Friday, 29 August 2014

Trial by Media Revisited - the ACCC and the sub judice rule


Introduction
In a recent post, I discussed the practice of the ACCC making sub judice comments about the cases which they are litigating in the Federal Court.  In that post, I argued that the ACCC’s conduct was exposing the organisation and its senior officials to an action for sub judice contempt. I also called on the Commonwealth Attorney General to intervene to direct the ACCC to cease engaging in this conduct.

Valve Corporation
Just when one thought it could not get any worse, we have today seen an even more clear cut example of the ACCC making sub judice comments about one of its court cases.

Earlier today, the ACCC commenced legal proceedings against Valve Corporation alleging that the company made false or misleading representations regarding the application of the consumer guarantees under the Australian Consumer Law (ACL).[1] In particular, the ACCC claimed that Valve had represented that:

·     consumers were not entitled to a refund for any games sold by Valve via Steam in any circumstances;
·     Valve had excluded, restricted or modified statutory guarantees and/or warranties that goods would be of acceptable quality;
·     Valve was not under any obligation to repair, replace or provide a refund for a game where the consumer had not contacted and attempted to resolve the problem with the computer game developer; and
·     the statutory consumer guarantees did not apply to games sold by Valve.

While the ACCC should have ended its commentary about the case at this stage, it chose to go much further by making the following sub judice comments:

The Australian Consumer Law applies to any business providing goods or services within Australia. Valve may be an American based company with no physical presence in Australia, but it is carrying on business in Australia by selling to Australian consumers, who are protected by the Australian Consumer Law.

In other words, the ACCC decided to include an analysis in its media release of the key jurisdictional issue which will arise in the case. Such a jurisdictional issue should not be the subject of media comment, but rather should be left to the judge hearing the case to consider and decide.

The publication of the ACCC’s media release was followed by further comment by the ACCC, including this quite remarkable discussion of the case:

ACCC Chairman Speaks: Here's Why We're Suing Valve[2]

 

“Under Australian Consumer Law, everybody who buys a product or a service has a right to a refund if the product doesn’t work. They have a right to a refund, or a repair. Those rights are enshrined in Australian Law, and our allegation is that Valve sought to remove those consumer rights which is a breach of Australian Consumer Law,” Sims said in an interview this morning. “The fact that they [Valve] are an offshore company doesn’t affect the rights for consumers.”

So how many customers have been affected by the alleged Valve refund drama?

Speaking to us this morning, Sims believes that that’s the wrong way to think about it.

He says that Valve misrepresented itself to each and every one of its 1.3 million Australian Steam customers.

“We’re focussing on liability here. We’re not thinking about a [specific] number of breaches in this case. Step one in this case is the Court deciding if there’s been a breach of [Australian Consumer Law]. We know they’ve got about 1.3 million active customers in Australia. I’m not sure we know how many have been affected by denying their rights, but the representations themselves are on their websites and in their agreements with [all of] those customers. Those representations are going out to all 1.3m customers.”

“We’ve also had a large number of complaints from individuals and consumer organisations. There’s a lot of concerns. We allege that the denial of consumer guarantee rights is pretty clear in that case.”

The Chairman added that the watchdog had been in contact with Valve over the issues, but added that the alleged breaches of the Australian Consumer Law are so severe that they need to go in front of a judge.

“We felt that the nature of this behaviour was better to be put before the court,” the Chairman said, adding that sometimes the ACCC needs to make an example out of big companies to keep the others in line.

“If every time a company — and I’m speaking generally now — said they’d stop [breaching the Act] when we asked them to, companies in Australia would have carte blanche to know that if we just knocked on the door and asked them to stop, they [wouldn't have to pay penalties],” Sims specifies.

This is the Chairman who has led the consumer watchdog to some of its most profitable wins yet against some of its biggest opponents. The ACCC in the last few years has taken Optus for $3.5 million, Apple for $2.5 million over the iPad 4G and a number of energy companies to the tune of $1.5 million. Rod Sims and his independent agency are out to set a fierce precedent that Australia is not somewhere you can misrepresent yourself as a big company.

“We want all companies doing business in Australia, even if they’re doing business offshore to comply [with Australian Consumer Law]. Big media companies doing business in Australia have to comply with Australian consumer law. Point number one is if you’re going to do business in Australia, you have to comply with Australian law. The second is don’t have blanket conditions around the world without bothering to check,” Sims warns.

“Whether or not we accept an undertaking prior to court depends very much on how blatant the behaviour was. In each of these cases it depends on the approach of the company that we’re taking action against. They can either move quickly [to settle]…or they can fight the case.

“If they [Valve] want to reach an early resolution it could be over in a month or two. They’re a huge company with massive resources, so if they want to fight it could go one or two years.

“We’ll wait and see to see if they want to do.”

The ACCC does not seem to understand that making such statements as the above is likely to raise sub judice concerns on a number of grounds. As stated by the NSW Law Reform Commission Report in its report “Contempt by publication”:[3]

6.3 Under existing law, a publication relating to civil proceedings may amount to contempt in three sets of circumstances. These are where the publication:

·    has the potential to prejudice a juror or witness; or
·    places pressure on a party to litigation to discontinue or compromise that party’s action or defence; or
·    prejudges the issues at stake in particular proceedings

6.4 This last ground of contempt, prejudging issues at stake, is commonly referred to as the “prejudgment principle”. The prejudgment principle is part of the sub judice rule, but does not rely on the traditional formulation of a tendency to cause prejudice to specific proceedings. It is concerned with ensuring that media publicity does not compromise the general administration of justice, as distinct from administration of justice in a particular case, by usurping the courts’ role and undermining public confidence in the court system.

The ACCC’s comments in relation to the Valve case appear to be prejudging a number of the issues at stake in the proceedings, including whether there ACL applies to Valve, whether there has been a breach of the law, and the level of detriment caused by Valve’s alleged illegal conduct. As made clear in the NSW Law Reform Commission Report, these types of comments are of particular concern because of their potential to compromise the general administration of justice by “usurping the courts’ role and undermining public confidence in the court system”.

The ACCC’s comments about the Valve case may also be objectionable sub judice comments to the extent they could be seen a placing pressure on Valve to compromise any defence which they were proposing to make to the ACCC proceedings.  As stated at paragraph 6.22 of the NSW Law Reform Commission report:

6.22 A publication may constitute contempt if it tends to impose improper pressure on a party to civil proceedings as to the conduct of those proceedings. In particular, a publication may exert undue pressure on a party to discontinue or settle a claim which he or she has instigated or is defending. The basis for restricting the publication of material in this context is concern that the individual party, as well as litigants and potential litigants generally, will be discouraged from seeking access to the courts for vindication of their legal rights, and in this way the due administration of justice will be impeded.

Indeed, it is hard to imagine a clearer example of sub judice commentary than the ill-advised comments by the ACCC in relation to the Valve proceedings. 

Conclusion
The case for intervention by the Commonwealth Attorney General is getting stronger each day. In my view, some action must be taken to make it clear to the ACCC that litigation is supposed to be tried in the court according to law, and not in the media.


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