Australian Competition and Consumer Commission v Valve Corporation (No 3)
[2016] FCA 196
•24 March 2016
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196
File number: NSD 886 of 2014 Judge: EDELMAN J Date of judgment: 24 March 2016 Catchwords: PRIVATE INTERNATIONAL LAW – Meaning of proper law of a contract – operation of “conflict of laws” clause in s 67(a) of Australian Consumer Law – whether Division 1, Part 3-2 (Chapter 3) of Australian Consumer Law applies to contracts where the real and closest connection is not the law of any part of Australia
CONSUMER LAW – meaning of “goods” in s 4(1) of the Australian Consumer Law – whether provision of computer software by contract involving a licence for provision of computer software is a supply of goods
CONSUMER LAW – meaning of “conduct in Australia” in s 131(1) of the Competition and Consumer Act 2010 (Cth) – whether there is a requirement that representations be “directed” at Australians to be conduct in Australia – whether representations made on websites are “directed”
CONSUMER LAW – meaning of “carry on business in Australia” is s 5(1)(g) of the Australian Consumer Law – whether respondent “carries on business in Australia” when it has 2.2 million Australian subscriber accounts, generates large Australian revenues, has valuable personal property in Australia, has business relationships in Australia, and incurs tens of thousands of dollars of monthly expenses in Australia
CONSUMER LAW – representations in consumer agreements, in chat logs and on website – whether representations contravened s 18(1) or s 29(1)(m) of the Australian Consumer Law – misrepresentations contained within contractual terms – extent to which qualifications in the same or other contractual terms alter the otherwise misleading representation
Legislation: Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) Sch 2; Div 1 of Pt 3-2; Chs 2, 3, 4; ss 2, 2(1), 2(2), 3, 4(1), 4(2)(a), 5, 5(1), 5(1)(a), 5(1)(g), 5(2), 5(3), 5(5), 8(2), 11(c), 11(d), 18, 18(1), 18(1)(m), 21, 23, 29(1)(m), 47, 48, 51, 54, 54(2), 54(3), 54(6), 64, 67, 67(a), 67(b), 131, 131(1), 236, 259, 259(1), 259(3), 263(4), 276
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Electronic Transactions Act 2000 (SA) s 13B
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Date of hearing: 7 to 9 March 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 341 Counsel for the Applicant: Ms N Sharp Solicitor for the Applicant: Thomson Geer Counsel for the Respondent: Mr RG McHugh SC with Mr ADB Fox Solicitor for the Respondent: PricewaterhouseCoopers
Table of Corrections 4 April 2016 In paragraph 143, “and a property right” in the second sentence has been replaced with “was not a property right”. 4 April 2016 In paragraph 145, “consistency with the text” has been replaced with “inconsistency with the text”. 18 April 2016 In paragraphs 40 and 233, “10 November 2013” has been replaced with “10 November 2014”. 2 May 2017 In paragraph 169, in the fourth sentence, the words “the ACCC” have been replaced with “Valve”. ORDERS
NSD 886 of 2014 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
AND: VALVE CORPORATION
Respondent
JUDGE:
EDELMAN J
DATE OF ORDER:
24 MARCH 2016
THE COURT ORDERS THAT:
1.The matter be listed for a hearing as to remedies.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
Introduction
[1]
The witnesses
[10]
Valve’s provision of video games to consumers
[13]
The process of installing Steam and purchasing a video game
[13]
The Steam games
[24]
The operation of the Steam servers
[29]
Valve’s SSAs and Refund Policies
[39]
Sections 18(1) and 29(1)(m) of the Australian Consumer Law
[42]
The terms of ss 18(1) and 29(1)(m)
[42]
The dependency of the representations upon s 54
[44]
The integers of ss 18(1) and 29(1)(m)
[51]
(1) Issue 1: The proper law of Division 1, Part 3-2 (Chapter 3) of the Australian Consumer Law
[54]
The terms of s 67
[54]
The meaning of the “proper law of a contract”
[57]
The law which has the closest and most real connection to the SSA is Washington State
[72]
Section 67(b) prevents Valve relying upon Washington State law
[85]
Reasons why s 67 does not limit Division 1 of the Australian Consumer Law
[90]
(i) The text of s 67 is contrary to Valve’s submission
[91]
(ii) The context of s 67 is contrary to Valve’s submission
[101]
(iii) The history and purpose of s 67 is contrary to Valve’s submission
[107]
(iv) The policy of the Australian Consumer Law is contrary to Valve’s submission
[116]
Conclusion on the first issue
[125]
(2) Issue 2: Whether there was a “supply of goods”
[126]
The proper approach to the definitions of goods and services
[127]
The application of the definitions
[135]
(3) Issue 3: Whether Valve’s conduct was in Australia or whether Valve carries on business in Australia
[158]
The test for whether Valve’s conduct was in Australia
[159]
Where the conduct relied upon took place
[170]
Whether Valve carries on business in Australia
[189]
(4) Issue 4: Did the representations contravene s 18(1) or s 29(1)(m)?
[206]
The legal principles concerning s 18(1) and s 29(1)(m)
[207]
Summary of the alleged representations
[229]
The SSA representations
[233]
Representation 1 (in the SSAs)
[237]
Representations 2 and 3 (in the SSAs)
[247]
Representation 4 (in the 2011-2013 and 2013-2014 Steam Refund Policy) 553, 555, 349
[257]
Representation 5 (in the 2014-2015 Steam Refund Policy)
[275]
Representations 6, 7, 8, and 9 (in the online chats): the ACCCs case and the statements made
[284]
Representations 6, 7, 8, and 9: the submissions and conclusions
[329]
Conclusion
[353]
EDELMAN J:
Introduction
The respondent, Valve, is a company based in the State of Washington in the United States of America. Valve operates an online game distribution network known as Steam. The Steam online game distribution network contains approximately 4,000 video games with names ranging from “Plants vs Zombies GOTY Edition” to “Thirty Flights of Loving”. Valve has more than 2 million Australian subscriber accounts. Many customers buy or download multiple games from Valve. Valve operates and controls a website (the Steam website), an online video game delivery platform (the “Steam Client”), and an online support assistance service known as “Steam Support” which is accessible from Steam or the Steam website.
The applicant, the ACCC, alleges that Valve made misrepresentations in relation to the acceptable quality guarantee in s 54 of the Australian Consumer Law which, by s 64, could not be modified or excluded. The ACCC says that Valve (i) contravened s 18(1) of the Australian Consumer Law by making representations which were misleading or deceptive or likely to mislead or deceive, and (ii) contravened s 29(1)(m) by making false or misleading representations about the existence or effect of the consumer guarantees. At the heart of these alleged misrepresentations were statements by Valve, such as the statement in its terms and conditions in capital letters: “ALL STEAM FEES ARE PAYABLE IN ADVANCE AND ARE NOT REFUNDABLE IN WHOLE OR IN PART”.
Valve defended these proceedings on a variety of grounds. Three of the grounds involved submissions that the consumer guarantees of acceptable quality in s 54 of the Australian Consumer Law did not apply to Valve.
First, Valve said that its conduct did not occur in Australia and that it does not carry on business in Australia so the Australian Consumer Law did not apply to it. There are some difficult issues involved in determining whether “conduct” is in Australia, but even if Valve’s conduct was not conduct in Australia, the Australian Consumer Law would apply if Valve carried on business in Australia. Valve said that it does not carry on business in Australia despite Valve (i) having more than 2 million user accounts in Australia, (ii) generating potentially millions of dollars in revenue from Australia, (iii) owning, and using, servers in Australia, with original retail value of US $1.2 million, (iv) having relationships with businesses in Australia, and (v) paying tens of thousands of dollars monthly to Australian companies in expenses for running its business in Australia.
Secondly, Valve submitted that the Steam Subscriber Agreement (SSA) it entered with consumers was not a contract to which the consumer guarantees in the Australian Consumer Law, Division 1 of Part 3-2 (Chapter 3) apply because the law which has the closest and most real connection to the SSA is the law of Washington State. There is no express provision which limits the operation of Division 1 in this way. Valve effectively submitted that such an implication derived from the conflict of laws provision, s 67, which contains terms to prevent a consumer from attempting to contract out of the Division by choosing a foreign proper law. The effect of Valve’s submission is that if it contracted with Australian consumers, but (possibly unknown to the consumer) made the supply through an Australian subsidiary supplier, then the consumer guarantees would be impliedly excluded by Division 1 because of the connection between the contract and Washington State. In other words, by implication but not by express terms, Division 1 would not apply even where an Australian consumer received a supply of Australian goods from an Australian subsidiary in Australia.
Thirdly, Valve submitted that it does not “supply goods” within the meaning in s 2(1) of the Australian Consumer Law. The definition of “goods” in the Australian Consumer Law includes “computer software”. The core of the supply by Valve was computer software. Valve said that it provided a “service” (by a Licence Agreement) rather than “goods” and that its supply to consumers of software was part of its service. Valve also said that a licence agreement for a use of goods is a service not a supply of goods even though (i) the term “supply” is defined to include a hire and an agreement to hire and (ii) the Australian Consumer Law expressly provides that a reference to a supply of goods includes goods supplied with services.
For the reasons below, each of these submissions must be rejected. The issue then becomes whether the representations made by Valve contravened ss 18(1) and 29(1)(m) of the Australian Consumer Law.
The misleading representations were said to have been made in (i) the SSAs, (ii) the Steam Refund Policies displayed on the Steam website from 1 January 2011, and (iii) during online “chats” between three Australian consumers (Mr Miller, Mr Miles, and Mr Phillips) and Steam Support staff. The ACCC said that the alleged misleading representations were all displayed to consumers on computer screens or electronic devices in Australia.
Valve said that it did not contravene the Australian Consumer Law because the ACCC did not prove that the representations as pleaded were made and even if they were made they were not false, misleading or deceptive or likely to mislead or deceive. In relation to all of the statements in the SSAs and all but one of the representations concerning Valve’s refund policy I accept that the statements amounted to misleading representations within s 18(1) and s 29(1)(m). But the statements in chats with the three Australian consumers, who were reasonably well informed of their rights, did not involve these contraventions.
The witnesses
The ACCC relied upon evidence from four people. The first was an investigator and ACCC employee, Ms Liskov. A key part of her affidavit evidence concerned how she obtained various terms and conditions, and policies used by Valve. She also described the process by which games are purchased from Valve. The other three witnesses relied upon by the ACCC were Australian consumers who had experienced problems with games that they had purchased from Valve and used. None of the ACCC’s witnesses was cross examined. Their evidence was not disputed, although its legal effect was contested.
Valve relied upon evidence from two witnesses. The first was its Business Development, Infrastructure and Operations Manager, Mr Dunkle. The second was its General Counsel, Mr Quackenbush. Both gave evidence honestly and with a genuine effort to assist the court. Their answers were clear. Their evidence was reliable.
Since there was no clash in any evidence and, after rulings on objections, no submission was made that any evidence should be rejected, it is convenient for me to set out my findings of fact independently of the witnesses. However, in my discussion below, I rely particularly upon the evidence of Ms Liskov as to what a consumer would have seen or done (including her careful inclusion of screenshots of many of these steps). For the technical detail behind each step, I rely particularly upon the evidence of Mr Dunkle. Although he was not an expert independent from Valve, he has worked in the gaming industry for 14 years and, previously in the semiconductor and telecommunications industry for 10 years. He was one of the original members of the team at Valve which developed what he described as the “online game distribution network” known as Steam.
Valve’s provision of video games to consumers
The process of installing Steam and purchasing a video game
There are three discrete processes that a consumer must follow to obtain games Valve offers on Steam. First, they must download and install the Steam Client. Secondly, they must create a Steam account. Thirdly, they must download and install a game.
The first step in obtaining games from Valve is that a consumer goes to the Steam website and clicks on the hyperlink “Install Steam”. A process then follows by which the consumer installs the Steam Client to the consumer’s computer. Steam Client is a software program without which video games cannot be played (ts 97).
During that process the consumer is taken to a window entitled “License Agreement”. The preamble to the Licence Agreement contains a reference to the SSA, which appears as a blue hyperlink. To continue the installation, the consumer must click on a box beside the words “I accept the licence agreement AND I am 13 years of age or older”.
After installation, a pop up window appears notifying the consumer that Steam has been installed. An icon also then appears on the consumer’s desktop.
Consumers can also access the SSA online by a link on the Steam website. When they click on this link, they are taken to a webpage which holds the terms and conditions of the SSA. This webpage is stored on the Washington Servers. The SSA is published (and made accessible to customers) in 21 different languages.
The second step towards obtaining and using a Steam game is that the consumer must have a Steam account. A consumer can create a Steam account either on the Steam website or through the Steam Client. When the Steam Client is used to open an account, a new window opens containing the SSA. The consumer must agree to the SSA before being taken to a window entitled “Create a Steam Account”. From there, the consumer can choose an account name and password, and must enter an email address. Clicking the “Next” button will take the consumer back to their desktop.
The third step towards obtaining and using a Steam game is to download a game. By opening the Steam Client, the consumer will be taken to their “Library” within Steam. This displays all the Steam video games that the consumer has purchased and downloaded. Within the consumer’s library, there is a “Store” where games can be purchased or downloaded. The consumer can search through the games in the Store, access game developer information, read peer or community group reviews and reviews of games. The consumer can then select games to download, after purchasing the game if it is not free. There is a “Review + Purchase” page where the consumer must accept the SSA before they can click “Purchase”. The SSA can be read before being accepted by clicking on the words “Steam Subscriber Agreement”. During the purchase the consumer is required to inform Steam of the country in which the consumer is located (ts 120).
In addition to credit card and other methods of payment, subscribers can also pay for games using “Steam Wallet”. Steam Wallet is an account which a subscriber can use to store value for later use for Steam purchases (ts 120).
Once a consumer has purchased a video game, a link to that game will appear in their Library. The game must then be installed. But no further agreement to the SSA is required before installation. During the installation process of a game which has been authored by a third party, the consumer may be required to accept an end-user licence agreement and any separate account registration requirements required by the third party.
Once a game is installed on a consumer’s computer, the consumer can play it online or, if the publisher of the game has created it in that way, in “offline mode”. When the game is run online for the first time, Steam checks to confirm that the user owns a subscription to the game. And after a subscriber quits an online Steam session, on the next online occasion the subscriber must login again to authenticate himself or herself. The Steam Client also checks for, and downloads, any updates to the games on these subsequent online occasions.
To access the offline mode, the consumer double clicks on the Steam Client. If the computer has no internet connection, a “Connection Error” message will appear on their screen, which contains a button entitled “START IN OFFLINE MODE”. The consumer can see his or her Library offline and can play some games offline. If the consumer is offline then he or she (i) cannot interact with others in multi-user games, (ii) cannot download updates to the game, and (iii) cannot save progress, score or achievements to the Steam Cloud for use on another computer.
The Steam games
Steam offers more than 4,000 games. But only around 26 of these games are authored by Valve. Almost all of them are authored by third party developers who receive a royalty from any sales of their game by Valve. Valve does not receive any of the source code of the video games from third party game developers. Instead, the game developers provide Valve with executable file software for the games to be uploaded in Washington State.
When a problem arises with a game developed by a third party, Valve often puts the customer in contact with the third party developer. If Valve ultimately chooses to give a refund to the customer, then Valve will ordinarily deduct the refund from the royalties which it pays to the third party developer.
The top three games developed by Valve are all multi-player games. They have a common theme of either battle (Dota 2, a free game), terrorism (Counter-Strike Global Offensive, priced at US $14.99) or shooting (Team Fortress 2, a free game). The consumer who downloads a free game commonly discovers that there are opportunities for purchases of digital items within the game.
The top three games developed by third party developers are Grand Theft Auto V (single or multi-player which needs no further description, priced at US $74.99), the Elder Scrolls V (a fantasy video game, priced at US $34.99), and Sid Meier’s Civilisation V (a single or multi-player strategy game to become Ruler of the World, priced at US $69.99).
Apart from the approximately 4,000 games available for purchase or free download, the Steam Client also provides consumers with many other functions including friends lists, chat, user groups, community groups, Steam cloud, Steam music player, video driver updates, and user profiles. Valve’s evidence referred to many of these other functions and many Steam products in detail. It is sufficient to observe that many of Steam’s non-game offerings are very closely associated with Steam’s core provision of games. Some examples follow.
(1)Steam Wallet, as I have explained, is a method of paying for Steam games.
(2)Steam subscribers can “create content” that can be used in Valve’s games and sold to other subscribers, for which Steam receives a portion of the sale proceeds. Senior counsel for Valve gave examples of such content as a digital “hat” or digital “sword” (ts 199).
(3)Steam subscribers have a licence to make modified versions of Valve games and to distribute them for free.
(4)Steam curators are individuals or organisations who make recommendations to others about video games.
(5)Steam Wish list is an ability for subscribers to add games on to a wishlist.
(6)Steam Greenlight is a forum where Steam subscribers can submit an unreleased game for the Steam community to rate according to whether they would like to see the game on Steam.
(7)Steam Play is a feature that allows subscribers to purchase subscriptions to games.
(8)Steam Cloud is a feature which stores the game data of a subscriber when a game is concluded so that when the subscriber goes online again, from any computer, he or she can access this information including for sharing with friends online. Steam Cloud is made available by third party service providers such as Microsoft Azure or Amazon Web Services.
(9)Steam Support has a website published to the world at large for inquiries by way of a ticket received in servers located in Washington State.
The operation of the Steam servers
Steam is supported by a global network of servers and associated information technology. Nearly a thousand servers are located in Washington State. The servers can broadly be classified in the following groups.
(1)Steam website servers in Washington State: used to host and support the Steam website and Steam store.
(2)Steam Client Software and subscription servers in Washington State: the communications which permit a subscriber located in Australia to download the Steam Client software (including any updates) onto his or her local computer, create a Steam account, select a game subscription, and pay the purchase price. These servers also include the authentication of subscribers and, in this role, were sometimes referred to during the trial as “authentication servers”.
(3)Steam content servers: host the content of Valve’s video games and all third party video games and other content available on Steam. Steam has content servers in Washington State as well as other locations around the world including Australia. The three of Valve’s content servers that are in Australia are located in commercial rack spaces leased from Equinix Australia Pty Ltd (Equinix). These content servers provide content to Australian customers as well as other customers, particularly in the Asian region.
The way that the Steam content servers in Australia (like others outside Washington State) operate is that when a consumer seeks to download a game, the servers in Washington State provide the content to the Australian content server. If that content is not requested again within a limited period of time (ranging from about 1 to 18 days in Australia, depending upon the server), it is automatically removed from the Australian content server.
One reason why Steam uses content servers in Australia and elsewhere in addition to its Washington State servers is efficiency. Steam aims to ensure that a consumer can download content as fast as possible. In fact, as Mr Dunkle explained (ts 107), the Steam Client knows how to download from multiple sources, including content servers and content delivery networks.
The content delivery networks are commercial third parties with whom Valve has business arrangements. These third parties permit Steam to have access to their networks to deliver Steam content to subscribers all around the world at agreed bandwidth and delivery capacity. Members of content delivery networks obtain the advantage of being able to provide their customers with fast, direct downloads without having to obtain the download from Washington State or other servers. Some of these third parties, such as a “key partner” called Highwinds, have servers in Australia.
In addition to Valve’s contracts with global content delivery network providers, Valve also has arrangements with smaller providers throughout the world. Two of those in Australia are Internode and ixaustralia.
Steam’s content servers, and the content delivery networks, hold a mirror image, or “proxy cache” of the software. However, a foreign content server (such as an Australian content server) will still need to communicate with the servers in Washington State to obtain authentication of the subscriber in relation to its communications with a subscriber (ts 109).
The content server which is chosen for a download by the Steam Client depends on an algorithm. The algorithm is designed to calculate the most efficient means of downloading based on available server capacity and to project download speed of available servers within the global network. Mr Dunkle said that it was “possible but not guaranteed” that the most efficient method for an Australian subscriber to obtain contention would be to use a server in Australia (ts 112).
Although Steam’s algorithm selects the server calculated to be the most efficient server to deliver the content, the algorithm can be overridden by a choice by the Steam subscriber of a particular server. The subscriber might choose a server which that subscriber knows to be located close to him or her or which is known to have a large bandwidth.
Steam game servers are servers that host specific multiplayer games and connect users who play against each other. Valve owns 4,341 of these game servers. There are also game servers operated by users independently of Valve but using Valve’s software. Some of the game servers are operated by third party developers of games sold or available for free download on Steam. A user anywhere in the world can choose whichever game server he or she wants to use anywhere in the world, or the user can let the game’s software choose the server.
Eighty of Valve’s game servers and supporting equipment are located in Australia. The original retail value of Valve’s Australian servers was US $1.2 million. The servers are stored within rack spaces leased in Australia from Equinix and host two specific Valve developed multi-player games (previously a third was also hosted). From September 2012, Valve has paid Equinix for floor space and server racks, power, connectivity, and exchange linkages to Equinix’s exchange. Valve pays Equinix approximately US $26,000 per month.
Valve’s SSAs and Refund Policies
Later in these reasons I consider in much more detail the terms of Valve’s SSAs and Refund Policies. It suffices at this point to explain that there are three relevant SSAs and Refund Policies to these proceedings.
As to Valve’s SSAs, the three relevant SSAs are as follows:
(1)the 2011/2012 SSA (1 January 2011 to 2 August 2012) (Court Book pp 483-486);
(2)the 2012/2013 SSA (3 August 2012 to 2 July 2013) (Court Book pp 493-497); and
(3)the 2013 SSA (3 July 2013 to 10 November 2014) (Court Book pp 529-533).
As to the Steam Refund Policies, the three relevant versions of those refund policies are as follows:
(1)the 2011-2013 refund policy (1 January 2011 to April 2013) (Court Book p 553);
(2)the 2013-2014 refund policy (April 2013 to 23 July 2014) (Court Book p 555); and
(3)the 2014-2015 refund policy (24 July 2014 to 18 March 2015) (Court Book p 349).
Sections 18(1) and 29(1)(m) of the Australian Consumer Law
The terms of ss 18(1) and 29(1)(m)
Section 18(1) provides:
Misleading or deceptive conduct
(1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Section 29(1)(m) provides:
False or misleading representations about goods or services
(1)A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
...
(m)make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2)…
The dependency of the representations upon s 54
The conduct and representations alleged by the ACCC to contravene ss 18(1) and 29(1)(m) concerned matters arising where goods are not of “acceptable quality”. The ACCC also pleaded that the representations were misleading for reasons including that s 64 prevents consumer guarantees from being modified or excluded. The ACCC accepted that ss 18(1) and 29(1)(m) could only apply in this case if the s 54 guarantee of acceptable quality was capable of applying to a supply by Valve. Section 54 falls within in Division 1 of Part 3-2 (Chapter 3) of the Australian Consumer Law. The ACCC assumed that s 54 must apply because the alleged misrepresentations related to acceptable quality (the concern of s 54). The assumption was that if s 54 did not apply then the alleged representations could not be misleading conduct or false representations concerning whether goods were of acceptable quality. I also proceed on that assumption.
Section 54(1) provides for a guarantee that goods are of acceptable quality if (other than a sale by auction) a person supplies, in trade or commerce, goods to a consumer.
Section 54(2) provides that:
Goods are of acceptable quality if they are as:
(a)fit for all the purposes for which goods of that kind are commonly supplied; and
(b)acceptable in appearance and finish; and
(c)free from defects; and
(d)safe; and
(e)durable;
as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).
There are separate provisions concerning when goods will not fail to be acceptable quality, and matters to which regard must be had in determining acceptable quality. I will refer to those later in these reasons.
Section 259 is concerned with failures of compliance. Different conditions are imposed on whether the goods can be rejected for major, or non-major, failures of compliance. Section 259 provides:
Action against suppliers of goods
(1)A consumer may take action under this section if:
(a)a person (the supplier) supplies, in trade or commerce, goods to the consumer; and
(b)a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with.
(2)If the failure to comply with the guarantee can be remedied and is not a major failure:
(a)the consumer may require the supplier to remedy the failure within a reasonable time; or
(b)if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time–the consumer may:
(i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
(ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection.
(3)If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a)subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or
(b)by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.
(4)The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
(5)Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after goods left the control of the supplier.
(6)To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).
(7)The consumer may take action under this section whether or not the goods are in their original packaging.
If the consumer is entitled to reject the goods, s 263 applies and makes relevant a right to refund:
Consequences of rejecting goods
(1)This section applies if, under section 259, a consumer notifies a supplier of goods that the consumer rejects the goods.
(2)The consumer must return the goods to the supplier unless:
(a)the goods have already been returned to, or retrieved by, the supplier; or
(b)the goods cannot be returned, removed or transported without significant cost to the consumer because of:
(i) the nature of the failure to comply with the guarantee to which the rejection relates; or
(ii) the size or height, or method of attachment, of the goods.
(3)If subsection (2)(b) applies, the supplier must, within a reasonable time, collect the goods at the supplier’s expense.
(4)The supplier must, in accordance with an election made by the consumer:
(a)refund:
(i) any money paid by the consumer for the goods; and
(ii) an amount that is equal to the value of any other consideration provided by the consumer for the goods; or
(b)replace the rejected goods with goods of the same type, and of similar value, if such goods are reasonably available to the supplier.
(5)The supplier cannot satisfy subsection (4)(a) by permitting the consumer to acquire goods from the supplier.
(6)If the property in the rejected goods had passed to the consumer before the rejection was notified, the property in those goods revests in the supplier on the notification of the rejection.
The ACCC does not allege that there was a major failure in compliance. Instead, it says that the representations were made to consumers concerning their rights whether or not there was a major failure in compliance.
The integers of ss 18(1) and 29(1)(m)
There are two integers within these two sections which are, uncontroversially, satisfied. The first is that Valve is a corporation, and therefore a person to whom the Australian Consumer Law applies (see s 131 Competition and Consumer Act 2010 (Cth)). The second is that Valve was acting in trade or commerce.
However, there are four matters that are controversial:
(1)Whether ss 18(1) and 29(1)(m) have any application where the alleged conduct or representation concerned matters relating to s 54 and any supply of goods occurred in the context of an agreement which had an objective proper law which was not the law of any part of Australia?
(2)Whether Valve “supplied goods” such that s 54 could be engaged?
(3)Whether Valve’s conduct was in Australia? (The ACCC assumed that it was necessary for it to prove that Valve’s conduct was in Australia for s 29(1)(m) as well as s 18(1)) or if Valve’s conduct was not in Australia, whether Valve was “carrying on business within Australia” under the extended application of the Australian Consumer Law?
(4)Whether ss 18(1) and 29(1)(m) were contravened?
Each of these issues is addressed separately below.
(1) Issue 1: The proper law of Division 1, Part 3-2 (Chapter 3) of the Australian Consumer Law
The terms of s 67
The first significant issue raised by the parties was whether ss 18(1) and 29(1)(m) have any application in this case. As I have explained, the ACCC accepted that ss 18(1) and 29(1)(m) could only apply in this case if s 54 was applicable. Valve’s submission that s 54 did not apply was based upon its construction of s 67 of the Australian Consumer Law.
Sections 54 and 67 both appear in Division 1 (consumer guarantees) of Part 3-2 (consumer transactions) of the Australian Consumer Law. Section 67 provides:
Conflict of laws
If:
(a)the proper law of a contract for the supply of goods or services to a consumer would be the law of any part of Australia but for a term of the contract that provides otherwise; or
(b)a contract for the supply of goods or services to a consumer contains a term that purports to substitute, or has the effect of substituting, the following provisions for all or any of the provisions of this Division:
(i)the provisions of the law of a country other than Australia;
(ii)the provisions of the law of a State or a Territory;
the provisions of this Division apply in relation to the supply under the contract despite that term.
In its written submissions, Valve submitted that the proper construction of s 67 required that “the guarantee in s 54 has no application where … any ‘supply’ takes place pursuant to a contract the proper law of which is [not the law of any part of Australia]”.
The meaning of the “proper law of a contract”
The terms of s 67(a) are very similar to those of s 8(2) of the Insurance Contracts Act 1984 (Cth) which were considered by the High Court of Australia in Akai Pty Ltd v People’s Insurance Co Ltd [1996] HCA 39; (1996) 188 CLR 418. In Akai, a Singaporean insurer had refused a claim by an insured New South Wales company. The insured commenced proceedings in New South Wales and in England. In the New South Wales proceeding, the insured relied upon s 54 of the Insurance Contracts Act which restricted the circumstances in which the insurer could refuse payment of the claim. The insurer sought to have the New South Wales proceedings stayed pending the determination of the English action. The insurer relied upon cl 9 of the policy which contained a choice of English law and an English jurisdiction clause.
The High Court considered the effect of s 8(2) of the Insurance Contracts Act which provided that:
… where the proper law of a contract … would, but for an express provision to the contrary … be the law of a State or of a Territory in which this Act applies … then, notwithstanding that provision, the proper law of the contract is the law of that State or Territory.
The High Court also considered the effect of s 52 of the Insurance Contracts Act which provided that:
(1)Where a provision of a contract of insurance (including a provision that is not set out in the contract but is incorporated in the contract by another provision of the contract) purports to exclude, restrict or modify, or would, but for this subsection, have the effect of excluding, restricting or modifying, to the prejudice of a person other than the insurer, the operation of this Act, the provision is void.
(2)Subsection (1) does not apply to or in relation to a provision the inclusion of which in the contract is expressly authorized by this Act.
A majority of the High Court (Toohey, Gaudron, and Gummow JJ) held that the New South Wales proceedings should not be stayed. Their Honours held that effect should not be given to the choice of jurisdiction in cl 9 of the policy, which was the courts of England and Wales. This was for two reasons. The first reason was the “policy” of the Insurance Contracts Act, independently of any express or implied statutory prohibition (447). The second reason was that the text of s 52 rendered the jurisdiction clause void (447-448). It is necessary to return later to each of these reasons.
In the course of their reasons, the majority explained the way in which s 8(2) of the Insurance Contracts Act operated. Their Honours explained, at 440-442, that the process of identification of the proper law of the contract is twofold.
The first stage involves considering “the system of law by reference to which the contract was made”. That requires consideration of the express or the “inferred” choice of law in the contract. This involves one question: “whether, upon the proper construction of the contract … the court may conclude that the parties exercised liberty given by the common law to choose a governing law for their contract” (442).
The reference to an “inferred choice” as part of the process of construction was said by their Honours not to be a question of implying a term as to choice of law (442). That statement should not be understood as suggesting that implication is irrelevant to the overall question at the first stage. The question at the first stage is whether, as part of the process of construction, applying “the ordinary rules of the common law relating to the construction of contracts” (441), the words of the contract express a choice of law to a reasonable person in the position of the parties a choice of law. As French CJ, Bell and Keane JJ observed in Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169, 186-188 [22]-[25], implications can be part of the process of construction.
On the majority’s approach, if there is no answer to the first question, because no express or inferred choice can be identified, then the second stage involves considering the system of law with which the transaction has its closest and most real connection. As their Honours described the second stage, “the law itself will select a proper law” (442).
The test for “the system of law with which the transaction has its closest and most real connection” (438) is usually attributed to the speech of Lord Simonds in Bonython v Commonwealth [1951] AC 201, 219 although it was used earlier in the writings of Professors Westlake and Cheshire, and Dr Morris. Whilst the language of “closest and most real connection” trips off the tongue, the underlying concept is far from clear.
The second stage (“closest and most real connection”) is commonly contrasted with the first stage on the basis that the first concerns the “objective intention of the parties” but the second is just an “objective test”. That was how Valve approached the test in this case. In at least one sense, this is a false distinction. “Objective intention” is an oxymoron. Although it is commonly used in the law of contract, “intention” is a word which involves subjectivity of decision making. If the question is one of construction of a contract then, in truth, the question has nothing to do with the “intention” of the parties in the sense of their subjective decisions. The question of “objective intention” really involves the (objective) meaning of the contract, by the process of construction. The second stage of the test is also an objective test but, on the authority of Akai, it must be concerned with something other than solely considering the meaning of terms of the contract.
It was not always the case that there were two stages involved in the determination of the proper law of the contract. As Dr Mann observed, a debate raged for some time concerning which stage was the only test (Mann FA, “The Proper Law in the Conflict of Laws” (1987) 36 Int’l & Comp LQ 437, 444). Dr Mann said:
The problem was whether in the absence of an express or implied choice the presumed intention of the parties had to be ascertained by construing the contract, i.e. by objective means as opposed to evidence about the subjective intentions of the parties, or whether it was for the court to ascertain the country with which the contract was most closely connected. (Footnotes omitted)
Dr Mann continued, explaining that “the practice had followed the former course” (ie objective meaning of the contract) until the decision of Lord Denning in Boissevain v Weil [1949] 1 KB 482, 490-491, which was then followed by Lord Simonds in Bonython v Commonwealth [1951] AC 201, 219. Dr Mann considered that the rise of the closest connection test was, in part, due to the influence of Dr Morris who had asserted that the only single test that could be applied to determine the proper law of the contract was the question of the closest and most real connection: Morris JHC, “The Proper Law of a Contract: A Reply” (1950) 3 Int’l & Comp LQ 197.
The question of “closest and most real connection” is a question which is usually further deconstructed when considering the “conflict of laws”. Indeed, as Dr Mann said at 438, at a high level of generality the “whole of the conflict of laws is concerned with the question: which, in a given situation, is the legal system closely or most closely connected with the matter in issue?”
Without further deconstruction into the nature of the enquiry, a difficulty with the second stage of the test (the “closest and most real connection” with the transaction) is that different factors will often point in different directions. Some of those factors are said to be of little weight. Some are said to be of substantial weight. But without a governing principle it is difficult to determine why some matters are more important for a close connection than others. For instance, one factor relied upon by the ACCC was the presence of proxy servers in Australia which create a “mirror” of the data contained on servers in Washington State. But how much weight should this factor have in determining the closest and most real connection with the transaction? Without the subsequent conduct by Valve which gave the consumer a choice of proxy server for download, at the time of contracting it is very unlikely that any consumer would know, or could reasonably know, of the existence of Australian proxy servers. And if this factor were ultimately the decisive matter that made the difference, would the proper law of the series of transactions subsequently change if the proxy servers were relocated or abandoned?
Professor Briggs has argued that in the assessment of the different weight given to different connecting factors, the “common law developed an unarticulated reflection of how far, if at all, each allowed the court to read something of the parties’ minds as regards intended proper law”: Briggs A, The Conflict of Laws (3rd ed, Oxford University Press, 2013) 242. The reference to reading something of the parties minds has an echo of the words of Lord Wright in Mount Albert Borough Council v Australasian Temperance and General Mutual Life Assurance Society Ltd [1938] AC 224, 240:
the Court has to impute an intention, or to determine for the parties what is the proper law which, as just and reasonable persons, they ought or would have intended if they had thought about the question when they made the contract.
It may be that, eventually, the common law rules concerning the proper law of the contract will come full circle and the test for “closest and most real connection” will be seen as involving, at its core, questions of construction of the contract (ie the meaning which reasonable persons in the positions of the parties would give to the words of the contract). But the basis upon which s 67(a) of the Australian Consumer Law was enacted, and the decision of the majority of the High Court in Akai, requires the question of closest and most real connection to be considered as an objective question, separate from the question which is concerned with construction of the contract. It must be approached independently from the construction question, as an evaluative exercise which takes into account all of the relevant matters connected with the transaction with the exception of those matters prohibited by s 67(a).
The law which has the closest and most real connection to the SSA is Washington State
The various versions of the SSA contained jurisdiction and choice of law clauses which chose the jurisdiction and proper law as Washington State. For instance, cl 14 of the 2011/2012 SSA provided as follows:
14 APPLICABLE LAW/JURISDICTION
The terms of this section may not apply to European Union consumers.
You agree that this Agreement shall be deemed to have been made and executed in the State of Washington, and any dispute arising hereunder shall be resolved in accordance with the law of Washington. You agree that any claim asserted in any legal proceeding by you against Valve shall be commenced and maintained exclusively in any state or federal court located in King County, Washington, having subject matter jurisdiction with respect to the dispute between the parties and you hereby consent to the exclusive jurisdiction of such courts…”
Both the ACCC and Valve proceeded on the assumption that this Court should disregard each of (i) the choice of law, (ii) the choice of jurisdiction, and (iii) the deeming of place where the SSA was made. This assumption was consistent with the approach of the majority in Akai that the words “but for an express provision to the contrary” in the Insurance Contracts Act “embrace those provisions of the contract from which, or by recourse to which, it would be determined that the parties to the contract had selected or chosen a proper law which was not the law of a State or a Territory” (436). Otherwise, as the majority concluded, there would be “an extreme artificiality in first, as required by the statute, disregarding that express choice, and then proceeding by analysis of other provisions in the contract to infer the making by the parties of a choice of governing law” (440).
The assumption by the ACCC and Valve is also supported by the history of amendment of s 67. When the Australian Consumer Law was enacted, the predecessor provision to s 67, which was s 67 of the Trade Practices Act 1974 (Cth), referred to the Division applying to the contract notwithstanding “a term that it should be the law of some other country or a term to like effect”. That wording was amended to use similar language to that considered in Akai. The amended words had the effect that the Division would apply despite “a term of the contract that provides otherwise” than the law of any part of Australia: see Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth).
The majority in Akai explained that in determining the law which has the closest and most real connection with the transaction, it is proper to have regard to matters including (i) the places of residence or business of the parties, (ii) the place of contracting, (iii) the place of performance, and (iv) the nature and subject matter of the contract (437). Each of these is considered in turn.
As for (i), the places of residence and business of the parties, the Australian consumers who gave evidence in this proceeding were located in New South Wales, Victoria, and Tasmania. The ACCC made no submission about which of these jurisdictions was said to be the proper law.
In contrast with the divergent places of residence of the consumers, although Valve conducts business in Australia, its residence and the locus of its business is in Washington State. That is where its registered office is located. It owns no subsidiary in Australia. The importance of Valve’s residence as the locus of connection with the contract is bolstered by the fact that any reasonable person in the position of a consumer would realise that Valve was entering into contracts on the same, or nearly the same, terms with consumers in countries other than Australia including the United States and the European Union to which reference is made in the SSA.
As to (ii), the place of formation of a contract, this must be determined by reference to the characterisation rules of the forum. If it were necessary to determine this point, I would conclude that the place at which the contract was formed was where the consumers’ electronic acceptances were received (Washington State) rather than the place from which they were sent (Victoria, Tasmania, and New South Wales). As a matter of basic principle any bilateral contract generally requires the receipt of a communication of acceptance in order to be effective: Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93, 111 (Dixon CJ and Fullagar J). The basis of this general principle is the usual expectation of reasonable persons in the position of contracting parties that they will be told whether an offer has been accepted. The various versions of the SSA contained cl 1 which provided that the SSA (offer) takes effect “as soon as you indicate your acceptance of these terms”.
The conclusion that the contract was formed where electronic communication is received is consistent with, and (importantly for the principle of coherence) provides coherence with, the provisions in Australian legislation concerning electronic transactions, based upon the United Nations Commission on International Trade Law, UNCITRAL Model Law on Electronic Commerce1996 with additional article 5 bis as adopted in 1998 (adopted 12 June 1996, United Nations), which provides for the place of receipt of electronic communications which is generally where the addressee has its place of business: Electronic Transactions Act 1999 (Cth) s 14B; Electronic Transactions Act 2000 (NSW) s 13B; Electronic Transactions (Victoria) Act 2000 (Vic) s 13B; Electronic Transactions Act 2000 (SA) s 13B; Electronic Transactions Act 2000 (Tas) s 11B; Electronic Transactions Act (Queensland) 2001 (Qld) s 25(1)(b); Electronic Transactions Act 2001 (ACT) s 13B; Electronic Transactions Act 2001 (NT) s 13B; Electronic Transactions Act 2011 (WA) s 15.
However, this conclusion that the SSA became binding at the place of receipt of acceptance says nothing about questions concerning whether, and when, electronic (and usually near-instantaneous) communication is received and the timing of such receipt: see Christensen S, “Formation of Contracts by Email – Is it Just the Same as the Post?” (2001) 1(1) Queensland University of Technology Law and Justice Journal 22. See also see Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 4) [2009] FCA 522; (2009) 255 ALR 632, 642 [25] (Logan J).
Although I would, if necessary, conclude that Washington State is the place where the contract was formed, this factor has very little weight. In Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 62, Lord Diplock remarked that the place of contracting was of little weight in an age of modern telecommunications. In Nygh’s Conflict of Laws the authors remark that this proposition is even more pronounced four decades later: Davies M, Bell AS and Brereton P, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, 2014) 454 [19.33]. In particular, in Fleming v Marshall [2011] NSWCA 86; (2011) 279 ALR 737, 751 [64], Macfarlan JA said that in general in the case of a transactional contract “the place of contracting will only be of real significance where a transnational contract has been concluded at a face-to-face meeting at the place of residence or business of one of the parties.”
As to (iii), the place of performance of the contract, the data emanates from servers in Washington State, including the SSA (whether it comes through the Steam website or the Steam Client: ts 93) although there is also use of servers located in Australia and elsewhere. The authentication process occurs in Washington State. Subscriber complaints and enquiries are dealt with in Washington State. All client information is held on servers in Washington State. Payment is made in United States dollars. It is received on servers in Washington State. In contrast with these strong links with Washington State, the video games are purchased, downloaded and played all over the world. Even in this litigation alone, performance of the contract occurred in Tasmania, Victoria, and New South Wales.
As to (iv), the nature and subject matter of the contract, although the video game is played in various different jurisdictions in Australia and abroad, a significant aspect of the core subject matter is the ability for multi-player engagement which can take place anywhere in the world. The SSA is a standard form contract. The nature of that contract favours a single proper law (Washington State) rather than a proper law of many different jurisdictions throughout the world.
For these reasons, even but for the terms of the contract that provide otherwise, the proper law of the contract for the supply of goods or services by Valve to a consumer is the law of Washington State.
Section 67(b) prevents Valve relying upon Washington State law
The ACCC submitted that if the law with the closest and most real connection to the SSA was the law of Washington State then s 67(b) had the effect that Division 1 of the Australian Consumer Law would still apply. The submission by the ACCC (ts 72, 151) was as follows:
(1)in the absence of s 67(b), the provisions of Division 1 would apply to the supply under the SSA (this was common ground: ts 181); and
(2)the choice of law clause in the SSAs purports to substitute Washington State law for the provisions of Division 1 or, alternatively, has the effect of substituting Washington State law in light of Mr Dunkle’s evidence that Washington State law (i) does not prohibit a clause of an agreement making non-refundable the subscriber purchases of video game content, and (ii) leaves consumers free to enter contracts that disclaim all guarantees for online services or software.
The question raised by the ACCC is whether the SSA clause involving a choice of Washington State law “purports to substitute” or “has the effect of substituting” Washington State law for the provisions of Division 1 of Part 3-2 (Chapter 3) of the Australian Consumer Law. If s 67(b) is read literally then it may be satisfied. A provision of the SSA has substituted Washington State law for the law of Division 1 which would otherwise have applied.
Valve submitted that s 67(b) was concerned only with circumstances where the proper law of the contract is a law of some part of Australia in the sense of the law with the closest and most real connection. Senior counsel for Valve submitted that s 67(b) was “dealing with simply some terms of some system of law that is to be substituted for the provisions of this division … So the parties could [not provide that] ‘The proper law of this contract is otherwise Australia but, in respect of consumer protection [some other law]…’” (ts 164).
The difficulty with this submission by Valve is that it requires s 67(b) to be read as though it were conditioned upon the proper law of the contract being Australian law. Section 67(b) would need to be read, on Valve’s submission, as if the following words in italics were included when the section refers to the provisions being substituted: “(i) the provisions of the law of a country other than Australia where the proper law would include Division 1; (ii) the provisions of the law of a State or a Territory where the proper law would include Division 1”. There is no warrant for such a large implication for three reasons. The first reason is that (as I explain below) the criterion of operation of Division 1 is no longer the proper law of the contract. The second reason is that the purpose of s 67(b) is to form part of a scheme together with s 67(a); it would defeat that scheme to read down s 67(b) in the manner that Valve submitted. The third reason is that such an implication would contrast sharply with s 67(a) where that condition was expressly included.
I conclude, with one assumption, that the inclusion of a Washington State choice of law clause purported to substitute Washington State law for all or any of the provisions of Division 1. The effect of s 67(b) is that, as it says, “the provisions of this Division [1] apply in relation to the supply under the contract despite that term”: see also Laminex (Aust) Ltd v Coe Manufacturing Co [1999] NSWCA 370 [32] (Meagher JA; Cole AJA agreeing). The assumption underlying this conclusion, however, is that the Division is not otherwise limited to apply only to instances where the law with the closest and most real connection to the contract is the law of a part of Australia. I turn then to that issue.
Reasons why s 67 does not limit Division 1 of the Australian Consumer Law
Contrary to Valve’s submission, s 67 does not limit the operation of Division 1 of the Australian Consumer Law by confining its operation only to cases where the closest and most real connection to the contract is the law of a part of Australia. There are four reasons why Valve’s submission must be rejected. It is inconsistent with the text of s 67. It is inconsistent with the context of s 67. It is inconsistent with the history and purpose of s 67. And it is inconsistent with the policy of s 67.
(i) The text of s 67 is contrary to Valve’s submission
The first reason why Valve’s submission should not be accepted is that it is inconsistent with the text of s 67. Valve essentially submitted that the concluding words of s 67 should be read as though they contained the words in italics: “the provisions of this Division apply in relation to the supply under the contract despite that term but they do not apply if the law with the closest and most real connection to the contract is other than the law of a part of Australia.” Valve submitted that this conclusion arose by construction rather than implication. But this is a false dichotomy. Implications can be part of the process of construction: Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169, 186-188 [22]-[25] (French CJ, Bell and Keane JJ).
The submission by Valve must be concerned with an implication into the Australian Consumer Law rather than an express term. Division 1 of Part 3-2 (Chapter 3) of the Australian Consumer Law contrasts with the Insurance Contracts Act where the joint judgment of the majority in Akai described the latter Act as being “so framed that its application to any other particular contract of insurance turns upon the treatment by the Act of the governing law of the contract in question” (432). The Insurance Contracts Act, s 8(1), provided that
the application of this Act extends to contracts of insurance and proposed contracts of insurance the proper law of which is or would be the law of a State or the law of a Territory in which this Act applies or to which this Act extends.
There is no express provision in Division 1 of Part 3-2 (Chapter 3) of the Australian Consumer Law which is equivalent to s 8(1). Nor is there a provision such as that contained in s 17(3) of the Contracts Review Act 1980 (NSW) which is otherwise in near-identical form to the original version of s 67 of the Australian Consumer Law: “This Act applies to and in relation to a contract only if the law of the State is the proper law of the contract”. The Australian Consumer Law, Division 1 of Part 3-2 (Chapter 3), like the legislation considered in Freehold Land Investments Ltd v Queensland Estates Pty Ltd [1970] HCA 31; (1970) 123 CLR 418, is an example where, as Walsh J (with whom Barwick CJ agreed) said (at 440) “the Act does not contain any express statement by which its general words are confined by some territorial limitation”.
In Taylor v Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531, French CJ, Crennan and Bell JJ said that “it should not be accepted that purposive construction may never allow of reading a provision as if it contained additional words (or omitted words) with the effect of expanding its field of operation” (548 [37]). But their Honours continued (548 [38], footnotes omitted)
The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills “gaps disclosed in legislation” or makes an insertion which is “too big, or too much at variance with the language in fact used by the legislature”.
One decision to which their Honours referred was Marshall v Watson [1972] HCA 27; (1972) 124 CLR 640. In that case, s 42 of the Mental Health Act 1959 (Vic) contained express powers for the admission of a person to a psychiatric hospital including on the recommendation of a medical practitioner. But this did not impliedly permit the police officer to move the plaintiff under compulsion to a psychiatric hospital. Justice Stephen (with whom Menzies J agreed) said (at 649):
Granted that there may seem to be lacking in the legislation powers which it might be thought the Legislature would have done well to include, it is no power of the judicial function to fill gaps disclosed in legislation…
The joint judgment in Taylor referred to the three matters identified by Lord Diplock in Wentworth Securities Ltd v Jones [1980] AC 74, 105-106 (as reformulated in Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586, 592 (Lord Nicholls). Those matters may be more in the nature of guidelines, which might not be sufficient even if they are established ([39]-[40]). Specifically:
(1)the court must be able to identify the precise purpose of the provision(s) in question;
(2)the court must be satisfied that the drafter and Parliament inadvertently overlooked an eventuality that must be dealt with if the provision is to achieve its purpose; and
(3)the court must be abundantly sure of the substance of the words that Parliament would have used had the deficiency been detected before enactment.
The implication sought by Valve is very significant. None of the guidelines from Wentworth Securities is met. And even if they were, the implication would be little more than an attempt to fill a perceived gap in the legislation.
As to the first of the guidelines, it is hard to understand the purpose for implying the words sought to be implied by Valve. Why would the legislation go to such lengths to extend the operation of provisions including Division 1 by techniques such as those in s 5 for conduct outside Australia, only to cut back the reach of Division 1 for all contracts with the closest and most real connection to an overseas jurisdiction? And why would this restriction apply only to contracts and not to all other arrangements and understandings covered by Division 1?
As for the second guideline referred to in Wentworth Securities, the implication could not be inadvertent in circumstances in which the draftsperson chose to refer to the proper law of the contract in s 67(a) but not in s 67(b) or in the closing words of s 67.
Further, there is no separate provision that provides that Division 1 is concerned only with contracts governed by the proper law of a State or Territory of Australia. In circumstances in which s 67 was re-enacted with changes in 2011, it is material that such a separate provision existed in s 8 of the Insurance Contracts Act which was considered in the leading decision on a comparable provision, namely the Akai decision.
(ii) The context of s 67 is contrary to Valve’s submission
There are four matters of context which militate against Valve’s submission that Division 1 of Part 3-2 (Chapter 3) does not apply if the law with the closest and most real connection to the contract is other than the law of a part of Australia.
First, not only does s 67 contain no such express provision but no other provision of Division 1 supports this submission. As senior counsel for Valve conceded, in the absence of s 67, Division 1 would apply to any contract irrespective of its proper law (ts 181). That concession should be accepted. The same point has been made about the application of s 52, in a different Division of the former Trade Practices Act which contained no provision concerning conflict of laws. In Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways (1996) 39 NSWLR 160, 164, Gleeson CJ (Meagher and Sheller JJA agreeing) said:
The fact that the proper law of the contract is the law of a foreign country does not prevent the conduct of one party to the contract from falling within the purview of section 52, if it would otherwise do so. The conduct of a party to a contract can amount to a contravention of section 52 even though the proper law of the contract is foreign law, provided it is conduct in trade or commerce as defined. There is nothing in the Trade Practices Act1974 (Cth) which, in the case of trade or commerce carried on under a contract, limits the application of the Act to cases where the relevant contract has local law as its proper law.
Secondly, an important matter of context is that Division 1 is not limited to contracts. The Division extends to supplies generally, whether by contract, or arrangement, or understanding or even by gift. For instance, s 51 provides that if a person supplies goods to a consumer other than by limited title, “there is a guarantee that the supplier will have a right to dispose of the property in the goods when that property is to pass to the consumer”. This provision would extend to circumstances where goods are supplied to a consumer as a gift for promotional purposes (s 5(1)(a)) or where there is a failure of consideration arising from a supply in anticipation of a contract or where a contract is void. This context makes it extremely difficult to see why s 67 would exclude the s 51 guarantee in a case where there is a contract with the closest and most real connection to Washington State, but not in any other instance where it is also the case that “the lex causae will generally be the law of the place with which the failure of consideration has its closest and most real connection”: Panagopoulos G, Restitution in Private International Law (Hart Publishing, Oxford, 2000) 171.
Thirdly, another matter of context is the breadth of operation provided in the Australian Consumer Law for its provisions, including Division 1 of Part 3-2 (Chapter 3). Section 5 of the Competition and Consumer Act extends the operation of the Australian Consumer Law (other than Part 5-3 “Country of origin representations”) to the engaging in conduct outside Australia by (i) bodies incorporated within Australia, (ii) bodies carrying on business within Australia, (iii) Australian citizens, and (iv) persons ordinarily resident within Australia. As I explain later in these reasons, these are provisions of considerable breadth. This extended operation militates significantly against a construction of Division 1 that would disapply the operation that the Division would otherwise have in all of these categories wherever there was a contract with the closest and most real connection to an overseas jurisdiction.
The extended operation of the Australian Consumer Law by s 5 of the Competition and Consumer Act is a context which also militates against Valve’s submission for another reason. One of the few exceptions to the breadth of s 5(1), and a rare instance in which the breadth of the Competition and Consumer Act is constrained by reference to the state of a foreign law, is where a person seeks damages under s 236 of the Australian Consumer Law. In such a case, the consent of the Minister is needed (s 5(3)) but consent will be given unless it is not in the national interest or “the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct” (s 5(5)). That exception by reference to a foreign law is narrowly confined (only to s 236). Again, this militates against an implication of a broad, unarticulated, foreign law exemption in s 67.
Fourthly, the context of s 67 also includes the provisions discussed below: ss 64 and 276. As counsel for the ACCC rightly submitted, those provisions must be read together. When they are read together they establish a legislative scheme to restrict any attempt to reduce the scope of operation of the Division. It would defeat that scheme if s 67 were read as imposing a restriction on the operation of the Division.
(iii) The history and purpose of s 67 is contrary to Valve’s submission
Prior to 1 January 2011 (when the Australian Consumer Law came into operation) the predecessor legislation to the Australian Consumer Law (the Trade Practices Act 1974 (Cth)) provided for similar consumer guarantees to those contained within Division 1. However, under the Trade Practices Act those consumer guarantees were imposed as statutory implications into a contract.
As statutory implications into a contract, a question that might arise would be whether those statutory implications could be excluded by the contract. The Trade Practices Act created a regime in similar terms to the regime of the Insurance Contracts Act considered in Akai. Like the Insurance Contracts Act, that regime was twofold. First, it prevented a term of the contract from excluding or modifying the statutory implied terms. Secondly, it provided in s 67 that the Division would apply notwithstanding a term of the contract that applied a foreign law or that purported to substitute, or had the effect of substituting, other provisions for the operation of the Division.
The Australian Consumer Law departed from the scheme of implication of terms into contracts. As the Explanatory Memorandum explained, one of the “features of the current law which contribute to its uncertainty” was that “the existing statutory implied terms regime is based on the law of contract”: Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) 600 [25.28].
On 17 January 2013, a response was sent by “Support Tech Cannon” as follows:
Hello
Thank you for contacting Steam Support. We apologize for the long delay in getting a response to you.
Steam Support has recently had a higher volume of tickets and we are working to respond to everyone.
We have found that many users have resolved their issues since submitting their ticket.
After suggesting some solutions, Support Tech Cannon then said:
If you are experiencing issues with this game after it has been installed, launched and is running you will need to contact the developer’s support department. They will be able to help you with in game issues, performance problems, and other similar bugs.
You can find the contact information for the third party Support on the store page for the game or through the following link:
we don’t receive a response from you, this ticket will automatically close. We really appreciate your understanding and patience while we continue to work with the increased ticket volume.
On 21 January 2013, Mr Miller replied as follows:
Hello
I’m not interested in looking for possible solutions for why the games don’t work, which would likely take hours of my time and possibly not help anything. I’d simply like a refund for these games since I haven’t been able to use them.
Thank you
Caleb
On 22 January 2013, a response was sent by “Support Tech Cannon” as follows:
Hello Caleb
The best technical support for in-game issues with this title is provided by its original developer or publisher. Please refer to the following article for more information on contacting the support team for this title:
Title: Anna
Link: php?ref=5385-PAFH-6160
Title: NyxQuest: Kindred Spirits
Link: Plants vs. Zombies
Link: is recommended that you complete any applicable steps on the page linked above. If you are still unable to resolve the issue, click tile blue “technical support” link provided in the article to contact the support department for this title.
As an alternate resource, please check Steam Discussions for other users that may have resolved this issue. You can find this game by using the search box near the top of the page:
>
On 22 January 2013, Mr Miller replied:
This is getting ridiculous. You are not listening to what I’m saying. I’d like a refund for the games that don’t work. The refund I’m legally entitled to. You are starting to really piss me off with your terrible lack of customer service sending me these generic bullshit answers and wasting my time.
Do not send me another one of these generic answers. Listen to me.
On 23 January 2013, a response was sent by “Support Tech Cannon” as follows:
Hello Caleb
It appears you have not attempted to troubleshoot your issue with the third party support team.
Please contact this support team and attempt to troubleshoot the issue you are experiencing.
Please send me a copy of this conversation with the third party support team, which outlines what steps you have taken to try to get the game working on your computer and I will investigate this matter further.
On 23 January 2013, Mr Miller replied:
Hello
Are you telling me that unless go through 3 third party supports for the 3 games you will not refund me for the games that aren’t working?
I cannot afford the time waste to do that and I am not interested in doing that. However I am still legally entitled to a refund. It’s a digital download, you won’t lose any stock by refunding me. If you would like me go through these 3rd party support channels you will need to pay me as contractor for the time I am using to do so.
My hourly rate is $55AU. Let me know if you still like me to do this or give me the refund for the faulty products. If you don’t comply I will do all in my power to involve the ombudsman, consumer watch, news channels so that I can at least publicise how you’ve treated me after two weeks of correspondence. Hopefully one of these avenues will apply enough pressure for you to do the right thing and refund me my 20ish dollars. Have you even checked how much this is worth? Can you tell me the total price for the faulty products? (which you might as well have stolen from me?)
I am now completely angry and frustrated by your terrible service and will be telling as many people as I can about this negative experience with Steam support.
On 25 January 2013 by “Support Tech Cannon” as follows:
Hello Caleb
Unfortunately, we will be unable to assist you further with this issue.
Thank you for contacting Steam Support.
On 2 May 2013, Mr Miller sent another complaint to Steam Support concerning the two additional games he had downloaded that day called “Thirty Flights of Loving” and “Dear Esther”:
Hello Steam Support
These are the games I’d like refunds for as they do not work (except Bard’s Tale, that item functions). My system meets the requirements for all of these games. Please deactivate these games (except Bard’s Tale) from my account and refund me. I am legally entitled to a refund according to consumer rights.
Under the Australian consumer rights laws you are immediately required to refund purchases that do not meet adequate standards or function as promised. I have made the Australian Competition & Consumer Commission aware of your actions and responses to refund claim, and they promised to investigate this issue breach of Australian consumer rights.
As an American company based company, it’s my understanding you’ve breached the Fair Credit Billing Act & Consumer Protection Act and for this reason I have made complaints to the Federal Trade Commission.
Total $13.35
Please refund me immediately.
Caleb
Username-Macsak88
A response was received on 2 May 2013 by “Support Tech Cannon” as follows:
Hello Caleb
The regulations you are citing do not apply to digital distribution subscriptions, electronic games, or downloadable content.
Additionally, you installed and played the game purchased in this transaction, in effect using the product.
Please contact the developer’s support and troubleshoot the issues you are having.
Mr Miller sent a further message that day on 2 May 2013 as follows:
Hello
I know that I installed and tried to use these products. That’s how I know they don’t work, please re-read my initial support submission.
I did not notice any clause saying that digital downloads were excluded from these laws. In Australia law, you are definitely in the wrong, hopefully the FTC will find the same.
The issue isn’t my creditability. They don’t work. I’m unable to play them. I’ve got 140 steam games, 5 of which don’t work. That’s about 3% right? I wonder if the 3% of your entire catalog [sic] doesn’t function for other customers? Let’s say you’ve sold 10 million games, that’s 300,000 products that don’t function - 3% of your customers are unsatisfied, possibly having to deal with your terrible support department, basically being stolen from, in that they can’t use products you’ve sold them. If they were to band together and sue it would be in the hundreds of millions of dollars area. Under Australian law, we have the ACCC who would do that for us, they are unsure how much pull they would have on an American company. If I get this into the Australian news would that have any affect on your immoral if not unlawful policies?
Obviously that huge amount of customer dissatisfaction doesn’t scare you, but I’m surprised you just don’t care about doing the right thing. It blows me away to see this level of customer service from such a large company. I’m a great customer, owning over a hundred of your products. Yet you are trying to weasel out of refunding products that don’t work, even to repeat customers. You are trying to quote that laws of customer protection don’t apply to you thanks to the mediums you use and the country you are in. Is your CEO aware that his company does this? Are you aware that your customers don’t know you don’t give refunds until they try to get one? Can you see how immoral and (i pray) unlawful that is?
What’s stopping you from just doing the right thing?
Caleb
On 3 May 2013, a response was sent by “Support Tech Cannon” as follows:
Hello Caleb
Unfortunately, we will be unable to assist you further with this issue.
Thank you for contacting Steam Support.
However, later on 3 May 2013, a further response was sent by “Support Tech Tony” as follows:
Hello Caleb
Upon reviewing your ticket I can see that you want a refund for the following titles: NyxQuest, Anna, Dear Esther, Plants vs. Zombies and Thirty Flights of Loving. I was also able to confirm that they have had no significant play time, so a refund should not be a problem. I can refund these purchases and the funds will be deposited into your Steam Wallet. Please confirm if this will be satisfactory.
On 3 May 2013, a message was sent by Mr Miller as follows:
Yes that will be fine thank you
Caleb
On 3 May 2013, a message was sent by “Support Tech Tony” as follows:
Hello Caleb
Your wallet has been credited $13.35 and the licenses for those games have been removed from your account. Please let us know if you require further assistance.
Representations 6, 7, 8, and 9: the submissions and conclusions
Although the ACCC pleaded these final four representations separately and made submissions about them separately there is significant artificiality in this approach. The four “representations” were alleged to have been made in the course of online chats which can be treated as a single (ongoing) conversation. Some of the statements alleged to give rise to one representation appear to contradict another. For instance, when the conversation is read as a whole, it makes little sense for Valve to be representing that it had no obligation to make a refund until recourse was had to a developer at the same time as it was allegedly representing that it had no obligation to make a refund at all. Further, it was common ground that all the statements needed to be read together, rather than independently, when considering each representation.
The sixth representation, as alleged by the ACCC was that Valve was under no obligation to repair, replace or refund video games it supplied that were not of acceptable quality unless the consumer had first attempted to troubleshoot the problems with the video game developer (No Obligation Where No Recourse to Developer Representation).
The seventh representation, as alleged by the ACCC, was that Valve was under no obligation to provide a refund to a consumer in any circumstances where the computer games it had supplied were not of acceptable quality (No Obligation to Refund Representation).
The eighth representation alleged was that statutory guarantees and/or warranties of acceptable quality did not apply in relation to the supply by Valve of video games to consumers in Australia (Non-Applicability of Statutory Guarantee Representation). This was false or misleading as the consumer guarantee of acceptable quality in s 54 of the Australian Consumer Law did apply in relation to the supply by Valve of video games.
The ninth representation alleged was that Valve was under no obligation to repair, replace or refund computer games that it had supplied that were not of acceptable quality where the consumer had installed and played the video game (No Remedy where Goods Used Representation).
In the case of all pleaded representations there are two essential reasons why the ACCC’s submissions should not be accepted. First, no-one was misled or even likely to be misled. Secondly, with only minor exceptions, none of the pleaded representations was made.
First, although I have proceeded on the basis that it is possible that a consumer can be likely to be misled even if the consumer was not misled, it is apparent from the conversations as a whole that none of the three consumers was misled or likely to be misled by any of the alleged representations even if they had been made.
In relation to Mr Phillips, his very first comment in the chat asserted that “Title purchase of this software and any refund request is protected under Australian law via rules set down by the ACCC (http:/ If I don’t receive a refund within 7 working days. I will put forward a complaint with the ACCC”. He made similar points, and references to the ACCC, throughout the exchanges.
In relation to Mr Miller, after a series of exchanges in which the Steam Support representative did little more than make suggestions for how to resolve the problems Mr Miller was encountering, Mr Miller responded by saying “You are not listening to what I’m saying. I’d like a refund for the games that don’t work. The refund I’m legally entitled to (emphasis added)”. Later he explained “Under the Australian consumer rights laws you are immediately required to refund purchases that do not meet adequate standards or function as promised”.
In relation to Mr Miles, the first statement by the Steam Support representative would have been misleading to any reasonable consumer. It was that “we do not offer refunds or exchanges for purchases made on our website or through the Steam Client”, and later involved a reference to cl 3 of the SSA which also contained a misleading representation to this effect. Mr Miles was not misled. He responded by saying that he knew “there are laws regarding this sort of thing: at the very least I consider it unethical (both on the part of the developer / publisher and steam) and would greatly appreciate a refund in this particular instance”. And when the Steam Support representative replied, falsely, that the “regulations you are citing do not apply to digital distribution subscriptions, electronic games, or downloadable content”, Mr Miles did not accept that statement. He replied, in his second response, with a summary of his rights which would have been an admirable submission by a lawyer in this litigation.
None of Mr Phillips, Mr Miller or Mr Miles was misled or (when the chats are read as a whole) was likely to be misled, by any statement that they were not entitled to a refund where the computer games were not of acceptable quality, or that statutory guarantees did not apply or that they needed to have recourse to a developer first or could not use the goods if they wanted a refund.
Secondly, when the statements in the chats are read in context, the statements did not amount to the pleaded representations. The statements must be considered in the context of two matters. The first was that the ACCC did not allege that there was any right to a refund that arose under the Australian Consumer Law. As I have explained, a right to a refund only arises if the various conditions in ss 54 259 and 263 of the Australian Consumer Law were met. The second matter of context was that each consumer was engaged in a chat with a Steam Support Representative concerning whether that consumer was entitled to a refund in those circumstances. Each pleaded representation can be considered in turn.
As to the alleged No Obligation Where No Recourse to Developer Representation, none of the statements, read in context, was capable of amounting to a representation that Valve was under no obligation to repair, replace or refund video games even if they were not of acceptable quality unless the consumer had first attempted to troubleshoot the problems with the video game developer. The ACCC alleged that such representations had been made in the chats with Mr Miller and Mr Phillips. But in both cases, the statements about troubleshooting could not be construed as requiring troubleshooting as a condition of a refund for the following reasons:
(1)None of the statements was capable of being construed as referring to any obligation of Valve at all. The statements made suggestions for troubleshooting with the developer in the context of alleged problems, not as part of a representation about obligations; and
(2)perhaps the high water mark for this representation which was relied upon by the ACCC was Mr Miller’s statement that “Are you telling me that unless go through 3 third party supports for the 3 games you will not refund me for the games that aren’t working?” But this statement was made with sarcasm and in obvious frustration at the failure of the Steam Support Representative to address Mr Miller’s constantly reiterated requests for a refund. His concern was that his requests were being ignored and Valve was constantly replying with suggestions for ways to fix the game rather than refund his money.
As to the No Obligation to Refund Representation, none of the statements in any of the chats amounted to a representation that even if the goods were not of acceptable quality a refund would not be given. The closest any statement came to this representation was the statement to Mr Phillips that “we cannot offer a refund for this transaction” (emphasis added) and then referring Mr Phillips to the SSA. By itself, and particularly without the words “this transaction” this could have amounted to the pleaded representation. But this statement was made in the general context described above as well as the particular context that:
(1)Mr Phillips had already insisted that he was entitled to a refund under Australian law, and the Steam Support representative did not deny this but referred to “this transaction”; and
(2)the remainder of the statements by the Steam Support representative in that part of the chat concerned implicit suggestions that the problem could be fixed by troubleshooting that Mr Phillips could undertake, including contacting a third party developer for support.
The ACCC also relied particularly upon the statements to Mr Phillips that “as with most software products, we do not offer refunds or exchanges for purchases made on our website or through the Steam Client” and which later referred to cl 3 of the SSA. By itself, and putting to one side the possibility that this might have been a statement of opinion about Valve’s policy, this statement involved an implied representation that Mr Phillips was not entitled to a refund even if the goods were not of an acceptable quality. But the statement cannot be read in isolation. The remainder of the statement must be considered. The Steam Support representative also relied, when refusing a refund, upon Mr Phillips having installed and played the game for four hours. Any representation, from the statement as a whole, was that Mr Phillips was not entitled to a refund because Steam did not offer refunds and Mr Phillips had been able to play the game for four hours. The possibility was plainly open that a refund might be offered if Mr Phillips had not played the game. Mr Phillips appreciated this and responded to explain that the four hours was spent trying to troubleshoot the game. Then the Steam Support representative repeated the four hour statement as the sole reason for denying a refund. Subsequently a refund was given.
As to the Non-Applicability of Statutory Guarantee Representation, the ACCC alleged that this representation was made in statements to Mr Miller that “[t]he regulations you are citing do not apply to … downloadable content” and similar statements to Mr Miles. The ACCC also relied upon the statements to Mr Phillips which I have already addressed in the paragraph immediately above.
As to the statement to Mr Miller, this was not a representation that Australian consumer protection statutory guarantees did not apply. The statement that the regulations relied upon by Mr Miller do not apply to downloadable content was a response to a statement by Mr Miller that as “an American company based company” Valve had “breached the Fair Credit Billing Act & Consumer Protection Act”. It is apparent that he was referring to United States legislation. He concluded by saying that he had “made complaints to the Federal Trade Commission”.
As to the statement to Mr Miles from the Steam Support representative, this was in response to Mr Miles’ statement that “I do know there are laws regarding this sort of thing”. Mr Miles did not actually “cite any regulations”. The statement by the Steam Support representative would be capable of giving rise to confusion about the regulations to which he was referring but it is not a representation that Australian consumer protection laws do not apply. Indeed, when Mr Miles later referred to “consumer law here in Australia”, the Steam Support representative simply responded that he was unable to assist any further.
As to the No Remedy where Goods Used Representation, the ACCC relied upon the statements by the Steam Support representative to each of Mr Miller, Mr Miles, and Mr Phillips that referred to the time that each had spent allegedly playing the games as a reason for refusing a refund.
In each case, there was a representation that no refund would be given because of the use of the goods but the representation was not in the absolute terms pleaded by the ACCC. In each case, it was not a representation that a remedy would never be given when there had been any use of the goods. It was, instead, a representation that the amount of use in those cases prevented a refund. Those representations contrast with the statement to Mr Miller on 3 May 2013 by the Steam Support representative that he “was also able to confirm that [the games purchased] have had no significant play time, so a refund should not be a problem. I can refund these purchases and the funds will be deposited into your Steam Wallet” (emphasis added).
It was common ground that the effect of s 262(1) of the Australian Consumer Law was that a consumer was not entitled, under s 259, to reject goods if the “rejection period” for the goods had ended. The rejection period is “the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee to become apparent”, having regard to various factors, including “the length of time for which is it reasonable for them to be used”.
Valve submitted, and I accept, that it was entitled to have a system in place to determine whether the failure is a major failure or whether it can be remedied. This litigation did not concern whether Valve’s system was proper or whether the relevant periods of 4 hours or 5 hours of use were a sufficient basis upon which Valve could have refused a refund. Such a result, in this case, might not have been difficult if the evidence of the consumers were accepted. In particular, the factors relevant to a consideration of the rejection period also include “the use to which a consumer is likely to put them” which, in this case, was said to be troubleshooting.
In circumstances in which Valve was entitled to have a system in place to determine whether a rejection period had ended, and since the statements of the Steam Support representatives were tailored to the period during which the games were asserted to have been used, I do not accept that there was an absolute representation that there was no refund remedy available whenever the goods had been used.
In summary, I conclude that Valve did not contravene s 18(1) or s 29(1)(m) by the statements of Steam Support representatives in the online chats. Those statements did not mislead any of the consumers and they did not involve the pleaded representations.
Conclusion
A heavy focus of this trial was upon whether the Australian Consumer Law applied to transactions of this nature involving the sale to Australian consumers from a foreign corporation of products, the essence of which was computer software. Each of Valve’s challenges to the applicability of the Australian Consumer Law fails. The conflict of laws provisions in the Australian Consumer Law did not essentially carve out an exception for conduct by foreign corporations like Valve governed by a different contractual proper law. Valve supplied goods (which are defined as including computer software). And Valve’s conduct was in Australia and it was carrying on business in Australia.
Valve’s conduct contravened s 18(1) and s 29(1)(m) of the Australian Consumer Law by the terms and conditions in its SSAs and also by the statements in two of its Refund policies which broadly concerned availability of refunds. However, the conduct of Valve’s Steam Support representatives in online chats did not contravene the Australian Consumer Law. This latter conclusion applies only to the particular three Australian consumers in this litigation. It is a conclusion based on the particular representations alleged by the ACCC. In particular, the conclusion is based upon the pleaded allegation that statements made by the Steam Support representatives involved implied representations which, in turn, were misleading. The ACCC did not bring a case that the statements themselves were misleading. In light of the conclusions I have reached about the SSAs and two of the Refund policies, the different circumstances of other consumers seeking refunds, including particular questions asked by those consumers and answers given, might well have led to a different result.
I certify that the preceding three hundred and forty one (341) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman. Associate:
Dated: 24 March 2016
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