A former school student has been ordered to pay $105,000 for defaming a teacher on Twitter and Facebook.

District Court judge Michael Elkaim ruled former Orange High School student Andrew Farley should pay compensatory and aggravated damages for making false allegations about music teacher Christine Mickle.

The unreported judgment handed down in November last year was covered by Fairfax, which reports the ruling is the first Twitter defamation action to proceed to trial in Australia.

Judge Elkaim said the comments had had a “devastating effect” on the teacher, who immediately took sick leave and only returned to work on a limited basis late last year.

“When defamatory publications are made on social media it is common knowledge that they spread,” Judge Elkaim said.

“They are spread easily by the simple manipulation of mobile phones and computers. Their evil lies in the grapevine effect that stems from the use of this type of communication."

Farley, who was 20 at the time of the judgment, posted a series of defamatory comments on Twitter and Facebook about Mickle in November 2012.

Evidence was given that Mickle would have otherwise continued teaching as she had before.

Judge Elkaim ordered Farley pay $85,000 in compensatory damages and $20,000 in aggravated damages given that Farley  ignored a letter from Mickle’s lawyers in November 2012 and removed the comments and apologised “unreservedly” only after they wrote to him again in December.

Judge Elkaim said the apparent sincerity of the apology was contradicted by Mr Farley when he attempted to argue in his defence that the comments were true.

Andrew Kenyon, professor at Melbourne University’s Centre for Media and Communications Law, told SmartCompany businesses should be aware that normal defamation law does apply to Twitter.

“Anything that you say on Twitter which would harm someone’s reputation could make you liable,” he says.

However Kenyon concedes “a whole lot of stuff on Twitter is said like that and usually people don’t sue.”

Kenyon says Farley could potentially have avoided the litigation by apologising immediately.

“Businesses realise they could be liable and try and deal with it as quickly and directly as they can, that could be avoiding a suit here,” he says.

Mark Pearson, author of the book Blogging & Tweeting Without Getting Sued, also warned businesses need to be careful in their use of social media.

“All businesses need to realise that they are now publishers and are therefore subject to all media laws like defamation,” he says.

“For small business it reinforces the need to be very mindful and reflective in their use of social media so they need personnel monitoring their social media sites who are across media law and sound ethical practice,” he says.

Pearson recommends small business act within a reasonable time to remove any offensive or defamatory material.

“The reasonable time for such material to be removed would be a very small window of time,” he says.

Fast-food chain Pie Face has launched a ‘low gluten’ pie to add to its range, as Australian food labelling laws remain unnecessarily strict compared to global standards.

In Australia, the Australia New Zealand Food Standards Code dictates the amount of gluten in a product labelled ‘gluten free’ must be undetectable, while in other western nations foods with less than 20ppm (20mg of gluten per kilogram) of gluten can fit under this classification.

Under British, American and European standards, the new Pie Face pie would be considered ‘gluten free’.

“In terms of the ‘low gluten’ label, Australia holds some of the strictest labelling laws in the world, and although the ingredients are gluten free, we produce many other products which contain gluten, so due to that exposure, it must be labelled as ‘low gluten’,” Pie Face said in a statement.

Last year the Australian Food and Grocery Council embarked on a push for Australian standards to be brought in line with the rest of the world.

The AFGC proposed products containing minute traces of gluten below 20ppm be able to be considered ‘gluten free’.

Some food scientists have raised concerns even ‘low’ amounts of gluten could cause harm to people with coeliac disease, however Coeliac Australia approved the push of the AFGC, saying 20ppm is safe for coeliacs.

In a statement, Coeliac Australia said it’s unrealistic to maintain Australia’s current labelling standards.

“In an ideal world, gluten free should mean exactly that. However, there is every chance that the term ‘gluten free’ will disappear, as manufacturers struggle to meet the more sensitive testing methods being developed,” Coeliac Australia says.

“Tests that can measure gluten at ‘parts per billion’ are currently being utilised in scientific research and may soon be the norm in commercial laboratories. When this occurs even the most staunch opponents of the change to <20ppm, some of whom are current manufacturers of gluten free products, will struggle to maintain their gluten free status.”

Australia’s legislation was developed around 13 years ago and, according to Coeliac Australia, technological developments mean Australian standards are out of date.

“This standard was introduced … when testing methods could only detect gluten at levels above 30ppm and above,” Coeliac Australia says.

“Coeliac Australia supports the AFGC proposal … Our position is based on the advice of leading medical experts. The weight of scientific evidence supports 20ppm as a safe threshold of gluten intake for people with coeliac disease.”

In an article for Australian Food News, FoodLegal managing principal Joe Lederman said Australian regulators take a “strict view” in terms of allergen regulations.

“Both the Australian Competition and Consumer Commission and the New South Wales Food Authority have maintained a strict interpretation of ‘gluten-free’ and require that it must be absolutely non-detectable. The consequence of a false claim for ‘gluten-free’ can be a food recall,” he says.

Lederman says as technology has developed, smaller and smaller amounts of gluten have been able to be detected.

“As food analysis technologies are constantly evolving, the levels of detection and quantitation are becoming more finite.

“On the one hand, this allows more certainty in measuring the presence of smaller quantities of a substance in a food product. However on the other hand, testing methodologies have been known to be so finely tuned that the presence of gluten in the air of a testing facility may be picked up as being present in the food product when in fact that might not be the case.”

Billabong has come under further fire today with the announcement law firm Slater & Gordon is preparing a class action against the beleaguered surfwear brand.

The class action is being funded by Comprehensive Leading Funding and 400 claims have been received to date with more expected. 

The class action will claim Billabong engaged in misleading and deceptive conduct and failed to comply with its continuous disclosure obligations. 

It will allege Billabong gave earnings guidance to investors for the financial year 2012 that lacked reasonable grounds.

On August 19, 2011, Billabong forecast that it would achieve strong earnings growth in financial year 2012.

A few months later, the board of the surfwear company withdrew that guidance and revealed its earnings would suffer a substantial fall.

As a result, Billabong’s share price dropped by more than 50% in the days following.

The class action participants allege Billabong misrepresented the assumptions on which the FY12 earnings growth guidance was based.

 Slater & Gordon senior associate Odette McDonald told SmartCompany the issue is that Billabong stated that achieving guidance depended on internal initiatives, such as achieving synergies between its newly acquired retail outlets, and increasing the proportion of total revenue from Billabong product.

But the class action claims, in reality, Billabong’s growth guidance required “an extraordinary lift” in overall sales revenue during an extremely challenging retail environment.

McDonald says the class action will claim Billabong’s internal initiatives “had no viable chance” of substantially lifting profit margins and if the market had been informed of the true issues underpinning the earning forecast “it would have disregarded the guidance as unrealistic”.

“Businesses need to be aware of their legal obligations to keep the market fully informed. Investors make important decisions when it comes to information, so it is critical to ensure the proper operation of the market, and that investors get adequate and timely disclosure from companies of information that is going to have a bearing on price,” McDonald says.  

“Based on our investigations to date, we believe that Billabong has a case to answer.”

Ian Ramsay, professor of commercial law at the University of Melbourne, told SmartCompany the class action had been foreshadowed, so to a certain degree, it may have been expected by the market.

“This latest class action announcement fits with the long trend of Australian securities class actions focusing upon disclosure and, in particular, alleged failures to comply with continuous disclosures,” he says.

“The trend of these actions has been to settle and not to result in a court judgment, so there is quite an important question as to whether this will eventuate in a court action.”

Ramsay says it is difficult to predict the amount of money at stake as there is “enormous variety” in class action claims from “miniscule amounts” to $100 million.    

McDonald says she expects the quantum to be “quite sizeable.”

At the start of the year Billabong shareholders overwhelmingly approved a 40% takeover of the retailer by US hedge funds Oaktree Capital and Centerbridge Partners.

This followed a difficult time for Billabong with its share price tumbling while Derek O'Neill, head of the surfwear retailer for 20 years, was replaced first by Launa Inman and then more recently by Neil Fiske.

SmartCompany contacted Billabong for comment but did not receive a response prior to publication.

Healthy fast food franchise SumoSalad is changing its food labelling after a customer went into anaphylactic shock and shared her story on Facebook. 

Ellie Rimmer purchased a beetroot and pumpkin salad from a SumoSalad store in Victoria Gardens, Melbourne.

An hour later she went into massive anaphylactic shock, fell unconscious, stopped breathing and was rushed to hospital after being administered five shots of adrenaline.

“I was later told by the paramedics who treated me that it was the worst case of anaphylaxis they had ever seen, and the treating doctor informed me that I would have died if I didn't get the adrenaline when I did,” Rimmer posted on Facebook.  

Rimmer has an allergy to nuts and there were walnuts present in the salad, which was not displayed on the salad’s labelling.

However, as SumoSalad’s salads are prepared fresh daily on the premises and are not sold as packaged goods, there is no legal obligation on the business to display information about the presence of walnuts in the salad.

Rimmer took to Facebook after trying “countless times” to contact SumoSalad about her experience.

“I have been hand-balled from one department to another, promised that someone would get back to me, and I have heard nothing.”

“I have tried to be polite to all members of your staff that I have come into contact with throughout this ordeal, and frankly I find it disappointing that I have had to resort to Facebook in an attempt to get an answer from you,” she wrote.

In her post, Rimmer called for SumoSalad to change its labelling to include identification of nuts.

“The way I see it, your legal obligations are one thing, but your business practices and the ways in which you promote yourselves to the general public are another,” she wrote.

The post received over 300 likes, prompting SumoSalad to investigate her claims.

The chief executive and founder of SumoSalad, Luke Baylis, told SmartCompany sensitivity information was available in store and online already, but in response to Rimmer’s experience the franchise would display the information on its labelling from September onwards.

“While we are not legally obliged to display this information on ticketing as our products are prepared daily and are not packaged goods, we have made the decision to do this when we next change our tickets in September,” Baylis says.

He says although the responsibility lies with the individual to manage their own dietary requirements if they have an allergy, SumoSalad wants to ensure what happened to Rimmer does not happen again.

“Life threatening allergic reactions can have catastrophic results. SumoSalad believes this small change to ticketing will go a long way to demonstrating to our customers that their health and wellbeing is of the highest priority to us, and if a similar allergic reaction could be avoided in the future, then it’s worth it,” he says.

For her part, Rimmer told SmartCompany she is “quite proud” of the change she has managed to bring about.

“The whole experience was pretty scary, so to be able to change it for the next person is excellent,” she says.

She says the only reason she went on Facebook was she had no luck contacting SumoSalad over the telephone.

“I had been trying to contact SumoSalad for a week and a half, but you put it on Facebook and you become a high priority, so it shows the power of social media,” she says.

“I thought if I could get a couple of ‘likes’ on this, that would be great, but it went much further than that.”

National law firm Holding Redlich has been “inundated” with calls from businesses which are unprepared for the privacy law changes due to take effect on Wednesday.

The legislation was first passed by Parliament 15 months ago, but many companies still haven’t made the necessary changes to comply with the laws.

Holding Redlich general counsel Lyn Nicholson has been fielding the requests and told SmartCompany there’s been dozens of companies calling in the past week.

“We did a webinar a week ago on the new laws and with just 48 hours’ notice we had 50 people log on and find out what they had to do. And since then we’ve had a number of follow ups,” she says.

“In December we’d done an earlier webinar on the topic which attracted 115 people, and equally we got a lot of follow ups from this too.”

Nicholson says despite having 15 months to prepare, businesses are only just starting to worry.

“It seems many businesses have left it to the last minute to get prepared and the level of interest on this topic has been huge. The deadline is looming and businesses are clearly realising that they face commercial and regulatory risks, including fines if they are non-compliant,” she says.

From March 12 businesses could be fined up to $1.7 million per breach of the new regulations, which aim to bring Australia’s privacy laws up-to-date with technology trends.

The laws will make it more difficult for businesses to collect information about consumers without their knowledge and will also give consumers more control over their ability to opt-out of marketing communications.

The laws will apply to businesses turning over more than $3 million a year and collect personal data.

Other small businesses which are health services providers, are related to a larger business, trade in personal information or contract to the Commonwealth will also need to comply.

However, Nicholson says it’s been predominantly larger businesses needing last minute information on the privacy law changes.

“They [the businesses making inquiries] are across a range of industries and they’re reasonably sized companies. They’re under-prepared and the changes are finally here,” she says.

“They’re also often the Australian branch of a multinational which hasn’t focused on the Australian legislation. They could have really great policies for the European Union regulations, but those then need to be adapted for Australia,” she says.

Nicholson says many companies which only deal business to business tend to be unaware the laws also apply to them.

“Even if you’re predominantly b2b, some of the changes will impact you,” Nicholson says.

Under the changes, the Privacy Commissioner will have greater powers to enforce the legislation.

The commissioner will be able to accept enforceable undertakings, seek civil penalties in the case of serious breaches, and conduct assessments of privacy performance for both Australian government agencies and businesses.

Nicholson says the commissioner has also indicated if a company has failed to update its policies and practices prior to March 12, so long as it can show it’s “working through the updates”, this will be taken into consideration.

But Nicholson says the changes need to be taken seriously and she expects a serious penalty will be delivered within the first six months of the new changes.

“The commissioner will be looking for an opportunity to work through the charges, so I expect there will be a high profile breach within six months,” she says.

“In America every three months there is a significant breach… the Privacy Commissioner has put out enough warnings.”

One of the world’s largest ratings agency, Standard & Poor’s, is back in court appealing the Federal Court’s landmark decision that it was responsible for the losses incurred by 13 New South Wales councils.

The local councils made losses on investments in complex instruments that had S&P’s coveted AAA rating. But the company told the ABC it was “not responsible for investment decisions and investors need to do their own analysis”.

In this Viewpoints, Binoy Kampmark argues investors should know ratings aren’t guarantees on risk; while Gail Pearson makes the case that investors expect the ratings to have a reasonable basis.

Binoy Kampmark

The question here is one of accountability, and what generates it. These are both ethical and legal questions. Credit rating agencies pride themselves on setting measurements about the financial health of assets, and more broadly, of a financial system.

These can have considerable economic impacts, none of which directly affect the ratings agency in question.

During the global financial crisis it became clear that these financial assessments were made without oversight. But is relying on these assessments without due diligence irresponsible in its own right?

It was clear that the credit mechanism being used in this case – the Constant Proportion Debt Obligation notes (CPDOs) – was unstable. Even economists at the US Federal Reserve admitted as much.

That these local councils were relying on just these assessments as statements of fact rather than assertions of opinion should itself be a cause for concern.

Gail Pearson

The issue of the reliance of the local councils is very important. But what were they relying on? They were relying on the expertise of their investment adviser – who was not the ratings agency – and they were also relying on the AAA rating given by the ratings agency.

I’m not sure about Binoy’s distinction between opinion and fact. The local councils knew there was risk in investing. They knew that there was a potential for loss. So they were relying on an assessment by the ratings agencies about the nature of that risk.

Part of the question is whether they were in a position to assess the risk of these very complex products for themselves. They weren’t.

It seems there was nothing in the documentation they received that indicated the extent of the risk. Assessment of investment risk is highly complex and technical. This is why investors rely on ratings agencies.

In any case, the distinction between fact and opinion is not very helpful to those who provide opinions that are not based on reasonable grounds.

We have, in Australia, a very well developed jurisprudence around the prohibition on conduct that is misleading or deceptive or likely to mislead or deceive. This prohibition exists in a number of pieces of legislation.

You fail to live up to this norm of conduct if you express an opinion without reasonable grounds for that opinion. If investors rely on the opinion of those who provide investment advice or those who grade an investment product, they are entitled to assume that the persons providing that opinion have a reasonable basis for what they are saying.

So the question comes back to whether ratings agencies, when they provide a particular rating, have a reasonable basis for saying that it has three gold stars or none.

It is not unlike ratings given in other contexts – think hats for restaurants or stars on travel websites. There must be a reasonable basis for the opinion. That was the issue here.

Story continues on page 2. Please click below.

Binoy Kampmark

Gail makes the vital point on reliance. What were the local councils relying on? Advice from investment advisors, and the AAA rating from S&P.

It is true that opinion matters, and that opinion can then cause the person investing to rely upon it. In that sense, an opinion or a fact is one of those fabulously opaque areas of legal deliberation.

But we should be careful that, in so doing, we are not painting the councils involved as vulnerable and entirely at the mercy of an S&P rating.

While the entire business of ratings is shoddy, they are not, in the words of S&P’s disclaimer, “statements of fact or recommendations to buy, hold, or sell any securities or make any other investment decisions”.

There may be more to be said about the specific parties who marketed the CPDOs and gave undertakings about their reliable value. That would just be patently silly, but it does happen in the world of finance.

The assessment of investment risk is highly complex. But converting assessments into guarantees is as reliable as astrology.

We can choose to pay for those services, but we cannot hope that those predictions will come true. There are simply too many factors at stake.

The law on deceptive conduct is highly developed in Australian commercial law, but there are also instances where a person was irresponsible to be deceived in the first place.

Public bodies like local councils, using the money of ratepayers, must also be wary of the sorts of investments they seek.

The financial crisis, with its revelations of the risk in highly complex investment structures, showed how flawed government and private institutions could be in their decisions. S&P’s ratings work is but a symptom of that culture.

Gail Pearson

But were the local councils irresponsible? It is easy to say in retrospect when they lost a lot of money that they did not do the right thing.

The local councils did understand that they were investing in a product with risk. They believed they were receiving sound advice from a trusted advisor and that this advice was reliable as it was linked to a rating from one of the world’s leading bodies that rates risk in investment products.

To say they were irresponsible might be to say that we can never trust or rely on any expert of whatever kind – very hard in most contexts.

Professor Gail Pearson is a leading academic in the fields of financial services, commercial and consumer laws. She is a former Member of the Fair Trading Tribunal of New South Wales (now Consumer Trader and Tenancy Tribunal), the chief venue for resolving consumer disputes. Dr. Binoy Kampmark teaches core legal courses within the Legal and Dispute Studies program for the Bachelor of Social Science at RMIT University.

This article was originally published at The Conversation. Read the original article.

The Federal Court has found breast imaging provider Breast Check engaged in misleading or deceptive conduct and made false representations about the devices used in its breast imaging services.

Former director Dr Alexandra Boyd was also found to have been knowingly concerned in Breast Check’s conduct.

The proceedings were brought by the Australian Competition and Consumer Commission against Breast Check, which is now called PO Health Professionals.

Breast Check’s imaging services initially involved the use of a device known as the Multifrequency Electrical Impedance Mammograph and a digital infrared thermographic camera to capture images of a customer’s breasts. 

From about February 2011, only the infrared thermographic camera was used.

The court found Breast Check falsely represented that breast imaging done using a thermography device alone, or in conjunction with the MEM device, could provide an adequate scientific basis for assessing whether a customer was at risk from breast cancer and the level of that risk and assuring a customer that they do not have breast cancer.

The court also found Breast Check represented that there was an adequate scientific basis for using the devices as a substitute for mammography when that was not the case.

Justice Barker commented that “it would be entirely reasonable for a consumer to conclude that, where a service of a medical nature is being provided, there would be scientific medical evidence of a sufficient quality to support the use of the equipment used to provide such a service and that the use of breast imaging devices would not be promoted in a way to be contrary to the state of scientific medical knowledge.”

“This case was particularly concerning to the ACCC because Breast Check had represented to women that its breast imaging services could assure them they did not have breast cancer when this was not the case, and that the imaging was a substitute for mammography, when there was no scientific basis for this claim,” ACCC chairman Rod Sims said in a statement.

Melissa Monks, special counsel at King & Wood Mallesons, told SmartCompany the implications of misleading conduct here go well beyond financial loss and brand risk.

“The ramifications of a woman relying on this could have been life threatening,” she says.

“We have seen this type of conduct before with Allergy Pathway making claims its product could cure allergies and these are risky health-related claims with no scientific basis for making them.”

Monks says it is also interesting that the ACCC joined with the Cancer Council Australia and the Therapeutic Goods Administration on an education campaign to urge Australian women not to rely on unproven commercial breast imaging technologies to detect breast cancer. 

“This shows the alternative strategies the ACCC can employee,” she says. 

A hearing will be held in the Federal Court in Perth on May 20 and the ACCC is seeking declarations, injunctions, an order that corrective letters be sent to affected consumers, pecuniary penalties and costs.

SmartCompany contacted PO Health Professionals for comment but did not receive a reply prior to publication.

The Australian Securities and Investments Commission has issued a warning over a loan scam which has been sucking in Australian businesses.

The scam involves borrowers being told that before a loan can be advanced they must first forward money for insurance, tax or other payments to a specified personal account or transfer money to an overseas account using Western Union or similar wire services.

But after borrowers make these payments, they never receive the loan.

The corporate regulator has received reports of borrowers sending amounts in excess of $33,000.

ASIC says the scammers, who are believed to be operating from overseas, appear to have hacked the legitimate websites of some small lenders to target consumers.

They have also set up fake websites and internet banner ads offering fake loans.

The fake loan contracts look like legitimate contracts, but are often made in the name of an unregistered business or a company the scammers do not represent.

Borrowers are misled by the inclusion of identifiers, such as Australian credit licence numbers and Australian Company Numbers, belonging to genuine licensees.

ASIC deputy chairman Peter Kell said in a statement that borrowers should never send any upfront payments before receiving the loan.

“Legitimate lenders who are authorised under the credit laws in Australia will collect upfront costs out of the loan disbursements when the loan is advanced, in accordance with the terms of the loan contract,” Kell said.

“They never ask you to transfer money to a third party or an overseas account before a loan is drawn down.”

Janine Cox, senior analyst at Wealth Within, told SmartCompany technology is making it easier for scammers to lure unsuspecting Australians into handing over their hard earned cash.

“These people have not only lost money, their personal information will be in the hands of the scammers,” she says.

“The people being targeted may be in search of easy credit, where in a normal lending environment banks might put up hurdles to stop borrowers who cannot afford the loans.”

Cox says in some cases people may simply be looking for loans with lower fees, however, history shows that lending rates in Australia are already at long term lows and therefore borrowers already have access to low, competitive rates.

“Australians are best to do their lending with well-known institutions such as the big four banks, or the well-known second tier banks who are listed on the Australian Stock Exchange,” she says.

Cox advises borrowers need to understand the banking process and their rights.

“The most important point is to always do your research thoroughly no matter what the product is and confirm that the company you are dealing with are who they claim to be,” she says.

“Also check with government related websites such as ASIC, Moneysmart and Consumer Affairs for details.”

She recommends reading loan documents carefully and asking questions so that you understand your obligations and if necessary seek advice from a qualified solicitor.

New privacy laws come into effect today and businesses need to review their internal processes and be prepared to pay for customer information in the future according to law firm Finlaysons.

Under the Australian Privacy Principles, which replace the current National Privacy Principles and Information Privacy Principles, businesses could be fined up to $1.7 million for mining big data or sharing or storing information without consent.

The laws apply to businesses that turn over more than $3 million a year and collect personal data.

However, there are some small businesses which turn over less than $3 million that still need to abide by the new legislation.

For example, the laws apply if the business is a health services provider, related to a larger business, trades in personal information, or is a contractor which provides services under a Commonwealth contract.

Finlaysons technology and intellectual property associate Paul Gordon told SmartCompany the new laws will make it harder for businesses to build personal profiles of their customers and anonymous information is useless.

Gordon says it is not inconceivable to imagine people might actually start asking to be paid in the future, just as now quite often a small incentive is offered for completing a customer satisfaction survey.

“Obtaining large amounts of aggregated information is already quite cheap, but information about a particular individual is going to have a much higher value attached to it,” he says. 

“Because of that businesses are going to focus more and more on how to access information and individuals are more likely to think of monetising it.”

Gordon says the new privacy laws are mainly about telling people what info is being collected, why it is being collected and what is being done with it.

“Customers are going to think – is the reward I am receiving in return enough to give up that bit of myself?” he says.

“This is going to be the first step in changes in the way we look at our personal information; with social media people have been giving away personal information quite freely.”

Gordon says businesses need to start to be aware about how they are communicating with their customers and how they are explaining to their customers what they are doing with their information.

“If you can have a good conversation and explain that you are using the information to provide a better and more personalised service, you can make it attractive to them to give you information when they need it,” he says. 

“Businesses should think about whether they will need to reward people for using their personal information in the future.” 

More than 45% of small businesses are unaware of the new privacy laws coming into effect from today and even fewer have made any changes to their business.

A survey conducted by SmartCompany with over 200 respondents found small businesses are largely unprepared for the new laws, which could see businesses cop a $1.7 million penalty.

The legislation, which was first passed by parliament 15 months ago, aims to bring Australia’s privacy laws into line with the current technological environment.

The laws will make it more difficult for businesses to collect information about consumers without their knowledge and will also give consumers more control over their ability to opt-out of marketing communications.

SmartCompany asked businesses if they’d made any changes to address the change in legislation, but 90.1% of respondents said they hadn’t.

Of the 9.9% that had made changes, the majority had only spent a small amount of money updating their technology and internal policies.

More than 63% of businesses surveyed had spent less than $500 making changes, however one company had spent between $10,000 and $50,000.

Of the changes made by businesses, the most common was updating the company’s privacy policy. Many also stated they’d trained staff in their new procedures.

One firm also stated it would be conducting surprise privacy audits in each of its locations around Australia at least once a year.

Of the respondents only 25.8% believed the privacy law changes would impact their business, however Holding Redlich general counsel Lyn Nicholson previously told SmartCompany companies which deal business-to-business are often unaware the laws will apply to them.

“Even if you’re predominantly B2B, some of the changes will impact you,” Nicholson says.

Under the new laws businesses must notify individuals when information about them is collected, how it’s intended to be used and where it is stored.

There are also new requirements regarding data going overseas, as Australian companies will now be responsible if there is a privacy breach offshore and data is leaked.

Of the businesses which recognised the privacy law changes would impact their company, some recognised the laws would impact how they stored their data and their ability to disseminate information, but many were unsure of how they would be affected.

“Possibly. I don’t know enough about it. I have a micro-business,” one respondent said.

While many others also said they weren’t sure, but were looking into the changes.

The laws will apply to businesses turning over more than $3 million a year and collect personal data.

Other small businesses which are health services providers, are related to a larger business, trade in personal information or contract to the Commonwealth will also need to comply.

However, some small businesses which aren’t obliged to abide by the legislation also intend to adopt the policies.

“It’s not mandated as we are a small business, but over time we will try to adapt some into our policies, as they represent good practices anyway,” one respondent says.

Another small business surveyed said the new laws were “common sense” however others complained they just add more red tape and “ridiculous regulation that gums business up and makes people furious”.

“It is quite onerous and the whole privacy thing is getting out of hand. Seriously, most people don't care, they know their information is being collected and used and don’t care,” another respondent says.

The High Court has reinstated an award of damages for breach of contractual warranties in the sale of a business for $1.2 million even though the purchase price for the business was less than $400,000.

The case involved Anne Clark agreeing to buy the assets of St George Fertility Centre, a fertility company controlled by David Macourt for a price less than $400,000.

The sale included a stock of frozen donated sperm, which Macourt warranted was compliant with relevant regulations. Macourt guaranteed St George’s obligations, including the warranties, under the contract.

But upon delivery it became apparent that the stock was not compliant as warranted and was unusable.

Clark was subsequently required to buy replacement stock from the United States at a cost of approximately $1 million and judgment was entered against St George for the breach of warranty, and against Macourt as guarantor, with damages to be assessed.

The primary judge awarded damages for breach of contract in the amount of $1,246,025.01, being the amount that it cost Clark to buy the replacement stock, but this award was set aside by the Court of Appeal.

Valuing the loss

The High Court embarked on an identification of what the loss entailed in the particular circumstances of this case, starting with the principle governing the assessment of damages for breach of a contractual warranty, that a successful plaintiff is to be awarded damages to put them, so far as money can do, in the same situation as if the contract had been performed as promised.

The High Court found the ruling principle governs the assessment of damage not only in a case of a failure to supply goods but also where the goods are supplied as an aspect of the sale of the assets of a business. The value is to be assessed as at the time of the breach of the contract.

The loss was measured not by what Clark had originally outlaid to obtain the unusable stock but the value of what St George had promised to deliver but did not.

The High Court agreed with the primary judge that this was best evidenced by what Clark had in fact been required to pay for the replacement stock.

Mitigation

The High Court found Clark’s loss could not be confined to the expense that she had to incur, but was able to recoup, in acquiring the replacement stock.

The High Court stated that “mitigation” embraced two separate ideas. First, a plaintiff cannot recover damages for a loss which he or she ought to have avoided and second, a plaintiff cannot recover damage for a loss which he or she did avoid.

The High Court determined acquiring the replacement stock neither mitigated nor aggravated the loss suffered by Clark from St George not supplying in accordance with the contract.

The evidence of what Clark had charged or could charge third parties was irrelevant to decide the value of what St George should have supplied.

Clark had been required to purchase the replacement stock to put herself in the position she would have been had the contract been performed.

Whatever transactions she then chose to make was irrelevant in determining the value of what was not provided under the contract.

What this means for your business

As a result of the decision, Macourt is liable for the damages award as St George has subsequently gone into liquidation.

Careful consideration should be given to the drafting of contractual warranties in a sale of business context, particularly where, as in this case, the value of damages could be significantly higher than the purchase price of the stock.

Particular consideration should be given to:

(a) drafting caps on liability for different types of warranties; and

(b) putting into place procedures for managing disputes during the “earn out” period, for example, dispute resolution or mediation processes which apply prior to the “earn out” period coming to an end.

The case also highlights the risk to a guarantor of warranties where there is a risk that the vendor will be unable to meet a claim for damages in the event of breach.

Sylvia Fernandez and Jodi Walkom are a partner and senior associate at law firm Holding Redlich

The Fair Work Ombudsman has commenced legal proceedings on behalf of 10 employees at a regional New South Wales abattoir, which it alleges were underpaid by more than $40,000.

According to the Ombudsman, the workers were underpaid amounts ranging from $347 to $10,257 between March 2011 and July 2013. Eight of the employees were Chinese nationals on short-term visas and two are Chinese immigrants employed full-time.

Labour hire company Raying Holding Pty Ltd and another individual are being taken to court for allegedly supplying the workers in question to the Primo Australia Scone Abattoir.

Fair Work alleges the employees supplied by Raying Holding were often required to work more than 38 hours a week, without being paid overtime or penalty rates.

In a statement Fair Work Ombudsman Natalie James said while the alleged underpayments were rectified last year, legal action was taken because the abattoir workers were deemed to be vulnerable.

“The Fair Work Ombudsman is keen to ensure that overseas workers in Australia are treated with dignity and respect and accorded the same rights as local workers,” she said.

“We seek to guard against employer practices that deliberately take advantage of language difficulties, lack of knowledge of the law, unfamiliarity with government agencies and dependency created by the significant power imbalance when an overseas worker is reliant on the employer signing paperwork.”

Raying Holding faces penalties of up to $51,000 per breach, with a directions hearing listed for March 28 in Sydney.

Warwick Ryan, partner at Swaab Attorneys, says underpayment arises for a variety of reasons.

“In smaller businesses, it sometimes arises because the employers simply don’t have any understanding of their obligations to meet awards,” he told SmartCompany. “For foreign workers, there is that element of just having a job. They’re not going to ask too many questions.”

Ryan says underpayment of workers is a major problem because sometimes an employer is uncertain which award their staff should be covered by.

“I think the key is to simplify the awards system. It’s far too complex.”

In September last year, a Perth cleaning company was fined $343,860 for underpaying six cleaners – the largest penalty awarded by a court for a matter initiated by Fair Work. The employees, who came from places as far as Hong Kong and Ireland, were also reimbursed for more than $22,000 in underpaid wages.

According to Fair Work, almost $1.5 million in underpaid wages and entitlements were recovered for visa-holders last financial year.

With the amendments to Australia’s privacy law coming into force, it is only natural that our attention is firmly focused on the domestic privacy scene at the moment. However, perhaps the bigger challenge for Australian businesses will come from abroad.

With a slow but steady pace, the European Union’s data privacy reform moves forward. One of its key features is that violations of the forthcoming Data Protection Regulation can result in fines of up to 2-5% of the offending company’s annual global turnover – a serious amount of money for most Australian businesses.

Having introduced its trailblazing data protection Directive in 1995, the EU is now looking to modernise its privacy law through a regulation that will harmonise the law across Europe. Several parts of the proposal have been controversial. and progress has been slow since the proposal was first released in January 2012. However, in a European Commission Memo released at the end of January, it was suggested that we may see an agreement on the data protection reform before the end of this year.

Dealing with Europe

So why should Australians care about a new law being introduced on a struggling market on the other side of the world? For the Australian business community, the answer lies in the effect the EU law may have in Australia. The EU has specifically stated that one aim of the reform is to ensure that companies based outside Europe will have to apply the same rules as European companies when they do business on the European market.

Any Australian business offering goods or services to EU residents in the EU will need to take account of the regulation. Similarly, any Australian organisation that processes the personal information of EU residents in the context of “the monitoring of their behaviour”, such as through internet tracking, are required to abide by the proposed EU law. And failure to comply may as mentioned have serious implications.

This also means that an Australian business which happens to sell something to a customer in the EU on a one-off basis must comply with the entire Data Protection Regulation.

Story continues on page 2. Please click below.

Levelling the playing field?

In a March 4 speech, European Commission Vice-President, Viviane Reding, stressed that the proposed Data Protection Regulation “is about creating a level playing-field between European and non-European businesses. About fair competition in a globalised world.”

This argument does not lack merit. However, the idea that the regulation’s wide reach creates a “fair competition in a globalised world” is questionable. In fact, complying with the complex EU data privacy law is likely to be prohibitively expensive for small and medium sized non-EU businesses interacting on the European market on an irregular basis. The result will be that only large foreign businesses, and foreign businesses that do not care about complying with EU law, will be able to afford to enter the European market.

Improved data privacy protection is to be welcomed, but the problem is one of nuance. The proposed EU data privacy Regulation contains many different types of rules; some are aimed at preventing privacy abuse. Such rules are common in privacy laws around the world. There is of course nothing unreasonable about Australian companies wishing to benefit from the European market having to abide by EU law protecting against misuse of personal information.

But other rules are burdensome and require changes to business structures. For example, it seems absurd that an Australian organisation with some limited interaction with EU residents also has to implement potentially costly administrative measures as appointing a Data Protection Officer. Such rules should only apply to businesses that have a substantial presence on the European market.

The solution is obvious. Australia should encourage the EU to adopt more sophisticated rules as to when the proposed regulation applies outside the EU so as to avoid this type of all-or-nothing situation. We need to see the EU distinguish between the types of privacy rules it applies to everyone who deals with EU residents, and those rules that only apply to businesses substantially engaging on the European market.

But then again, Australia also takes an all or nothing approach in our privacy law - so maybe we should start the revolution on home soil.

Professor Svantesson is a Co-Director of the Centre for Commercial Law at the Faculty of Law (Bond University) and a Researcher at the Swedish Law & Informatics Research Institute, Stockholm University.

This article was originally published at The Conversation. Read the original article.

On Wednesday the Coalition government will hold its first red tape repeal day for the year, which could see the controversial Personal Property and Securities Act simplified, along with 8000 other pieces of regulation.

The Coalition has been on a red tape warpath since being elected in September last year and intends to cut $1 billion worth of regulations deemed excessive.

Small Business Minister Bruce Billson told SmartCompany the Coalition is looking at reducing the “regulatory burden and the costs which fall on industry, particularly small business, as a result of the PPSR”.

“We’re changing a couple of things, firstly we’ll be increasing the length of time an item needs to be leased for a business to be required to register it,” he says.

“Currently, hire agreements of 90 days or more must be registered, but that’s being increased to a year.”

Billson says the classification of a motor vehicle under the act will also be altered.

“Currently, a motor vehicle which has a mandatory requirement for legislation is anything which can go 10km an hour or has one or more motors with a total power greater than 200 watts,” he says.

Billson says this has resulted in packaging machines, scissor lifts, excavating vehicles and even stationary cement mixes having to be registered as motor vehicles.

“We’ll be changing the act to say a motor vehicle must have a travel speed of at least 10km an hour and one or more motors,” he says.

The Personal Properties and Securities Registry was first introduced by former prime minister Kevin Rudd in 2009, but only officially came into practice in 2012 and the transition period to the registry didn’t end until late January this year.

The registry came about as a way for businesses to claim their assets if a company using them went into administration; however, for rental businesses this has resulted in extra compliance burdens.

A failure to add an item to the registry can result in these assets becoming available to all unsecured creditors in the event of a business going into administration.

Earlier this year, Dissolve liquidator Cliff Sanderson told SmartCompany there is no legal excuse for not having a business’s assets registered, but there has been a lack of education around it.

“It’s fundamentally not a bad piece of legislation,” he says.

“But it has been implemented with almost no education or information provided out of statutory bodies to the business community. And if you don’t know about it, you can only be a victim.”

Other regulations on the chopping block include requirements for films to have separate classifications for 3D and 2D versions, according to The Australian, and legislation impacting childcare centres and licenced restaurants and cafes.

 Billson says around 8000 pieces of legislation will be simplified or repealed.

“A lot of that goes to redundant legislation, legislative instruments which don’t sit well with reality and a particular favourite of mine which is the changes to paid parental leave payments,” he says.

“We’re having another go and I’ll be introducing legislation to repeal the pay clerk burden on businesses under the existing laws, so it only happens when the employer and the employee opt in, resulting in a $48 million saving for private sector and not-for-profit companies.”

Billson says he’s currently working through the repeals to determine which are most relevant to small business, and invites small business to contact him about “ridiculous regulations”.

“If you have examples of completely nonsensical and over-reaching compliance burdens, send the examples to me or go to the www.cuttingredtape.gov.au  and there is a process through which people can nominate examples of excessive, ridiculous regulations.”

The former owner-operator of a Crust Gourmet Pizza outlet in Maroubra, Sydney, is facing court for allegedly failing to meet the requirements of a Compliance Notice from the Fair Work Ombudsman.

The Compliance Notice related to the alleged underpayment of eight delivery driver employees, totalling over $25,995. The FWO has commenced legal proceedings against Soitiros Theocharidis for allegedly failing to comply with the demand to back-pay the staff.

The alleged underpayments were discovered by Fair Work inspectors during an audit of the business, as part of its crackdown on the fast food sector.

The FWO issued a Compliance Notice to Theocharidis and his private company in September 2013 that required the underpayments to be rectified within 29 days. Theocharidis and his company allegedly failed to meet the requirements of the notice, and no application for a review of the notice was made.

Fair Work Ombudsman Natalie James said the Fair Work inspectors made “extensive efforts to engage with this business operator to try to resolve the matter voluntarily but were not able to secure sufficient co-operation”.

Under the Fair Work Act, business operators must comply with Compliance Notices issued by Fair Work inspectors or make a court application for a review if they are seeking to challenge a notice.

James said employers must understand that compliance notices are designed to help recover wages that should already have been paid, and are not designed to be punitive.

Theocharidis faces a maximum penalty of $5100.                              

Swaab Attorney’s partner and expert in workplace relations Warwick Ryan told SmartCompany this morning the approach by the FWO to take action against the business for allegedly ignoring a Compliance Notice was designed to send a clear message that these notices need to be taken seriously.

He says it can be easier for the FWO to prosecute against a breach of a compliance notice rather than for underpayment.

“For an underpayment case you need to obtain rosters and perhaps evidence from the individuals concerned,” he says, explaining the background work is a lot more arduous.

He says the outcome is “relatively the same” in that a business or owner-operator can still face penalties and a clear message is sent that non-compliance won’t be tolerated.

Ryan says business owners need to be aware they are not immune to personal penalties if they are knowingly involved in underpayment, or do not attend to compliance notice requirements.

“Business owners probably don’t appreciate that they can be prosecuted,” he says.

He says if a company is issued with a compliance notice from the FWO they have two choices.

“They can apply to the FWO to challenge the notice… or they can offer to ensure compliance with the notice.”

Warwick says if there is a large underpayment figure, it could be possible to strike an agreement with staff concerned over a graduated repayment plan, which could be accepted by the FWO.

A hearing for the case is listed in the Federal Circuit Court in Sydney on April 16.

The co-founder of a United States frozen yoghurt chain popular with celebrities has been sentenced to seven years in prison for assaulting a man in Los Angeles.

Young Lee, 49, left the dessert business Pinkberry in 2010, but originally founded the company alongside Hye Kyung (Shelly) Hwang in 2005.

Lee was sentenced on Friday to seven years in prison for an attack in June 2011 on a homeless man, Daniel Bolding, who was begging near a freeway off-ramp in Hollywood.

After opening its first store in West Hollywood, Pinkberry quickly became popular with celebrities such as Hillary Duff and Kim Kardashian.

The entrepreneur is said to have struck Bolding twice on the head and broken his arm, after Bolding showed a sexually explicit tattoo to people in Lee’s car while he was driving.

Lee originally drove away from the scene, but later returned and chased down Bolding, ordered him to apologise and to kneel on the ground, according to The Huffington Post.

Bolding followed Lee’s request, but was then beaten with a tire iron, resulting in a broken arm and cuts to his head.

In November last year Lee had been refused bail by the Los Angeles County Superior Court, with judge Henry Hall saying he was a “significant threat to the community”, according to the LA Times, after he threatened a witness.

SmartCompany contacted Pinkberry, but received no comment prior to publication.

Founder of PR firm CP Communications, Catriona Pollard, told SmartCompany the first thing a business should do to distance itself from negative publicity is be open and transparent.

“Make a statement to the media stating the facts. In this case, this would be informing people Lee left Pinkberry in 2010, no longer has a connection with the business and include a corporate statement about why the products and staff are amazing and so on,” she says.

“The next thing to think about is something companies should be doing all the time – building and maintaining a reputation so they already have a well-established reputation when an issue like this arises.”

Pollard says unless businesses deal with the media in an open and transparent way during a time of crisis, their reputation will come into question.

“If a company makes a decision not to talk to the media, there must have been a decision behind the scenes people aren’t aware of, but I think the majority of the time the chief executive should make a statement, or else it appears they’re hiding something, or that the company doesn’t deem the issue important enough for the chief executive to be involved” she says.

“The other thing too which helps companies distance themselves is to do some positive news stories highlighting their products, or community and any initiatives with their staff. They can also focus on local news stories and talk about what the stores are doing in their local area.”

Pollard says during a period of negative press, social media is crucial, but it needs to be used in the right way.

“Social media is also important, but it needs to have the same approach as with PR. In a time of crisis there are often knee-jerk reactions like shutting the Facebook page or deciding not to respond to any comments,” she says.

“There needs to be a team of people monitoring social media and actually having a chain of responses around what comments to react to and what not to.”

Pollard says ultimately companies need to just be honest and do their best to “ride out the storm”.

“In any crisis, if it’s not handled well there is the potential for a permanent impact on the organisation, however I suspect in this case there won’t be. The key is learning to respond with a strategy informed by a long-term view, not with knee jerk reactions,” she says.

Australia’s consumer watchdog is warning the public to beware of a scam targeting those interested in the latest developments of missing Malaysian airlines flight MH370.

For almost two weeks the missing plane has captivated the attention of people worldwide as search crews across the globe hunt for debris of the plane, with the latest efforts focused on a section of the Indian Ocean 2500km from Perth.

Scammers are now capitalising on the likely tragedy, sending fake tweets, email messages and Facebook posts with supposed breaking news about the missing plane which infect computer systems with malware.

Australian Competition and Consumer Commission deputy chair Delia Rickard is warning businesses if they’re security systems aren’t up to scratch, they could fall victim.

“The first thing businesses should do is ensure they have a good firewall in place and their systems are up to date with the latest anti-virus and malware software,” she told SmartCompany.

With so many Australians awaiting news of the missing plane, employees or business owners could unwittingly infect their work computer system with malware by clicking on a fake story.

“If the business thinks its security has been compromised, it should run a virus check and if in doubt contact its security provider,” Rickard says.

However, Rickard says it’s a “cat and mouse game” between security software providers and scammers.

“Software providers are constantly trying to stay a step ahead of the scammers, but there are times when the scammers get ahead,” she says.

The ACCC has received reports of an email and social media message being sent with random links supposedly to videos of MH370.

The messages include text which reads: “Malaysian Plane (MH-370) Has Been Found Near Bermuda Triangle. BBC News: Recent Video Released!”

Rickard says when a person clicks on the link they are taken to a seemingly legitimate news site branded with logos to watch the video, but to view it they’re asked to download software to view it in the correct format.

At this point the scammers have either set up the malware to be downloaded immediately when the person clicks on the link to view the footage, or the ads appearing on the site could be infected.

Once the malware is installed, scammers use it to gain access to a person or business’s personal information including financial details and identification.

Rickard says these types of scams have occurred before, such as during the Boston Marathon bomb tragedy and at the 100^th anniversary of ANZAC Day.

“There is no opportunity scammers won’t take advantage of. If you receive a message out of the blue, be it via Facebook, email or social media which contains links and you don’t know the person who sent it, it could be a scam,” she says.

“If you’re interested in the latest information, go to a legitimate news website, they will be onto it as fast as anyone else.”

An employee of the Melbourne Taxi Club has been found guilty of obtaining financial advantage by deception, after she tricked colleagues into believing she had cancer.

In 2006 Chantal Hoffman falsely told a co-worker she had uterine cancer and then allowed her colleague to raise money to help her pay for treatments.

Hoffman, who had been working in accounts at the MTC, received $5265.30 from 64 MTC members.

She also evaded debts of more than $100,000 related to property investments by claiming she had cancer and banking cheques she knew wouldn’t be approved.

The mother-of-two pleaded guilty to six counts of obtaining financial advantage by deception, one count of obtaining property by deception and one count of perjury in the County Court on Friday.

Upon entering a guilty plea, Hoffman was terminated from her job at the MTC.

The Victorian County Court sentenced Hoffman to a wholly suspended jail term of two years and two months for her actions, thanks largely to her guilty plea.

The maximum penalty she faced for obtaining financial advantage and property by deception was 10 years and 15 years in prison for perjury.

Judge Jane Patrick said the money loaned and donated to Hoffman for cancer treatment was used for other purposes, which was a serious deception.

Hoffman was found to have evaded her debts to relieve pressure she was under to repay other debts which had amounted over the course of the year.

The deception was orchestrated by Hoffman who provided cheques to banks and others she owed money to, even though she knew she had insufficient funds to cover the cheques.

On some occasions Hoffman was found to have breached the trust of her employer by using their cheques and signing them, or on one occasion deceptively getting someone else to sign the cheque.

When police first questioned Hoffman about her conduct she denied all the allegations on numerous occasions.

Despite acquiring substantial debts, Patrick found Hoffman’s main motivation was not monetary gain.

Patrick said Hoffman wished to appear to be in a better financial position than in reality and tricked a co-worker and later friend into believing she had access to funds she did not.

In the six-year delay between her wrongdoings and the court case, Hoffman remarried, had children and maintained employment. Patrick found this suggested, in conjunction with positive character witnesses, there were strong prospects of continued rehabilitation.

However Hoffman was said to have not expressed genuine remorse for her actions and general deterrence was needed to discourage others from taking advantage of the charity of others.