Misleading or Deceptive Conduct: The Case of Lorna Jane

Misleading or Deceptive Conduct: The Case of Lorna Jane

On the 23rd of July 2021, the Federal Court ordered Lorna Jane Pty Ltd to pay $5 million in fines for making false and misleading claims to consumers in relation to its “LJ Shield Activewear” line of products. The company admitted that in July of 2020, it falsely represented that the activewear “stopped the spread” and “protected wearers” against viruses including COVID-19. This article discusses the lesson learnt from this Federal Court proceeding and how the law surrounding misleading and deceptive conduct protects consumers.

What is Misleading or Deceptive Conduct?

Misleading or deceptive conduct is regulated under the Australian Consumer Law which provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. ‘Trade or commerce’ is interpreted by its ordinary meaning and extends to anyone providing or acquiring goods and services. Therefore, it is important for business owners to be aware of their obligations. For conduct to be considered ‘misleading or deceptive’ there must be a real possibility that the alleged conduct will mislead a consumer into thinking that the false claim was, in fact, true. This may include:

  • False advertising about a company’s or its competitors’ products;
  • Small print and disclaimers hiding important information from consumers;
  • Bait advertising and special offers which misrepresent products or prices;
  • Pricing errors where products are advertised at incorrect prices; or
  • Silence and withholding important information.

However, even if a consumer discovers the truth before the conclusion of a transaction, the company can still be found to have engaged in misleading and deceptive conduct as the consumer has been enticed into ‘the marketing web’. Misleading or deceptive conduct claims can be brought by individual claimants who have relied upon this conduct to their detriment, or by the Australian Competition & Consumer Commission (ACCC) as part of their regulatory function.

The Case of Lorna Jane

The marketing campaign for the Lorna Jane “Shield Activewear” included claims that the product incorporated ground-breaking technology that made the transferal of pathogens onto the fabric impossible, thereby eliminating viruses upon contact with the fabric. These misrepresentations were made both in store and on the company’s social media platforms. Representatives from the company admitted that there was no scientific basis for their claims. The Federal Court emphasised the severity of the company’s conduct, characterising it as ‘exploitative, predatory and potentially dangerous’. Along with the $5 million in penalties, the Court also ordered that Lorna Jane be restrained from making any ‘anti-virus’ claims about their products, must publish corrective notices across their media platforms and establish a consumer law compliance program.

How Etheringtons Solicitors can help

This case is a timely reminder that the ACCC will continue to prioritise consumer protections in the midst of the pandemic and hold companies accountable for their advertising practices. It is important for companies to be fully aware of their obligations particularly during this rapidly changing environment. If you would like more information on how we can assist you, do not hesitate to contact us on 9963 9800 or via our contact form.

Scarlett Johansson Sues Walt Disney Co. For Damages

Scarlett Johansson Sues Walt Disney Co. For Damages

Scarlett Johansson sues Walt Disney Co. for damages for intentional interference in her contract with Marvel Studios

Scarlett Johansson recently filed a law suit against Walt Disney Co. (Disney) alleging that the studio engaged in the tort of intentional interference by releasing Black Widow on Disney+ at the same time as it was released in theatres. She alleges that this interference caused Marvel Studios (Marvel), a subsidiary of Disney, to breach the terms of their contract with her. She is seeking both compensatory and punitive (also called exemplary) damages. This article will provide further insight into the elements of the tort of intentional interference in Australia and how it relates to Johansson’s claim.

Background for Johansson’s claim against Disney

Johansson alleges that Disney caused Marvel to breach the terms of her contract, by releasing Black Widow on Disney+ simultaneously with the theatrical release. Her compensation for the film was “based largely on ‘box office’ receipts”. This has been common practice within the industry for decades where stars are often paid an upfront fee along with receiving a portion of the back end profits which are dependent on box office success.

Johansson’s claim exposes the current shift within the film industry towards prioritising streaming services as a result of the COVID-19 pandemic, which will impact the future cinematic experience. COVID-19 has pushed film companies to adopt a hybrid release model, where movies are released in cinemas and on streaming platforms simultaneously. While Netflix offers larger up front deals to actors who forego cinematic releases, this claim highlights that many film companies have not shifted their payment practices in accordance with this new model. This claim will potentially set a precedent for other actors contracted under the same model. Disney has accused Johansson of “callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic”, adding that there was “no merit whatsoever” to the claim.

Tort of intentional interference

Johansson alleges that Disney intentionally interfered with her contract with Marvel, thereby committing a civil wrong as they were subject to a duty not to do so. According to the influential case of Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd [1995] FCA 1368, this tort allows damages to be claimed against a defendant who induces or procures an entity to act or refrain from acting whilst being aware that doing so would result in the entity breaching their contractual obligations to the plaintiff.

The recent case of Daebo Shipping Co Ltd v The Ship Go Star [2012] FCAFC 156 outlines the elements needed to establish this:

  • There must be a contract between the plaintiff (Johansson) and a third party (Marvel).
    • In this case, Johansson must establish that her contract with Marvel specifies that Black Widow would have an exclusive theatrical screening for a period of time. Johansson will likely argue that the agreement for a ‘wide theatrical release of the picture’ will be understood to expressly or impliedly promise this exclusive release. If this is proven, Disney would have intentionally disregarded this contract by simultaneously releasing the film on their streaming platform.
  • The defendant (Disney) must know that such a contract exists.
  • The defendant (Disney) must know that if the third party (Marvel) does, or fails to do, a particular act (provide an exclusive theatrical release) that conduct of the third party would be a breach of contract.
  • The defendant (Disney) must intend to induce or procure the third party (Marvel) to breach the contract through that conduct (failing to provide an exclusive theatrical release).
    • To establish this, the defendant (Disney) must have a “fairly good idea” that the contract benefits another person in the respect which they are intervening in. Reckless indifference or wilful blindness can amount to his knowledge.
    • Knowledge of the contract can infer that there was “actual” or “subjective” intention within the state of mind of the defendant (Disney).
  • The breach must cause loss or damage to the plaintiff (Johansson).
    • Johansson will likely allege that Disney presumably released the film on Disney+ to increase the share price, at Johansson’s expense as it likely interfered with box office sales.

Johansson is seeking both compensatory and punitive damages

Compensatory damages aim to put the plaintiff (Johansson) into the position they would have been in, had the defendant (Disney) not committed the civil wrong. These damages are calculated according to the size of the plaintiff’s loss, which will be difficult to calculate in this matter given the effects of COVID-19 on the industry globally and the uncertainty of the specific revenue expected from an exclusive cinematic release.

Punitive damages are only available in the USA for tortious claims (not for breach of contract), and aim to punish the defendant (Disney) for egregious conduct, acting as a deterrent for future actions. Awards of punitive damages in the USA are often significantly larger than that of compensatory damages. However, punitive damages are rarely available in Australia, and only for very rare personal injury matters.

How Etheringtons Solicitors can help

A solicitor at Etheringtons Solicitors can provide clarification of the relevant law in relation to your individual circumstances. If you need further advice or assistance with contractual or tortious matters, please contact one of our experienced solicitors on (02) 9963 9800 or via our contact form.

Medical Negligence Case Study

Medical Negligence Case Study

Makaroff v Nepean Blue Mountains Local Health District [2021] NSWCA 107

A former patient has recently succeeded in a medical negligence action against the Nepean District Hospital (“the Hospital”) for the improper diagnosis of a shoulder injury. Ms Makaroff (“the Plaintiff”) was awarded a sum of $276,319.95 in damages on appeal. This case highlights the importance of seeking legal advice if you or your loved ones have experienced unsatisfactory care or poor health outcomes as a result of receiving medical treatment.

Establishing medical negligence

A party (the defendant) can be found to be negligent if they fail to take reasonable care to avoid causing damage to another person (the plaintiff). In order to establish a claim for negligence, a plaintiff must address the following elements under the Civil Liability Act 2002 (NSW):

  1. That a duty of care (to exercise due care and skill) between the plaintiff and the defendant existed;
  2. That this duty of care was breached by the defendant;
  3. That this breach caused the plaintiff (causation) to suffer injury or loss (damage); and
  4. That this damage suffered was not too far-removed (remoteness) from the consequence of the breach.

Each of these factors has been considered in greater detail in our previous article. The law of negligence is not straightforward, and highly dependent on the specific circumstances of the case.

There are also numerous defences which a defendant may establish in order to defer liability. For example, we have considered the dangerous recreational activity defence in a previous article regarding a case where a jockey was injured during a horse race. The Court in Makaroff v Nepean Blue Mountains Local Health District [2021] NSWCA 107 considered this defence in the context of assessing the standard of care expected of medical professionals.

Case Study: Makaroff v Nepean Blue Mountains Local Health District

The Plaintiff was injured on 19 September 2010, when one of her horses bit her on her right forearm, which led to the dislocation of her right shoulder. An X-ray conducted at the hospital indicated that she had “moderate reduction in the right humero-acromial distance, suggesting rotator cuff insufficiency”. No ultrasounds or MRIs were conducted, and she did not receive an orthopaedic review, prior to being discharged two days later. Neither the hospital or her GP advised the Plaintiff that she required an urgent radiological examination or orthopaedic review. Based on this advice, the Plaintiff did not obtain an ultrasound until 3 February 2011, by which time it was too late for surgery to be effective.

In this case, the Plaintiff claimed that had she been properly diagnosed in a timely fashion, she would have undergone surgery and would have properly recovered the function in her arm. She alleged that the hospital and her GP breached their duty of care by their negligent treatment and sought damages for her pain, further injury and loss.

Decision in this case – considering duty of care and causation

The Primary Judge at first instance rejected the claim that the Hospital and her GP had breached their duty of care, as the Civil Liability Act 2002 (NSW) s 5O precludes liability of both parties as they acted in a manner that was‘widely accepted in Australia by peer professional opinion as competent medical practice’ at the time it was provided. Additionally, the Primary Judge held that even if a breach could be established, there was no ‘causal link’ between the alleged breach and her subsequent injuries.

However, on appeal, the Court found that the hospital had in fact breached its duty of care to the Plaintiff. Experts claimed that a competent professional medical practice required the patient to be advised of the urgency of seeking an orthopaedic consultation within 2-3 weeks of the injury. Judge Simpson also found that the hospital breached its duty of care by failing to refer the Plaintiff for radiological investigations when she presented symptoms which suggested the need for further investigation. The Court held that, but for the hospital’s breach, the Plaintiff would have undergone surgery by mid-November 2010 and there would have been a “very high degree of probability that she would have had a better outcome”.

As such, the hospital was held liable on appeal, and ordered to award the Plaintiff with $276,319.95 in damages. The appeal against the Plaintiff’s GP, however, was dismissed as the Court found that there was no breach of duty.

How Etheringtons Solicitors Can Help

A solicitor at Etheringtons Solicitors can provide clarification of the relevant law and its relation to your individual circumstances. Furthermore, Etheringtons Solicitors can assist with a variety of negligence matters, whether you are the injured party or a professional.

If you need further advice or assistance, please contact one of our experienced solicitors on (02) 9963 9800 or via our contact form.

Pet Custody Disputes Arising from Divorce or Separation

Pet Custody Disputes Arising from Divorce or Separation

Divorce or separation has a significant impact on all members of the family, including our beloved pets. Approximately 61% of Australian households have at least one pet and, in the event of a divorce or separation, pet custody can be a significant issue in the dispute due to the considerable emotional attachment we have to our furry friends.

How are pets classified in custody disputes after a separation?

Despite being a beloved member of one’s family, pets are considered a personal property asset under NSW Law. The Family Law Act 1975 (Cth) provides no specific provisions on how pet custody or ownership should be determined in the event of separation. Property settlement principles are applied instead and while we all value our pets emotionally, they are typically not considered to be significant assets in a property settlement. This is unless they have significant monetary value, such as pedigree pets, or are income generating, such as competition/show animals or livestock. Pets that do not fit into these categories are attributed their nominal market value within a property settlement.

Keep in mind that property settlement proceedings in the Federal Circuit Court or Family Court must be commenced within two years from the date of separation for de facto relationships, or one year from the date of divorce for married couples. However, parties can still settle matters by entering into Binding Financial Agreements beyond that time frame.

How would a court handle a pet custody dispute?

The Courts always prefer separating couples to make their own arrangements concerning pet custody. However, when they are asked to make this discretionary decision, the court will take into account any of the following factual considerations:

  • Who purchased the pet and what was the purpose of that purchase?
  • Whose name is the pet registered under?
  • Who has current possession of the pet (including who it resided with before, during and following the separation)?
  • Does one party have a more suitable residence for the pet (we have discussed keeping pets in strata schemes in a previous article)?
  • Is the pet a service animal which one party relies on or will rely on in the future?
  • Who made financial contributions towards the pet – including food or veterinary payments, pet insurance and grooming fees?
  • Who made non-financial contributions towards the pet – including who provided exercise, fed or cleaned up after the pet?

If your child or children have an attachment to the pet, a court may prefer to assign the pet to the primary residence of those children or to move the pet between residences with the children, as it is in their best interest.

The Court aims to resolve disputes in a manner that will avoid further proceedings. A court may make appropriate orders, which could include selling the pet, to distribute its nominal value in the same manner as any other asset, such as a house or furniture.

Davenport & Davenport (No 2) [2020] FCCA 2766

In this recent case, the Husband applied for interim orders for shared custody of the dog which had remained with the Wife following their separation, as he was “suffering pain and separation anxiety by not being allowed to have time” with the dog. The Husband had attempted to create a ‘pet custody agreement’ and to visit the dog numerous times since separation, but the Wife had refused access. The Wife was the registered owner and purchaser, but the Husband claimed he had spent $1,633 in financial contributions towards the dog, including food, vet visits and other supplies. The Wife sought orders to instead adjust the parties’ property interests and to keep the dog as part of the final property settlement; as animals have been dealt with by the Court as personal property.

The Federal Circuit Court of Australia found that the issue was merely the alteration of property interests on an interim basis. The Court held that it did not have the jurisdiction to make the shared custody order requested, as the Family Law Act 1975 (Cth) provides no basis for the shared custody of property, including pets, after separation. The Husband’s application was accordingly dismissed.

What options can Etheringtons Solicitors provide?

Etheringtons Solicitors can assist you with negotiations or mediation regarding the ownership or living arrangements (including time allocations, residence and expense payments) of a pet with a former partner.

We understand that your pets represent more than the asset-based approach the Court has to adopt. We suggest negotiation and mediation whenever possible, as both options are more time- and cost-efficient than court proceedings and allow for greater flexibility in the solution developed for your particular circumstances. These negotiations would need to cover who will care for the pet on which days, how handovers will be dealt with, who will meet ongoing and future expenses, who will be responsible for vet checks and who will make major health decisions – these are considerations not dissimilar to parenting orders.

Once parties reach agreement, they can be formalised by way of consent orders with the Court, along with any parenting or property orders as needed.

If you need further advice or assistance with a pet custody dispute or other Family Law matters please contact one of our experienced solicitors on (02) 9963 9800 or via our contact page.

Debt Collection Basics For Business

Debt Collection Basics For Business

If you are owed money for goods or services, the first step in attempting to recover it is generally to send a Letter of Demand to the other party. This letter should set out the amount of money outstanding, a cut-off time to respond by, and if no response is received by you that you will take legal action with no further notice to the recipient.

Letter of Demand

The Letter of Demand is sent by you (or your lawyer) if you are owed the money (the creditor) and it warns the person owing the money (the debtor) that if they don’t pay the debt within a certain time period (such as seven days) they will be sued in court to recover the debt.

A Letter of Demand should be the last letter a creditor sends before issuing court proceedings. While Letters of Demand are not court documents they are often an effective means of forcing the debtor to take action.

It is a good idea to contact us first to ascertain whether it is prudent to proceed with court proceedings and this will usually depend on the size of the debt. Naturally, if the sum owed is small it may not be economically viable to pursue the debt by engaging a lawyer(NB: if they’re doing it themselves it usually won’t cost anything to send the letter). You must ensure however that, in enforcing your rights to recover the debt, you act within the law.

Principles of Debt Collection Fairness

When sending a Letter of Demand, you should be careful not to harass the debtor or send a letter which is designed to look like a court document.

You must not pursue a person for a debt unless you have reasonable grounds for believing the person is liable for the debt.

Time Limits

A creditor has a limited period of time to sue for a debt. In most instances, for debts owed, this will be 6 years.

If the debtor has made no payments towards the debt or has not acknowledged in writing that they owe the debt for a period of 6 years from when the debt arose, then the debt may no longer be recoverable.

Disputed Debts

The debtor has the right to dispute a debt and may do so on the grounds if:

  • it is not their debt;
  • they have already paid the money;
  • they disagree with the amount of the debt; or
  • it is an old debt and they haven’t made a payment for at least 6 years, no court judgment has been entered against them and they haven’t admitted in writing that they owe the debt in that time.

If the debt is disputed, then you, as the creditor, may have no alternative but to commence legal proceedings or to seek to negotiate a compromise with the debtor.

When Your Lawyer Becomes Involved

If you, as the creditor, are not willing to negotiate or wait for payment, you may wish to contact us to assist with pursuing the debt.

If you know the debt is due and payable, and you want to commence legal proceedings, it is prudent to have a lawyer assist you and represent you in court to recover the debt. If your lawyer advises that the size of the debt make their engagement not economically viable, then we may still be able to help you to negotiate a payment plan that is manageable to the debtor and acceptable to you.

It is not in the debtor’s interest to ignore your claim and risk the additional costs of the legal fees and interest on top of the original debt. By following the correct process we can help obtain a satisfactory result for you.

New Customer – Credit Application Process

Before you take on a new customer, you should have the correct systems in place to ensure that you are able to assess the customer’s credit position.

Do you have a credit application process for your new customers?

Your Credit Application and Terms of Trade should provide you with security over the goods which you have sold to the customer and, if the customer is a corporate entity, ensure that the directors of the company provide you with their personal guarantees. You must, however, ensure that you register any security over goods on the Personal Property Securities Register and we recommend that you speak with a lawyer to assist you with this process to ensure that the registration is not void.

If you do not have a system in place, contact us and we will help you put a system in place to protect you and provide you with security for money owed to you. It is important that you have the correct systems and documentation in place before you do or provide credit to any new customers.

Conclusion

You should contact us to discuss your legal rights and obligations if you are owed money or if you owe money to someone else who is threatening court action.

If you would like more information or require assistance or advice on how to proceed in debt recovery matters please contact us on (02) 9963 9800 or via our contact form.

 

 

Family Law and Going to Court

Family Law and Going to Court

When a relationship or marriage ends, people often have a fear that they will need to go to court to deal with the separation of joint assets and liabilities, and arrangements for their children. The fear of going to court, on top of the emotional side of separation, can be extremely stressful for those involved.

Do I need to go to Court?

It is not always the case that people automatically need to go to court when their marriage or de facto relationship ends. If the parties to a separation can agree on how they separate jointly-owned assets and liabilities and also have an agreed co-parenting arrangement for  the children there is no need to go to court at all.

Do I need a Lawyer?

You will most likely need a legal document to be drafted to ensure that the agreement between the separated persons is clear, defined and legally binding. This is when a family law solicitor can assist you. Your family law solicitor will be able to explain to you the different types of documents that are available to set out the separation of assets and liabilities. You can also obtain such documentation to set out the children’s arrangements. The Family Law Act 1975 (Cth) sets out how these different agreements function.

There are different types of documents available to you, and your solicitor can also tell you what will work best for your situation. Once you have decided on the type of document you need, your solicitor will be able to draft the document to reflect what you and your ex-spouse have agreed, to ensure that it is clear and binding.

Why Should I get Legal Representation?

Each party will need their own legal representation before signing any documentation to ensure that they obtain independent advice.

Clients often find that once they have entered into binding documents drafted by their lawyer, there are fewer arguments between them and they can move on with their lives with certainty following their separation or divorce.

Contact us

The team at Etheringtons Solicitors are skilled at handling all matters relating to Family Law, and are able to assist with complex cases. If you need assistance with any area of Family Law, do not hesitate to contact us on 9963 9800, via email to [email protected] or enter your details in the form here and we will contact you.