Parker trading as on Grid Off Grid Solar v Switchee Pty Ltd trading as Australian Solar Quotes (No 2)
[2019] FCA 79
•8 February 2019
FEDERAL COURT OF AUSTRALIA
Parker trading as On Grid Off Grid Solar v Switchee Pty Ltd trading as Australian Solar Quotes (No 2) [2019] FCA 79
File number: NSD 763 of 2017 Judge: GLEESON J Date of judgment: 8 February 2019 Catchwords: CONSUMER LAW – damages for contraventions of ss 18, 21 and 29(1)(h) of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) – where respondent’s contraventions allegedly suppressed success of applicant’s solar panel installation business – whether damage proven – quantification of damage to business, through past hypothetical or loss of chance analysis Legislation: Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth) ss 18, 21, 29(1)(h), 236 Cases cited: Generic Health Pty Ltd v Bayer Pharma Aktiengesellschaft [2018] FCAFC 183; (2018) 361 ALR 248
H Lundbeck A/S v Sandoz Pty Ltd [2018] FCA 1797
Henville v Walker [2001] HCA 52; (2001) 206 CLR 459
Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638
O’Neill v Medical Benefits Fund of Australia [2002] FCAFC 188; (2002) 122 FCR 455
Parker trading as On Grid Off Grid Solar v Switchee Pty Ltd trading as Australian Solar Quotes [2018] FCA 479
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; 196 ALR 257
Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332
Date of hearing: 18 June 2018 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 34 Counsel for the Applicant: The applicant appeared in person ORDERS
NSD 763 of 2017 BETWEEN: JOHN PARKER TRADING AS ON GRID OFF GRID SOLAR
Applicant
AND: SWITCHEE PTY LTD TRADING AS AUSTRALIAN SOLAR QUOTES (ACN 609 700 594)
Respondent
JUDGE:
GLEESON J
DATE OF ORDER:
8 FEBRUARY 2019
THE COURT ORDERS THAT:
1.Pursuant to s 236 of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)), the respondent pay the applicant the sum of $15,000 for damage suffered by the applicant because of the conduct of the respondent in contravention of a provision of Chapter 2 of the Australian Consumer Law.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GLEESON J:
In April 2018, following an undefended hearing, I made three declarations concerning contraventions by the respondent (“ASQ”) of the Australian Consumer Law (“ACL”) (Sch 2 to the Competition and Consumer Act 2010 (Cth)): Parker trading as On Grid Off Grid Solar v Switchee Pty Ltd trading as Australian Solar Quotes [2018] FCA 479. The declarations were that:
(1)The respondent’s conduct in publishing the listing at (“listing”) since 12 October 2016 was and is misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law.
(2)By publishing the listing since 12 October 2016, the respondent made and is making a false or misleading representation that the respondent has an affiliation with the applicant in contravention of s 29(1)(h) of the Australian Consumer Law.
(3)By:
(a)removing the applicant’s access to the listing on the respondent’s website following the termination of the agreement between the parties;
(b)failing to remove the listing despite the applicant’s request that the listing be removed;
(c)advising the applicant that he will only be able to change the listing if he buys further leads from the respondent;
(d)publishing inaccurate information on the listing and preventing the applicant from correcting such inaccuracies; and
(e)removing a positive review from the listing,
the respondent has engaged in unconscionable conduct in contravention of s 21(1)(a) of the Australian Consumer Law.
In addition, I made orders that the respondent:
(1)remove all references to the business of the applicant known as “On Grid Off Grid Solar” from the respondent’s website within seven days of the date of this order.
(2)be restrained from using as part of its website or otherwise, the “On Grid Off Grid Solar” name, work or mark.
PROCEDURAL HISTORY
Mr Parker’s claim
Mr Parker’s originating application relevantly sought damages from ASQ for loss or damages suffered by him because of ASQ’s contraventions of the ACL.
In my earlier judgment, at [97] to [100], I set out the general principles governing recovery of damages under s 236 of the ACL:
[97] By s 236 of the ACL, if a claimant suffers loss or damage because of the conduct of another person, and the conduct contravened, relevantly, ss 18, 29 or 21 of the ACL, the claimant may recover the amount of the loss or damage.
[98] Following from the words of the provision, the relevant question is whether or not there is a sufficient connection between the contravening conduct and the loss or damage suffered such that the latter can be regarded as being “because of” the former: see Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 at [38]-[39] and Campbell v Backoffice Investments [2009] HCA 25; (2009) 238 CLR 304 at [102]. While the contravening conduct need not be the sole cause of the claimant’s loss or damage, it must be shown to have “materially contributed” to it: Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 at [106] per McHugh J.
[99] For the same reason, recovery is confined to the “amount of the loss or damage” suffered, assessed via comparison between the position in which the person who suffered loss or damage is in and the position that person would have been in had there been no contravention; neither nominal nor punitive damages can be awarded under s 236: Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 525-526.
[100] In Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 416; (1984) 57 ALR 167 at 183, the Court considered the obligation to assess damages where there is uncertainty, and said:
The principle is clear. If the court finds that damage has occurred it must do its best to quantify the loss even if a degree of speculation and guess work is involved…We emphasise, however, that the principle applies only when the court finds that loss or damage has occurred. It is not enough for a plaintiff merely to show wrongful conduct by the defendant.
I noted (at [106] of my reasons) that, while I accepted that Mr Parker had reason to suspect that his business has been damaged by the publication of the negative review, I was not satisfied on the balance of probabilities that such damage had in fact occurred. In particular, I noted that there was no evidence that any particular individual had decided not to deal with OGOG because of the negative review and that there is a range of reasons why a potential customer might not proceed to acquire services after obtaining a quote from Mr Parker that are unrelated to the contravening conduct of ASQ.
However, I also noted that my first hearing was conducted within only months of ASQ’s contraventions and it was likely that any harm suffered by Mr Parker as a result of the impugned conduct, particularly in the nature of harm to commercial reputation had not fully crystallised at that time.
Accordingly, I gave Mr Parker a further opportunity to file evidence and make submissions as to his rights to further monetary relief: earlier judgment at [110].
I noted that ASQ would, of course, be able to participate in a further hearing on the question of monetary relief, including by filing its own evidence, should it wish to do so: earlier judgment at [110].
Subsequent events and ASQ’s non-appearance
ASQ did not attend the handing down of the earlier judgment on 12 April 2018. A copy of that judgment was sent by the Registry of the Court to both Mr Parker and email addresses previously used by ASQ under cover of an email that relevantly stated:
Please find attached a copy of her Honour Justice Gleeson’s reasons for judgment in this proceeding, and the stamped orders giving effect to her Honour’s judgment.
You will note that the orders require the respondent, Switchee Pty Ltd, to do certain things.
Please also note that pursuant to order 7 of those orders, this proceeding has been listed for a case management hearing on Thursday 26 April 2018 at 9.30 am. Please see paragraphs [109] and [110] of her Honour’s reasons for judgment. This case management hearing will take place at the Sydney registry.
No response was received from ASQ.
On 24 April 2018, the Registry sent a further email to the parties reminding them of the 26 April 2018 case management hearing. No response was received from ASQ.
ASQ did not appear at the 24 April 2018 case management hearing.
On 26 April 2018, the Registry sent a copy of the orders made at that case management hearing to the parties under cover of an email that relevantly stated:
Please find attached the orders her Honour Justice Gleeson made at today’s case management hearing. Please note that in accordance with order 1 of these orders, this proceeding has been listed for a further case management hearing on 10 May 2018 at 9.30 am. This case management hearing will occur at the Sydney registry of the Court.
No response was received from ASQ.
On 8 May 2018, the Registry sent a further email to the parties reminding them of the 10 May 2018 case management hearing. No response was received from ASQ.
ASQ did not appear at the 10 May 2018 case management hearing.
ASQ was given notice of the monetary relief hearing by an email the Registry sent to the parties on 10 May 2018. Attached to that email was a copy of the orders of 10 May 2018, which listed Mr Parker’s application for further relief for hearing on 18 June 2018 at 10.15 am. No response was received from ASQ.
ASQ did not appear at the further hearing on 18 June 2018. At the further hearing, Mr Parker appeared in person and made oral submissions.
MR PARKER’S EVIDENCE OF LOSS OR DAMAGE
In my earlier judgment, I made the following findings concerning Mr Parker’s evidence of loss or damage to that point (at [101]-[105]):
[101] In his [3 July 2017] affidavit, Mr Parker stated that he has “lost 10 jobs that he knows of and most of our potential customers see the review as do our competitors. Estimated damages so far are $20,000 in lost profit”.
[102] At the hearing, Mr Parker said that email leads are a very large percentage of the business of OGOG. He said that, since the negative review was published, he had been told by “customer after customer after customer” that they saw the review. Mr Parker also compiled a profit and loss statement which, he submitted, showed a steep decline in sales and revenue since the publication of the negative review.
[103] Mr Parker tendered a list of 11 individuals and addresses marked “Customers who we believe did not go ahead because of negative review on ASQ”. In support of the contention that these individuals would have acquired services from OGOG but for the negative review, Mr Parker said:
Well, those ones there they have – they were all – I’ve written them in there because they were very, very keen and ready to proceed and all of a sudden having said that they would do some research they’ve gone very cold. Just couldn’t contact them, didn’t hear back, and I was – I felt that I was at the point of signing a deal.
[104] Mr Parker said that his average profit per job was $2,000-2,500. Mr Parker also said that the low profit figures were unusual because the domestic solar market was rather buoyant because high electricity bills are attracting customers to the market. Based on the state of the market, Mr Parker claimed that his profit figures should be “a lot higher” than the figures as they stood at the date of the hearing.
[105] The profit and loss statement shows OGOG’s trading income, gross profit and net profit for the months August 2016 to July 2017 inclusive. It shows that OGOG made losses in the months of June and July 2017. In May 2017, OGOG made a modest profit after incurring legal expenses of $9,090.91. In the months of August 2016 to April 2017, the monthly net profits ranged from a high of $24,142.63 in December 2016 to a loss of $7,346.79 in August 2016.
Subsequently, Mr Parker filed an affidavit sworn by him on 9 May 2018 in which he stated:
1.I ask the court for consideration of damages on the following grounds. The publishing and the listing and of the false and negative review and association with the respondents business that I did not want has continued for a further 8 months right up until this week. Damage has continued at a similar rate dropping my usual rate of won Jobs from previously 1 in 3 down to 1 in 5 success. I have lost conservatively about 30 jobs in the last year which equates to $60,000 lost profit. We have only won and completed 11 Jobs since the final hearing last August.
2.Because the respondent did not comply with the Judgement orders and did not remove the listing until two days ago I have not yet been able to see the difference in sales without the publication. The respondent has changed the name to a fictitious company in Sydney's CBD. The respondent was ordered to remove the material by no later than the 19/4/2018.
3.As far as quantifying the loss I am in a nigh on impossible situation because I don't believe that anyone in my position would be able to get a non-customer to state in an affidavit and get themselves involved in a federal court case that they did not proceed with my quote because of the publication by the Respondent. Those non-customers are effectively strangers and owe me nothing. Even if they would admit the reason privately they would not admit that to me, let alone put their name on an affidavit. I have had some customers raise the listing issue with me but it was not always in my best interests to raise the matter at the time with potential customers unless they gave an indication that they had been or would be checking the internet for reviews. All this time the review has sat at the top of Googles search engine so that anyone looking up my business is highly likely to see the review before anything else ie our website and facebook page.
4.Because I have been dealing with this for so long I do not believe that historical turnover figures can help my case given the business only started in late 2015, and only getting into full swing from Feb 2016. I can provide the court with bank records to support my case from the last 8 months but the trend is now lost due to the length of time the publication has existed.
5.Even if damages were scaled back to a lower dollar figure at least it would send a message to rogue Internet publishers like Switchee Pty Ltd that they be held accountable for their actions.
At the further hearing, Mr Parker stated that, over the 13 month period that the offending publication was on the internet (“the relevant period”), he continued to experience the problem of initially keen customers going cold without explanation. Mr Parker also stated that prior to beginning operations as OGOG, as an employee of another solar installer, he completed 60 jobs in six months in contrast to the 11 jobs that he had completed since the final hearing.
Mr Parker’s new evidence permits me to make the following additional findings:
(1)Between the hearing in August 2017 and May 2018, Mr Parker’s rate of won jobs was 1 in 5 instead of his rate of 1 in 3 prior to the contravening conduct.
(2)Mr Parker has won only 11 jobs between August 2017 and 9 May 2018.
(3)Since the contravening conduct, Mr Parker has experienced customers being keen to acquire his services but suddenly “going cold”.
Contrary to the statement in Mr Parker’s affidavit, I am not satisfied that Mr Parker lost “about 30 jobs” as a consequence of ASQ’s contraventions. His evidence does not identify specific jobs that he would probably have won but for ASQ’s conduct. The “about 30” figure is also in tension with Mr Parker’s evidence that he won 11 jobs from August 2017 to 9 May 2018 and that his pitch success rate dropped from 1 in 3 to 1 in 5: see [30] below.
Similarly, while Mr Parker may have completed 60 jobs in six months while employed by another solar installer, this does not provide grounds for a finding that he would have obtained and completed jobs at a similar rate during the relevant period when operating his own business but for ASQ’s contravening conduct. Without evidence to support the validity of the comparison, I am not willing to draw it.
CONSIDERATION
Mr Parker previously gave evidence of conversations with prospective customers who referred to conducting internet searches for reviews of his business. In my view, it is reasonable to assume that potential customers of Mr Parker typically conducted internet searches as a part of the process of deciding whether to acquire Mr Parker’s services. A person conducting such searches and who came across ASQ’s misleading and deceptive and unconscionable conduct would have gained the false impression that the only review submitted to ASQ about OGOG was a negative one, and that Mr Parker had no response to the negative review. A person conducting such searches would also have seen the prominent ‘one star out of five’ rating for OGOG displayed on the ASQ listing and, consequentially, in external search results.
Having regard to Mr Parker’s new evidence as to the negative changes that he observed in his business following the contravening conduct, and in the absence of any evidence of any other reason for those changes, I am now satisfied on the balance of probabilities that Mr Parker suffered damage to his business and that, by the mechanism just outlined, ASQ’s contravening conduct materially contributed to that damage: see Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ and Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 at [106] per McHugh J.
While the amount of Mr Parker’s damage “must be proved with certainty, this only means as much certainty as is reasonable in the circumstances”: O’Neill v Medical Benefits Fund of Australia [2002] FCAFC 188; (2002) 122 FCR 455 at [33] per Carr, Moore and Marshall JJ.
Quantifying the present damage necessarily requires the Court to engage with an uncertain “hypothetical situation of the past”, namely with the counterfactual of what Mr Parker’s business might have been during the relevant period but for ASQ’s contravening conduct: see Generic Health Pty Ltd v Bayer Pharma Aktiengesellschaft [2018] FCAFC 183; (2018) 361 ALR 248 (“Generic Health”) at [181] per Allsop CJ, Yates and Beach JJ and Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 at 639 per Brennan and Dawson JJ. Thus, as Deane, Gaudron and McHugh JJ noted in Malec at 643:
If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. ... But unless the chance is so low as to be regarded as speculative - say less than 1 per cent – or so high as to be practically certain – say over 99 per cent – the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability.
In another sense, as explained in Generic Health at [182], the issue might well be looked at as being one of quantifying the value of a lost opportunity. As Jagot J said in H Lundbeck A/S v Sandoz Pty Ltd [2018] FCA 1797 at [369], “what the party whose rights have been infringed has lost is an opportunity to sell its products or as much of its products, at the price it would have sold them for, but for the infringing conduct”. Here, Mr Parker can be said to have lost the opportunity to sell his services without his reputation being adversely affected by ASQ’s contraventions. The value of this lost opportunity is to be assessed “by reference to the degree of probabilities or possibilities” involved in the hypothetical counterfactual: Sellars at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ.
The Full Court in Generic Health elaborated on correct approach to assessment as follows:
[183] Another way to express the same point is as Brennan J described it in Sellars at 368:
Although the issue of a loss caused by the defendant’s conduct must be established on the balance of probabilities, hypotheses and possibilities the fulfilment of which cannot be proved must be evaluated to determine the amount or value of the loss suffered. Proof on the balance of probabilities has no part to play in the evaluation of such hypotheses or possibilities: evaluation is a matter of informed estimation.
[184] This theme of informed estimation resonates with some observations made by Hayne J in Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; 196 ALR 257 at [37] and [38]. Any estimation must be done “with as much precision as the subject matter reasonably [permits]”. Mere difficulty in estimating damages does not relieve a court “from the responsibility of estimating them as best it can”.
[185] Interestingly, Staughton LJ in Gerber Garment Technology [1997] RPC 443 at 459 cited Sellars with approval and discussed the matter in terms of evaluating the loss of a chance. Gerber Garment Technology both at first instance ([1995] RPC 383 per Jacob J at 407 and 408) and on appeal ([1997] RPC 443 per Staughton LJ at 459 and 460) evaluated and applied a loss of a chance approach based on the possibilities and probabilities. Moreover, Jacob J at [1995] RPC 383, 395 also invoked the themes of Lord Diplock in Mallett v McMonagle [1970] AC 166; [1969] 2 WLR 767 at 176, which resonate with the themes discussed in Malec at 639 and 643 that we have referred to above.
[186] Whichever way one expresses it, in assessing the possibilities or probabilities of a hypothetical counterfactual, one is engaged in the task of estimation, even if the estimation involves an assessment of the counterfactual as being close to a certainty. But being close to a certainty is not the same thing as a certainty. If one is estimating, one still needs to apply a discount, albeit a very modest one, to reflect the assessment that one is not at a certainty. If one is looking at the value of a lost opportunity which is not certain to occur, then the valuation must involve some discount, even if a very modest one.
Mr Parker won 11 jobs during the 10 month period August 2017 to 9 May 2018. In the absence of any evidence to the contrary, I accept the evidence of pitch success rates before and after the contravening conduct. Given his pitch success rate of 1 in 5 during the relevant period, I estimate that Mr Parker pitched for approximately 65 jobs during the relevant period. Had his success rate been 1 in 3, as it was prior to ASQ’s unconscionable conduct, Mr Parker would have won approximately 22 jobs during the relevant period, or nine more than he in fact did. Based on Mr Parker’s estimated profit per job of $2,000-$2,500 (see [104] of the previous judgment), the loss of nine jobs equates to a loss of approximately $18,000-$22,500 in profit.
In my view, a discount should be applied in recognition of the inherent uncertainties of the present counterfactual.
Thus, as a matter of informed estimation, I assess the loss Mr Parker suffered because of ASQ’s contravening conduct as being $15,000: see Sellars at 368 per Brennan J and Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; 196 ALR 257 at [37] and [38] per Hayne J.
CONCLUSION
Accordingly, pursuant to s 236 of the ACL, I find that Mr Parker is entitled to an award of damages in the sum of $15,000.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate:
Dated: 8 February 2019
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