Media Publications Pty Ltd [2015] FCA 652

Mr Hockey initiated proceedings in response to a series of newspaper articles which were published in May 2014 in hardcopy and online through various social media platforms by the publishers of The Sydney Morning Herald, The Canberra Times newspapers and The Age. The respective articles were headlined “Treasurer for Sale” and “Treasurer Hockey for Sale”. The articles claimed that:

(a)        Mr Hockey provided ‘privileged access’ in consideration of political donations to the Liberal Party via the North Sydney Forum (fundraising body); and

(b)        the forums activities were secretive because they had not been disclosed properly to the relevant electoral funding bodies.

While much of the media discussion of the case surrounded the use of Twitter as one of the social media platforms to ‘tweet’ the article titles, it is significant to note that each characterisation of the statements by the publishers within the media formed a part of Mr Hockey’s claim. Mr Hockey argued that the publications carried the following defamatory imputations

(a)        that Mr Hockey was corrupt;

(b)        that Mr Hockey solicited the sale of privileged access to himself as Treasurer for consideration of political donations to the Liberal Party; and

(c)        that Mr Hockey accepted bribes which were intended to gain influence over his decisions as Treasurer.

Mr Hockey was successful and was awarded general damages in the following claims:

(a)        $120,000.00 in respect of the advertising posters; and

(b)        $80,000.00 for each of the two ‘tweets’.

Mr Hockey was unsuccessful in seeking damages for all other claims. This included claims in respect of the article that appeared in the printed version and other versions of the article which appeared in hard copy.

The approach of the Court in determining which claim should succeed is consistent with the traditional perspective of interpreting defamatory content. The traditional perspective with respect to defamation law is to treat the ‘whole’ identifying source of text as one publication. This is inclusive of pictures, titles and captions associated with the publication. So how did the Court differentiate between ‘tweets’, advertisement posters and newspaper/hard copies?

The Court clearly adopted the traditional perspective when finding that the newspaper articles/hard copies of the publication were not defamatory because their titles were readily capable of being placed in their respective contexts by the reader. However, the Judge considered the ‘tweets’ and advertising poster differently because they only consisted of a headline.

Significantly, the Court found that the lack of readers who would have read the ‘tweets’ would also not have taken the positive step of clicking on a link to gain access to the full article in its true context. The Court therefore found that, when viewed in isolation, the headlines “Treasurer for Sale” and “Treasurer Hockey for Sale” were defamatory.

What constitutes ‘whole’ in terms of the traditional perspective could now require further consideration. It appears that the Court must be satisfied that:

(a)        a majority of readers would be willing to accept the defamatory imputation without recourse to further context; and

(b)        a majority of readers would not take the positive step of adding context to the defamatory imputation if that information were readily available to them.

This appears to be consistent with Justice Elkaim’s view, where in a judgement last year noted that "when defamatory publications are made on social media it is common knowledge that they spread”.[1]

Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750

Assessing costs can be a rigorous and often tedious event for clients and law firms. The commercial reality of a competitive legal market demands that plaintiffs and defendants refine their arguments and identify a strategy for achieving a commercially sound result. Defamation proceedings can hold their weight in general damages and/or as a way of ‘rubber stamping’ the reputation of a plaintiff at law and in the eyes of the public.

A majority of plaintiffs in any case will not have the job of running the nation’s finances, as Mr Hockey does. This means that seeking general damages is more likely to be pursued when you do not rely on the public scrutiny associated with high office. So where does that leave those clients who wish to seek general damages in defamation proceedings?

Mr Hockey’s case is somewhat different to most clear-cut defamation cases due to the mixed result, after an unfavourable court order in respect of costs. However, Mr Hockey’s case does provide some useful insight for the rest of us. In Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750 (Hockey No. 2), Justice White placed a strong emphasis on the requirement for plaintiffs to ‘focus’ their lawsuit for cost purposes:

It is much more likely that, had Mr Hockey pursued only a confined claim, the resources expended in pursuing and defending that claim would have been more focused and confined and that the trial itself would have been more confined. It is improbable that a trial concerning only the SMH poster and the two tweets of The Age would have occupied seven days. Put slightly differently, it was the ambit of the claims made by Mr Hockey which defined, and extended, the battleground of the parties’ contest”.[2]

It is important that clients and their legal teams, as a part of proceedings, structure their claims in a way that places a focus on the arguments which are most likely to succeed at trial. The current cap of $366,000.00 for claims of non-economic loss means that defamation proceedings often have to be weighed against the potential legal costs, which are generally not capped.[3] In Hockey No. 2, Justice White accepted the submission that Mr Hockey’s principal concern was the printed version of the article rather than the ‘tweets’ and advertising poster. His Honour went on to state that:

... his lack of success on significant matters should be reflected in a reduction of costs to which he is entitled.”[4]

Based on the Court’s assessment of Mr Hockey’s claims, it is important for plaintiffs to “focus”[5] their lawsuit to avoid negative cost orders. A failure to conduct a proper risk assessment can win the battle, but will inevitably lose the war when it comes to legal costs. This risk is often accompanied by the further risk of the plaintiff causing greater damage to their reputation by pursuing legal action and this is why it is necessary for a focussed approach to claims when it comes to litigating defamation. Had Mr Hockey refined his claims, he could have avoided trial altogether. This is particularly important in defamation claims because in court, everything comes out and this is where the reputational damage to the client can be compounded. Parties should take the following into consideration when considering pursuing a defamation pursuit:

(a)        clearly outlining your objectives for pursuing your claim;

(b)        avoid ‘scattergun’  tactics where the reputation of the client is the subject of proceedings (especially defamation lawsuits); and

(c)        seek clear advice as to what claims are more likely to succeed at all stages of the dispute process.

If you have a defamation enquiry, please contact Mia Kershaw at Cronin Litigation Lawyers on (07) 5592 6633 to find out how we may be of assistance. 

Story by Ryan Anderson, Trainee Lawyer, Cronin Litigation Lawyers - ryan@croninlitigation.com.au


[1] Mickle v Farley [2013] NSWDC 295.

[2] Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750 at 103.

[3] Section 35(3) Defamation Act 2005 (NSW); Note, the cap can be varied if, and only if, the Court is satisfied that the circumstances of the publication of the defamatory matter to which the proceedings relate are such as to warrant an award of aggravated damages (see s 35(2) Defamation Act 2005 (NSW)).

[4] Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750 at 101.

[5] Ibid.

New Discovery: No Longer may we be Pirates in Private

12-Aug-15 10:49

On 7 April 2015, an application for the disclosure of individual internet protocol addresses (IP Addresses) of Australian internet users was heard in the Federal Court of Australia, New South Wales before his Honour Justice Perram.  The outcome of this application could morph the modern-day average Australian into a copyright pirate, and all thanks to a 2012 movie in which Mathew McConaughey becomes a HIV medication smuggler; Dallas Buyers Club.

Dallas Buyers Club LLC, a United States entity which owns the copyright in Dallas Buyers Club, and its parent entity Voltage Pictures LLC, a movie production company involved in producing Dallas Buyer Club (DBC) filed an application on 14 October 2014 for various infringements of the Copyright Act 1968 (Cth) allegedly committed by 4,726 Australian citizens with the facilitation of the following internet service providers (ISPs):

  • iiNet Limited;
  • Internode Pty Ltd;
  • Amnet Broadband Pty Ltd;
  • Dodo Services Pty Ltd;
  • Adam Internet Pty Ltd; and
  • Widebrand Networks Pty Ltd.

DBC suspected at least 4,726 Australians (End Users) of having contravened the Copyright Act 1968 (Cth) by illegally using BitTorrent software to distribute Dallas Buyers Club via peer-to-peer file sharing platforms.  DBC did not have sufficient details to ascertain the identities of these purported pirates and for that reason, was not in a position to commence proceedings for recovery of damages against each End User.  

DBC relied on Rule 7.22 of the Federal Court Rules 2011 (Cth) to obtain the End User information.  Under this Rule, DBC had to have succeeded in satisfying the Court:-

(a)   firstly that they have a right to obtain relief against the prospective pirates;

(b)   secondly, that DBC cannot identify the End Users individually on its own; and

(c)   thirdly that the ISPs know, or have the ability to ascertain, the description of the prospective pirates.

His Honour Justice Perram was satisfied that DBC had successfully proved all three elements.

With respect to the first element required to be met, DBC had to prove to the Court that the 4,725 End Users contravened the Copyright Act 1968 (Cth) and because of these contraventions, DBC was entitled to relief.  DBC satisfied his Honour Justice Perram, on the basis of cogent circumstantial evidence that the End Users were infringing the copyright of DBC. Justice Perram did not accept the argument submitted by the ISPs that the 4,726 End Users only shared/”seeded” a very small sliver of the movie (due to the mechanism by which the BitTorrent software operates) and to that extent, had not sufficiently “communicated” or “made available online” the movie within the meaning of sections 86 and 10 of the Copyright Act 1968 (Cth).  

The second element was proved by DBC rather easily.  DBC proved that they had no way of knowing the individual identities of the End Users from the IP addresses alone.

With respect to the third element that had to be satisfied, namely that the ISPs have the ability to ascertain the description of those individuals infringing the Copyright Act 1968 (Cth) his Honour heard evidence from technical analyst of a German forensic investigation firm which produced a software program, Maverik Monitor 1.47, which operated to identify the IP addresses which shared the Dallas Buyers Club file via the BitTorrent platform.  The ISPs had the ability to match the IP addresses that had been flagged by the Maverik Monitor 1.47 to the End Users’ individual accounts.  DBC was successful in convincing the Court that the ISPs ought to divulge the details of the 4,726 End Users.

Despite the submission from the ISPs that it could only identify each account holder linked to the IP Address and there was no guarantee that the account holders were in fact the persons who had infringed the copyright held by DBC, Justice Perram was satisfied that the account holder would be able to identify which person had downloaded/”seeded” each movie based on the movies’ genre.  In his judgment, his Honour stated that the audiences for Cinderella and American Sniper would have few common members (hopefully).

A likely litigant who, similarly to DBC, knows that it has been wronged, does not have the ability to individually identify the wrongdoer(s), and knows someone who can, may rely on Rule 7.22, if bringing an application within the Federal jurisdiction.

The Federal Court possesses only statutory jurisdiction[1] to hear a narrow range of matters such as those that turn on judicial review, bankruptcy, intellectual property, native title, taxation and consumer law

If a likely litigant’s matter turns on common law or the equitable jurisdiction, an equivalent of Rule 7.22 is not available to a Queensland litigant under the Uniform Civil Procedure Rules 1999 (Qld) (the UCPR). Disclosure under Chapter Seven of the UCPR extends only to preliminary disclosure which facilitates the finding out of whether a party has a case against another party, whose identity is already known. There is no direct equivalent in the Queensland UCPR which facilitates the finding out of the identity of a prospective wrongdoer where it is not already known.

It is worth noting that a potential litigant in Queensland may be stripped of his/her ability to rely on Rule 7.22, even in instances where the litigants’ matter involves incidental issues of a Federal jurisdictional nature, due to the cross-vesting scheme. [2] The individual nature of each matter will determine whether the cross-vesting scheme is applicable.

Likely litigants in New South Wales whose matters turn on common law; however, are more fortunate as the Federal Court Rule 7.22 is reflected in Regulation 5.2 of the Uniform Civil Procedure Rules 2005  (NSW).

So what is the take away message for you modern day pirates?

If you have a predilection for downloading  movies, music or software files free of charge, that you reasonably believe someone or something owns a copyright in, without the owner’s knowledge, your internet service provider may be, or indeed may have already been, compelled to divulge this information.  This case demonstrates that the days of being a protected pirate in private are coming to an end.

This landmark decision indicates that such acts of piracy may leave you exposed to litigation commenced by large scale movie production companies, and what we ask is it really worth it, just to watch an emaciated Mathew McConaughey for two hours?

Cronin Litigation Lawyers are experienced commercial litigators, acting for Plaintiffs and Defendants in the Federal Jurisdiction, Queensland jurisdiction and interstate jurisdictions. If you have a dispute of a legal nature, please contact Derek Cronin or Stacy Miller at Cronin Litigation Lawyers on (07) 5592 6633 to find out how we may be of assistance. 

 Story by Tara Phelan, Solicitor, Cronin Litigation Lawyers - tara@croninlitigation.com.au


[1] Section 19 of the Federal Court of Australia Act 1976 (Cth)

[2] Pursuant the to the Jurisdiction of Court (Cross Vesting)Act 1987 (Cth) and the subsequent enactment of the Federal Courts (State Jurisdiction) Act 1999 (Qld) the State/Territorial Courts of Australia have jurisdiction to hear matters of a Federal nature when same is  incidental State/Territorial matter but the Federal Court of Australia does not have jurisdiction to hear State/Territorial  matters (even when incidental to a Federal matter) as it has been deemed unconstitutional, specifically insofar as it is a contravention of Chapter III of the Constitution. See also  Re Wakim; Ex Parte McNally 7 Anor; Re Wakim; Ex Parte Darvall; Re Brown 7 Ors; Ex Parte Amann & Anor; Spinks & Ors v Prentice [1999] HCA 27 and Gould v Brown (1998) 115 ALR 395

Cronin Litigation says 'Thanks for the Support'

14-Apr-15 16:50

A number of staff from Cronin Litigation Lawyers recently participated in the 10km run at the Gold Coast Marathon.

Thanks to the support of clients, friends and colleagues we have raised almost $4,000.00 for OzHarvest. 

OzHarvest is a food rescue charity that collects excess food from cafes, delis, supermarkets and restaurants and delivers it to some 80 charities within South East Queensland who then feed those in need.   To learn more about OzHarvest, please click the following link:

http://www.ozharvest.org/index.asp

The BCIPA Reform

14-Apr-15 16:50

After much debate, the Building and Construction Industry Payments Amendment Act 2014 (Qld) (the Amending Act) was passed in Queensland Parliament on 11 September 2014.

The Act introduces amendments to the Building and Construction Industry Payments Act 2004 (QLD) ("BCIPA") which seek to create a better balance between claimants and respondents in the building and construction industry in Queensland.

The main focus of the reform revolves around the adjudication process, types of claims and new timeframes for payment.

The Key Areas of Reform

The Adjudication Process – The Queensland Building and Construction Commission (QBCC) now acts as a single adjudication registry in charge of, inertia alia, registering and appointing adjudicators. The registry is also responsible for adjudicators in so far as monitoring them, providing a list of ‘active adjudicators’ to the public, providing professional development to them and assisting them to administer the Act.

Timeframe to Make a Claim – A claim for payment must be made within 6 months (rather than 12 months) from the time the last work was carried out or the goods/services were supplied. The only exception to this rule is where the contract provides for a longer period.

Special Provision for Large or Complex Claims – If the claim is over $750,000 it will fit under the banner of ‘large’ or ‘complex’ claim. If the Payment Claim is large or complex, the Respondent will have 15 business days to pay (rather than 10 like all other Claims). Furthermore, if the Payment Claim is served after 91 days (starting from the reference date on the contract) the Respondent in a large or complex Claim will be allowed 30 business days to make payment.

Time for Adjudication Response – All Respondents have 10 business days to respond (rather than 5) after receiving an Adjudication Application. Again, if it is a large or complex Claim the Respondent will have 15 business days and the Adjudicator may allow a further extension of an additional 15 business days.

Information on Adjudication Response – Respondents can now set out their reasons for lack of payment in their adjudication response, even if the issues were not raised by the Claimant in the payment claim. Claimants can then reply within 15 business days. The Claimant may also apply to the adjudicator for an additional 15 business days if the reasons given by the Respondent are complex or high in volume. This change has occurred because, previously, Claimants could spend large periods of time preparing payment claims and the Respondent only had 10 business days to respond.

Fees of Adjudicator – The new BCIPA provides a list of considerations that an Adjudicator may take into account when deciding what fees to charge to the parties. Included in the list is whether one of the parties participated for an improper purpose or whether one of the parties acted unreasonably.

Second Chance for Respondents – If a Claimant serves a Payment Claim on a Respondent and the Respondent fails to serve a Payments Schedule and pay all or part of the Claim by the due date, the Claimant must give the Respondent notice of their intention to either start proceedings or apply for adjudication. This step must be taken before such action can proceed. The notice must allow 20 business days starting on the day after the payment fell due and state that the Respondent can serve a Payment Schedule within 5 business days after receiving the notice. 

Tip for Respondents

It is important for Respondents to provide a Payment Schedule within the correct timeframe whenever they receive a Payment Claim. This is the case even if the contractor has previously stated that they will not pursue a payment claim under BCIPA because express agreements are not allowed to limit the operation of BCIPA. However, should such an event occur, the Respondent still has a second chance to lodge a Payment Schedule once served with a notice of proceedings.

In these circumstances, the Respondent will only have 5 days to create the Payment Schedule which, depending on the complexity and scale of the claim, could be time consuming and costly. It is therefore recommended that all Respondents seek legal advice and begin preparation on a Payment Schedule as soon as they are served with a Payment Claim, even if they decide to wait until after they are served with the notice of proceedings to lodge it.

Transitional provisions

The transitional provisions are relatively simple. Any construction contract that is entered into before 11 September 2014 will still be subject to the old BCIPA in regards to the recovery of payments. Even if an Adjudication application has been made before the amendments and the decision has still not been made after the amendments, the old BCIPA will still apply to the decision.

The only part of the new BCIPA that will apply to contracts before its commencement are the changes relating to the functions of the ANA’s (Authorised Nominating Authority’s). Simply put, the functions of the ANA’s have been transferred to the registrar.

An element of training and education has been implemented into the transitional provisions by giving the Registrar the power to impose a condition on the registration of Adjudicators. The only condition that the Registrar can impose is the condition that the Adjudicator completes “transition training”. This condition can only be imposed within the first 6 months after the commencement of the Act in order to facilitate a smooth transition to the new provisions.

Moving Forward

In general, the reforms create a more equitable system and should reduce Adjudication costs for parties. They take account of complex claims and look to boost the interests of Respondent’s, which were previously stifled in comparison to Claimants.

The amendments add a layer of complexity to the industry so it is important that both Claimants and Respondents obtain legal advice to ensure compliance. The legal industry can assist compliance by shifting focus to concentrate on timeframe identification and creating new construction contracts that are drafted with the BCIPA amendments in mind.

Should you require assistance with your building or construction dispute, contact Cronin Litigation Lawyers on (07) 5592 6633

 

Cronin Litigation Raises Money for OzHarvest

14-Apr-15 16:50

In 2014, a number of staff from Cronin Litigation Lawyers will be running together in the Gold Coast Marathon 10km run to raise money for OzHarvest.

OzHarvest is a food rescue charity that collects excess food from cafes, delis, supermarkets and restaurants and delivers it to some 80 charities within South East Queensland who then feed those in need.

In support of OzHarvest, and to give us all some motivation for the Marathon, we have set up a Cronin Litigation Lawyers team fundraising page where you can donate and assist with this great cause.

OzHarvest and Cronin Litigation Lawyers are grateful for your donations.

To donate, please click the link below:

http://www.everydayhero.com.au/cronin-litigation-lawyers

To learn more about OzHarvest, please click the following link:

http://www.ozharvest.org/index.asp

Stacy Miller Appointed as Partner of the Firm

14-Apr-15 16:49

We are pleased to announce that Stacy Miller has been appointed as a partner of the firm effective 19 February 2014.

Stacy has practised exclusively in the areas of commercial litigation, insolvency, debt recovery and dispute resolution since her admission as a solicitor of the Supreme Court in January 2003.

Stacy has been with the firm for over two years following previous employment as a solicitor in specialist litigation firms in Brisbane.  Having moved to the Gold Coast with her family, she is well and truly entrenched in the Gold Coast community and her appointment as a partner is an acknoweldgement of the signifcant role she holds with the team of seven lawyers at Cronin Litigation.

We congratulate Stacy on her appointment.

Gold Coast Marathon

14-Apr-15 16:49

Cronin Litigation Lawyers are participating in the Gold Coast Marathon 2013.

This year, members of the firm are running in the full marathon (over 42km), the 10km event and the 5.7km challenge.

At Cronin Litigation we understand the importance of volunteers on the Gold Coast, and the active role they play in making our city a great place to live, that is both safe and progressive.

In 2013, the Cronin Litigation marathon participants will be running for the Gold Coast Project for Homeless Youth. The Gold Coast Project for Homeless Youth, established in 1984, provides supported accommodation across three houses for young people aged 16 to 19. A Mobile Support team also provides services for young people to secure and sustain stable accommodation. The aim of GCPHY is to break the cycle of homelessness and encourage young people to reach their full potential.

In 2012, Cronin Litigation raised over $3,500.00 for the Second Chance Programme, which also provides assistance to homeless women of Queensland.  This year we hope to exceed that figure obtained in 2012. GCPHY and Cronin Litigation are grateful for your donations and the motivation that your donations will give us to keep running!

The link to our fundraising page is here: http://www.everydayhero.com.au/Cronin_Litigation_Lawyers_2013

 

 

Andrea Joyce joins Cronin Litigation Lawyers

14-Apr-15 16:48
Andrea was admitted as a lawyer in March 2010 and joined the Cronin Litigation Lawyers team in March 2013.  She has a broad range of experience in building and construction disputes, property disputes, contractual disputes and trade practices disputes.
 
Andrea has recently returned home to the Gold Coast after practising law at firms in Mackay and Brisbane.  Andrea's aim is to ensure clients are fully informed and guided in all facets of a dispute and to resolve disputes in the most effective manner.  
 
Outside of the office, Andrea enjoys travelling and sharing good food and wine with her family and friends. 
 

Facebook: How to Serve a Super-Star

14-Apr-15 16:47
On 22 October 2011, thousands of screaming fans were anxiously waiting for the headline act, Flo Rida, to appear at the ‘‘Fat as Butter’’ music festival in Newcastle, New South Wales, Australia.
As the crowd grew restless, a festival official was forced to announce: ‘‘Flo Rida has slept in and will not be able to make the concert.’’ Understandably, patrons and fans were outraged; the festival organisers, Mothership Music Pty Ltd (‘‘Mothership Music’’), even more so.
What followed was a seemingly simple action against the superstar and his manager for breach of contract. Proceedings were commenced against the duo in the New South Wales District Court but despite a number of attempts, process servers were prevented from getting close enough to the artist in order to serve him with the documents.
Mothership Music was forced to apply to the court for substituted service. The court granted the application and ordered that substituted service be effected on Flo Rida by way of email and by posting the following message on Flo Rida’s Facebook page [1]:
‘‘On Friday, 13 April 2012, Mothership Music Pty Ltd commenced proceedings against you in the District Court of New South Wales, Australia, seeking damages for breach of contract in respect of your non-appearance on 22 October 2011 at the ‘‘Fat as Butter’’ Concert at Camp Shortland, the Foreshore, Newcastle. In addition, the Court ordered that you do not diminish your assets in Australia below $80,000.00 and also made additional ancillary orders. These orders were renewed today together with an order that you may be served by sending to you of this message by your Facebook page.
Full details and copies of all relevant documents can be obtained by contacting Neville & Hourne Legal (Level 4, 162 Goulbourn Street, Sydney NSW 2010 +61 2 9264 6888 Ref: Stephanie Borg or by email at Stephanie.borg@nhlegal.com.au).
If you do not file a defence to these proceedings within 28 days of service, the Court may enter judgment against you without further notice to you.’’
In his decision, Gibson DCJ stated that ‘‘the international reach of Facebook is such that it is a matter of notorious fact.’’ This case demonstrates that service by Facebook is becoming more and more routine where the ordinary methods of effecting service are unreasonable or unavailable in the circumstances. Arguably, in the modern age of social media, defendants will find it increasingly difficult to evade service of proceedings.
Cronin Litigation Lawyers are experienced commercial litigators, acting for Plaintiffs and Defendants in Australia and foreign jurisdictions. If you have a local, inter-state or international dispute of a legal nature, please contact Derek Cronin or Shaun Rose at Cronin Litigation Lawyers on (07) 5592 6633 to find out how we may be of assistance.


[1] Mothership Music Pty Ltd v Darren Ayre (trading as VIP Entertainment & Concepts Pty Ltd) and Flo Rida (also known as Tramar Dillar) [2012] NSWDC 42

Protecting your Interests in Personal Property after Registration

14-Apr-15 16:47

Introduction

In the first Court decision since the proclamation of the Personal Property Securities Act (PPSA), the Federal Court in Carson, in the matter of Hastie Group Limited (No 3) [2012] FCA 719 (5 July 2012) ("Hastie") has illustrated that protecting your property interests may require more than mere registration on the Personal Properties Security Register (PPSR).

Facts

Administrators appointed to a number of companies that comprise the Hastie Group applied to the Court for permission to dispose of plant and equipment held by various companies in the Hastie Group across 36 different locations.  The total estimated auction value of the plant and equipment was $6.4 million.

There were 995 registrations recorded against the companies in the PPSR.  The administrators sent letters to all creditors who had an interest recorded against the companies on the PPSR.  Each creditor was requested to provide notification of its interest.  Approximately 80% of those secured creditors did not respond to the letter and the responses received by administrators did not adequately particularise the relevant property or security agreement.  Administrators had great difficulty identifying property that is subject to the security interests of third parties.  To add to the complexity, property had been relocated to various sites owned by the Hastic Group making it difficult to identify the location of property belonging to creditors.  Additionally, administrators had difficulty relying on the PPSR for the purpose of identifying property subject to security interests of third parties because many of the descriptions were too general.

Decision

At the time of the decision, approximately 3684 items of plant and equipment remained "unclaimed".  The ongoing storage and maintenance of that plant and equipment represented a significant cost to administrators.  The Court was satisfied that there had been genuine and substantial difficulties in identifying those items of plant and equipment that might be subject to a security interest and other claims, and that the administrators had taken a number of steps to attempt to identify security holders.  The Court allowed the administrators to sell the unclaimed plant and equipment by public online auction.  The proceeds of sale were then to be held in a separate account to be distributed first towards the payment of administrators' costs incurred in the sale, second towards any claim in respect of the unclaimed property and finally, after a period of three months, the balance would be distributed in the ordinary course of the administration. 

Implications

The decision in Hastie serves as a warning to creditors that they should actively take steps to protect their property interests beyond mere registration on the PPSR.  We recommend that creditors:

  • Register security interests on the PPSR including security interests created before 30 January 2012 (transitional security interests);
  • Provide an accurate description for each item of secured property and particularise as much detail as possible to enable administrators to identify the property;
  • Attach labels, name plates or serial numbers to property to distinguish it from property belonging to other creditors and to assist administrators trying to identify it;
  • Have a system in place to track or record the location of property;
  • Monitor the status of customers and other businesses (i.e. whether insolvent);
  • If a customer is under administration, take steps to contact the administrator to notify them of your secuity interest;
  • Respond to such requests from administrators within the stipulated time and particularise, in as much detail as possible, the relevant property and the security agreement under which the security interest was granted;
  • If you currently have an interest in property concerning any of the companies within the Hastie Group, contact us or the liquidators immediately for advice on how you should proceed with the enforcement of your interest.

Cronin Litigation Lawyers comprises lawyers who are dedicated to protecting and enforcing interests in personal property. Our team has in-depth experience in dealing with companies under administration and in liquidation.  If you are seeking to protect or enforce your interest in personal property, please contact Derek Cronin at Cronin Litigation Lawyers on (07) 5592 6633 to find out how we may be of assistance.

Fair Entitlements for Employees

14-Apr-15 16:47

On 5 December 2012, the Fair Entitlements Guarantee Act (2012) (FEG) came into effect. This act will apply to employees whose employment ends as a result of their employer entering liquidation or bankruptcy from 5 December 2012 forward. The previous scheme, known as the General Employee Entitlements and Redundancy Scheme (GEERS) will still apply to employees whose employment ends due to an insolvency event that occurs prior to 5 December 2012. As opposed to GEERS, the Fair Entitlements Guarantee Act enshrines the right to payment of outstanding entitlements in legislation, and strengthens these rights in certain respects.

In the main, the FEG replicates the assistance provided through the previous GEERS administrative scheme, providing for the advance of the following unpaid employee entitlements by the Commonwealth Government to the employee in the event the employer enters liquidation or bankruptcy:

  • Wages (up to 13 weeks)
  • Annual leave 
  • Long service leave 
  • Payment in lieu of notice (up to five weeks), and
  • Redundancy pay (up to four weeks per year of service).

However the operation of the FEG Act differs in some respects from GEERS. The following is a summary of some of the main provisions of the Act, and where they differ from GEERS.

Timeframe to lodge a claim

The FEG provides that an effective claim for assistance may only be lodged within 12 months of the date of liquidation or bankruptcy, or the end of employment (whichever is later). There is no flexibility to extend this timeframe. If a claim is received outside this timeframe (whether lodged directly with the department or by an insolvency practitioner on behalf of the claimant), the claimant will not be eligible for assistance. Note that GEERS provided some discretion to extend this timeframe; however, the FEG Act does not.

Residency requirements

Under the FEG claimants must be an Australian citizen or the holder of a permanent or special category visa (under the Migration Act 1958) at the time their employment ended. There is no flexibility with this time requirement under the FEG Act. Under GEERS a claimant was eligible if they met residency requirements within 12 months of liquidation or the end of employment.

Deed of Company Arrangement (DoCA) and equivalent bankruptcy arrangements such as Personal Insolvency Agreements

The FEG does not include eligibility requirements relating to DoCAs and equivalent bankruptcy arrangements. Provided that all other eligibility criteria are met, assistance will be paid to employees. Under GEERS eligibility rested on whether the DoCA met certain requirements in relation to maintaining provisions of the Corporations Act 2001 relating to priority of employee entitlements and distribution of funds.

Assistance paid to end of employment.

Under the FEG, where an employee continues to be employed after an insolvency practitioner is appointed, assistance is also payable for any entitlement or proportion of entitlement that accrues or crystallises during that employment, provided that the insolvency practitioner is not legally responsible to pay the entitlement as part of the cost of wind up the company. Put simply, under the FEG the entitlement is calculated up to the end of employment, less any portion required to be paid by the insolvency practitioner as a cost of winding up. Under GEERS entitlements were only calculated up to the date of appointment of the insolvency practitioner.

Transfer of Business and Transfer of Employment

Initially there is no change. However, from 1 July 2014, the FEG will no longer impose a flat rule that entitlements for payment in lieu of notice (PILN) and redundancy are not payable if the employee is offered employment by the new operator within 14 days of their employment ending with the previous operator. From 1 July 2014, assessment of entitlements payable in transfer of business cases will be based on the provisions of the claimant’s governing or employment instrument, such as the Fair Work Act 2012. Generally, this means that payments will only be excluded under the FEG where the new operator is required to recognise the employee’s service and entitlements.

Discretion within the scheme

As the FEG is a legislative scheme any discretionary decisions are closely prescribed in terms of the circumstances and conditions under which discretion may be exercised. Under the FEG, discretion can only be used for uncommon circumstances to:

  • Allow payments to be made to employees of a company in administration before liquidation provided there is a high degree of certainty that liquidation will occur in the future and there is a public interest in facilitating early access to the scheme;
  • Make a regulation establishing a separate scheme to provide assistance for workers that are not employees; i.e. contractors
  • Paying FEG assistance by way of an instalment.

It should be noted that these areas of discretion should not be initiated by an insolvency practitioner as a usual approach in administration. This differs considerably from GEERS, in that GEERS is an administrative scheme, and as such, has flexibility for discretion to be exercised to allow claims that meet the objectives of the scheme.

Rights of Review

The FEG provides three avenues of review:

  • Under s.37 the department may initiate a review of a decision – it is expected that this avenue would be used to reassess claims where convincing new evidence has been provided or there is an anomaly in the original decision; 
  • Under s.38 the claimant may make a formal request for the department to review a claim decision; and 
  • Under s.40 the claimant may apply for an external review by the Administrative Appeals Tribunal (noting this option is only available where the claimant remains dissatisfied with an outcome to a s.38 review).

Under GEERS there was no avenue for external review of a claim decision.

The FEG Act clarifies the current arrangements for the payment of employee entitlements on the insolvency or bankruptcy of their employer, and puts these arrangements on a more secure constitutional footing.

From the point of view of employees, more generous provisions relating to redundancy payments and some additional flexibility in relation to payment arrangements will be welcomed. From the point of view of other creditors of the employer, more certainty should also be beneficial.

Cronin Litigation can assist with lodging a claim under the FEG Act. Our staff will outline the process in an easy step by step manner and ensure that your entitlements are acknowledged and protected in the event your employer enters liquidation or bankruptcy.

Melissa Coleman appointed to the Commitee of Young Professionals Gold Coast

14-Apr-15 16:47

Cronin Litigation Lawyers are proud to announce the appointment of Melissa Coleman as Secretary of Young Professionals Gold Coast.

Young Professionals Gold Coast are a non-profit association providing a platform for Gold Coast's young professionals to meet, mingle and build relationships. Cronin Litigation Lawyers are proud to sponsor the Young Professionals team and look forward to the rapid growth of the organisation. Young Professionals Gold Coast regularly hold social and networking events with inspiring and motivating key-note speakers.

If you are interested in attending the Young Professionals Gold Coast events, or sponsoring the association, please contact Melissa Coleman on (07) 5592 6633 or visit www.ypgc.com.au

Derek Cronin Speaks at Networking Night for Blair Harding - Action Coach

14-Apr-15 16:47

On 1 August 2012, Derek Cronin attended a networking function run by Blair Harding. Blair Harding is a business coach with a very successful practice on the Gold Coast and beyond.

Derek spoke of the importance of crafting effective letters of demand and also discussed debt recovery options including statutory demands and the use of the Queensland Civil Administrative Tribunal.

The event was held at Hotel QT which is fast becoming a popular establishment on the Gold Coast.

For further information regarding Blair Harding, please see www.actioncoach.com

Cronin Litigation Raises Money for Homeless Women

14-Apr-15 16:46

A large contingent from Cronin Litigation recently participated in the Gold Coast Marathon (well actually, the 10 kilometre run which was held during the Gold Coast Marathon!).

Thanks to the support of clients, friends and associates, the efforts of the team raised more than $3,000.00 for the benefit of Second Chance Programme, a fundraising group which provides funds to homeless women throughout Queensland. Pictured are four members of the team, Shaun Rose, Mia Kershaw, Melissa Coleman and Chloe Rushby.

For information concerning Second Chance Program, please visit www.secondchanceprogramme.com.au

BMD Northcliffe Surf Lifesaving Club

14-Apr-15 16:46

 

Cronin Litigation is pleased to continue its longstanding support of the BMD Northcliffe Surf Lifesaving Club.

Pictured above is Shannon Eckstein, three time World Iron Man Champion, David Shields, President of Northcliffe, and Derek Cronin of Cronin Litigation Lawyers.

New Office for Cronin Litigation

14-Apr-15 16:46

Construction of our new office has been completed and we are now located at Level 2, 33 Elkhorn Avenue, Surfers Paradise. The move has been necessary to accommodate the significant growth experienced by the firm.

The design of the new office was completed by Paul Ziukelis, Architect, the construction by Better Build Construction and interior design by Toni Packer. The design of the office is unique and especially planned to accommodate a modern, boutique law firm.

Derek Cronin to speak at Australian Marriage Equality Function

09-Oct-14 16:03

Australian Marriage Equality is visiting the Gold Coast on the weekend of 12 to 14 September 2014.

Derek, a strong supporter of Marriage Equality, has agreed to assist Australian Marriage Equality in holding a business meeting to be held at Bond University on the 12th September.  Derek will be introducing Shelly Argent (the President of PFLAG) and also Rodney Croome (the National Director of Australian Marriage Equality).

The aim of the meeting is to show community support to the notion that it is time for legislative change nationally.

Many business leaders of the Gold Coast have already expressed their support and have indicated that they will be attending.

For more information, please contact Derek Cronin on (07) 5592 6633 or derek@croninlitigation.com.au

Cronin Litigation Lawyers Raises Money for Homeless Youth

09-Oct-14 16:02

A number of staff from Cronin Litigation Lawyers recently participated in various events of the Gold Coast Marathon including the 7.5km challenge, the 10km run and the half marathon.

At Cronin Litigation we understand the importance of volunteers on the Gold Coast, and the active role they play in making our city a great place to live, that is both safe and progressive.

Thanks to the support of clients, friends and associates, the efforts of the team raised over $5,000.00 for the benefit of the Gold Coast Project for Homeless Youth.  The Gold Coast Project for Homeless Youth Inc, established in 1984, provides supported accommodation across three houses for young people aged 16 to 19.  A Mobile Support team also provides services for young people to secure and sustain stable accommodation. The aim of the Gold Coast Project for Homeless Youth is to break the cycle of homelessness and encourage young people to reach their full potential.

For more information concerning the Gold Coast Project for Homeless Youth, please visit www.homelessyouth.com.au.

Appointment of Associates

09-Oct-14 16:02

Cronin Litigation Lawyers are pleased to announce the appointment of Mia Kershaw as Senior Associate and Melissa Coleman as Associate to the firm. 

Mia has a career spanning more than nine years on the Gold Coast and Brisbane, with over seven years experience in litigation and dispute resolution. 

Melissa has been practicing exclusively in commercial litigation since becoming admitted as a solicitor, and has continued since joining Cronin Litigation in 2011.

Derek and the Cronin Litigation team congratulate both Mia and Melissa on their new roles. 

Mia and Melissa can be contacted on (07) 5592 6633 or as follows:-

Mia Kershaw:  mia@croninlitigation.com.au

Melissa Coleman:  melissa@croninlitigation.com.au

 

Adjudicator Erred in Building Dispute

09-Oct-14 16:02
In the recent decision Matrix Projects (Qld) Pty Ltd v Luscombe [2013] QSC 4 the Supreme Court of Queensland decided that the adjudicator in the proceedings failed in applying the Building and Construction Industry Payments Act (“the Act”).  

The parties to the proceeding were engaged in a building dispute in relation to a Period Subcontract and appointed an adjudicator under the Act to resolve the dispute. The adjudicator’s decision dumbfounded Matrix Projects (Qld) Pty Ltd (“Matrix”) and an application was brought forward to review the decision.

Matrix took a two-pronged approach to attack the adjudicator’s decision, stating the adjudicator erred on a question of law and failed to correctly execute his powers.

Among other things, the adjudicator was asked to review a Payment Claim made by Jason Luscombe trading as Luscombe Builders (“Luscombe”) under section 17 of the Act. The Payment Claim was in relation to rectification work carried out by Luscombe under the Period Subcontract. The Payment Claim included rectification work from 14 separate projects all in the one claim. Out of the 14 rectification projects, 9 were performed after work orders were issued to Luscombe pursuant to the Period Subcontract, while the remaining 5 jobs were performed after Luscombe received verbal instructions from Matrix.

The adjudicator believed all of these rectification jobs were performed under one Construction Contract as defined by the Act. The adjudicator argued that the series of projects performed by Luscombe all occurred pursuant to one arrangement. The adjudicator made reference to a term in the subcontract that stated Luscombe builders would “perform and complete… Works yet to be agreed” and took the view that this meant any work performed after the commencement of the Period Subcontract, was done so under this one arrangement. As such, the adjudicator believed all the jobs were performed pursuant to a single construction contract.

Matrix argued, and the Court agreed, that the adjudicator erred in correctly applying the Act. The Court stated that the term “arrangement” could not include works performed under a Period Subcontract and works performed pursuant to verbal instructions (referred to as “do and charge” works). Matrix claimed do and charge works were entirely different to works performed pursuant to Work Orders issued under the Period Subcontract. The Court decided the works were in fact entirely separate and therefore found there was more than one construction contract incorporated into the Payment Claim. As a result the Court found that the Payment Claim did not conform to the requirements of the Act, namely section 12 and 17 of the Act, which requires a payment claim to relate to only one construction contract.

In addition, the Court found the adjudicator failed in exercising his powers. The Adjudicator is required by the Act to calculate the value of construction work performed by Luscombe under the Contract. Instead of performing this task, the ajudicator calculated the value of all work Luscombe was given under the Contract including work not yet completed and work that Matrix terminated. 

Further the adjudicator stated in his decision that Luscombe was entitled to receive damages for any loss of income suffered by terminating work under the Contract. The Court found the adjudicator’s reasoning for damages flawed and unintelligible and stated the adjudicators calculations were erroneous as he failed in performing the simple task required by the Act. 

The Court found that the adjudicator’s decision was void because the adjudicator failed to perform the task required of him by the Act, the adjudicator failed to accord to natural justice and because the payment claim covered more than one construction contract.

This case is a timely reminder that:-

  1. Substance over form does not apply when lodging Payment Claims under the Act; and
  2. Adjudicator’s decisions are never final.

Cronin Litigation Lawyers are currently assisting many clients with building disputes and reviewing adjudicator’s decisions. If you have a building dispute or are unhappy with the outcome of adjudication, please phone our offices on (07) 5592 6633 to find out how we may be of assistance. 

Decisions Highlight Consumer Law

09-Oct-14 16:00

Recent decisions on alleged misrepresentations by sellers and their agents have forced real estate agents, conveyancing solicitors, litigators and developers to take notice.

Decisions in Queensland’s Supreme Court and District Court have challenged long-standing consumer protection and misrepresentation precedents entrenched in state property law.

This article provides a brief summary of the decisions and their impact on current litigation and the property landscape.

In October 2011, the Supreme Court of Queensland delivered its decision in Nifsan Developments Pty Ltd v Buskey & Anor [2011] QSC 314 (Applegarth J 27/10/2011) in which deposits were successfully returned to buyers after the contract for the purchase of a penthouse apartment in Nifsan’s Emerald Lakes development was found to be void as a result of representations made by the developer’s agent.

The representations regarding views were found to be misleading and deceptive – terms used in the sections 52 and 53A of the Trade Practices Act 1974 (Cth) (now called the Competition and Consumer Act 2010, but the TPA still applies to acts or admissions prior to 1 January 2011 pursuant to section 6 of schedule 7 of the Trade Practices Amendment (Australia Consumer Law) Act (No.2) 2010 (Cth)).

In December last year, and in stark contrast to the decision in Nifsan, the Supreme Court delivered the decision in a number of claims against Oracle developer South Sky Investments Pty Ltd. In South Sky, eight individual purchasers sought to terminate their off-the-plan contracts, alleging various breaches of the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act) by the developer, the primary assertion being a failure to disclose that the Oracle would be operated by the Peppers chain of resorts and hotels.

The plaintiffs in South Sky asserted that each had contracted to purchase an apartment in ‘The Oracle’, whereas each apartment in question was now in a hotel or resort branded by Peppers. The plaintiffs maintained that, on completion of the Oracle development, the purchasers were receiving a substantially different product than what they had contracted to purchase.

Ultimately, the purchasers failed in their claims against South Sky on the basis that the contracts implied that the apartments would be in a residential, not commercial, precinct as opposed to the strict interpretation of the term ‘residential’ being owner-occupier or long-term rental.

A recurring subject throughout the South Sky decision was that the applicants had failed to establish their pleaded case of inaccuracy (of the BCCM Act statements) and the inaccuracy found was not shown to be causative of material prejudice. The prejudice suffered by the applicants was because the contracts did not give protection to their expectations.

The importance of an accurately pleaded claim or defence was a significant theme within Applegarth J’s judgment (at paragraphs 285 and 351). His Honour also reminded the parties and litigants that the purchasers ought to have the evidence to support the allegations of misrepresentation and reliance.

The court placed more significance on the actual written terms of the contracts rather than the intention (or expectations) of the purchasers. By still delivering the purchasers with ‘an apartment’ in a ‘residential’ complex, the developer had substantially fulfilled its obligations under the contracts. On that basis, the purchasers were held not to have repudiated the contracts as there had been no breach of a material term of the contracts which would give rise to the purchaser's right to terminate. Had the purchasers sought to rely on the expectations placed on them, then they ought to have had those expectations written into the contracts.

The buyers in South Sky appealed Applegarth’s decision to the Queensland Court of Appeal. On 15 June 2012, their Honors McMurdo M, Muir and Wilson M dismissed the buyers’ appeal with indemnity costs in favour of South Sky.

The decision in South Sky will undoubtedly have off-the-plan buyers nervous about their position in respect of other developments in Queensland. Many developers expected buyers to complete their contracts throughout 2011, with many buyers refusing or failing to do so.

It is clear from these recent decisions that each matter will be taken on a case-by-case basis. Accordingly, it is imperative that your claim (or counterclaim) is impeccably prepared and that your evidence is strong enough to stand up in court.

In Nifsan, the court was persuaded by the evidence put forth by the buyers (and even that of the developer’s agent) whereby it was clear that the representations had been made, the buyers relied on those representations and the representations were made by the agent on behalf of the developer in circumstances where the developer had knowledge that those representations were false and made with the intention to mislead.

The decisions also have far-reaching impacts for conveyancing solicitors and advisory firms. If your clients intend to sign, or have recently signed, a contract for an off-the-plan unit in a development, the South Sky decision goes so far as to say that any and all representations concerning the buyer’s expectations for the development ought to be written into the contract.

Despite the South Sky decision, developers must ensure that they and their agents comply with the provisions of the Competition and Consumer Act 2010 (Cth) with respect to misleading and deceptive conduct and unconscionable conduct in the procurement of off-the-plan sales.

With the hearing of numerous claims in the District Court and Supreme Court throughout the state, it is certainly an interesting and exciting time for the development of property law and commercial litigation in Queensland.

Cronin Litigation Lawyers are currently acting for many buyers of off-the-plan residential units and houses on the Gold Coast and the greater Brisbane region. If you have purchased an off-the-plan property, please contact Melissa Coleman at Cronin Litigation Lawyers on (07) 5592 6633 to find out how we may be of assistance.