FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Valve Corporation (No 4) [2016] FCA 382

ORDERS

THE COURT ORDERS THAT:

1.    The respondent’s application be dismissed.

2.    Costs be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

EDELMAN J:

Introduction

1    This is an application by the respondent, Valve, for what is effectively a split remedies hearing within a split hearing of liability and remedies. In numerous areas of the law there is a policy against the fragmentation of hearings. But since this application arises in a relatively novel circumstance, these oral reasons will be published.

2    In October 2014, a judge of this Court made orders, by consent, separating the hearings of liability and remedies in this matter. The remedies sought by the applicant, the ACCC, include declarations, injunctions, pecuniary penalties, disclosure orders, adverse publicity orders, non-party consumer redress, a compliance program and costs.

3    A trial of liability was held on 7 to 9 March 2016. On 24 March 2016, I delivered reasons for decision in relation to the questions of liability: Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196. At the handing down of my reasons for decision, junior counsel for Valve foreshadowed an application for some remedial orders, but not others, to be made. He submitted that I should make only declaratory orders in order to facilitate an application for leave to appeal by Valve. The foreshadowed application was adjourned until today following the publication of my reasons for decision.

4    Valve now seeks declarations and costs orders only for the purposes of facilitating the appeal. There are a number of reasons why this application was ill conceived and, if successful, would be likely to multiply the costs of this litigation for both parties. An immediate example is Valve’s premiss that it requires leave to appeal from any declaratory orders that I make. Valve submitted that it would seek an oral hearing for leave to appeal. But leave might not be required. If it were not required, then an oral leave hearing would add yet another layer of costs for the parties: see Tag Pacific Limited v McSweeney (1992) 34 FCR 438.

5    For nine reasons, I refuse the application.

Reasons why the remedies hearing should not be split

6    First, there are many cases in which this Court has proceeded to a hearing concerning remedies before an appeal. In some of those cases, a contravening respondent would undoubtedly have formed an intention to appeal prior to the remedies hearing. Counsel for Valve was not aware of any authority over the decades of a regime involving civil penalties in which an opposed application for a split remedies hearing had been successful after a split liability hearing. I am also unaware of any authority.

7    Secondly, the premiss upon which Valve seeks declarations may be misconceived. That premiss is that any hearing concerning the remainder of the remedies would be stayed if an appeal from the declarations were proceeding. In ASIC v Edwards [2005] NSWSC 1278 [18], Barrett J refused to defer a hearing concerning penalties pending appeal from declarations. His Honour held that he was “not satisfied that completion of the proceeding by hearing of submissions on penalty and a decision on that matter in the normal way will entail relevant prejudice to the defendant”.

8    Thirdly, there may be difficulties in making the declarations sought independently of the other remedies. The form of the declarations may have significant effect upon the terms of any injunctions to be granted. They also may affect, to varying degrees, the orders that I make concerning disclosure orders, adverse publicity orders, non-party consumer redress, or the terms of a compliance program. These matters would very conveniently be considered together.

9    Fourthly, I am not immediately satisfied that the declarations sought by Valve are necessarily in the appropriate form. Although Valve proposed declarations in a similar form to those that were sought by the ACCC, and although the ACCC does not raise any substantial objections to that form, declarations, even those made without opposition, should be formulated by reference to the findings of the Court not by reference to a pleading. At the very least, a determination will need to be made in relation to two alternative forms of part of the declaration.

10    Essentially, what Valve seeks is not to defer a hearing about remedies but to conduct a hearing, albeit a brief hearing, concerning one remedy only. In other words, Valve wants to split the remedies hearing. In Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1, 55 [168]-[170], Kirby and Callinan JJ remarked upon some of the difficulties in conducting a hearing concerning a subset of the issues. Those remarks apply a fortiori where what is sought is a split hearing within a split trial. One of the observations made by their Honours at 55 [169] was that “[a] party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court’s, rather than the parties’, interests”.

11    Fifthly, and another matter about which Kirby and Callinan JJ remarked in Tepko, the splitting of issues raises the additional potential for further appeals. The course proposed by Valve raises the potential for two different appeals concerning the same subject matter. The first appeal would potentially be from the proposed declarations. If that appeal were refused, and the deferred hearing concerning the remaining remedies were then conducted, then there would be potential for a second appeal possibly requiring another panel of appeal judges to consider the same underlying facts in relation to different remedies.

12    Sixthly, even further inefficiencies would be created if the unsuccessful party on appeal sought special leave. Counsel for the ACCC, with her customary diligence, identified a transcript of a special leave application in Baxter Healthcare Pty Ltd v Australian Competition and Consumer Commission [2009] HCATrans 20 where the High Court special leave panel remarked upon the difficulty of entertaining an application for special leave before a hearing concerning penalties. Since Valve assumes that leave would be required to appeal from a declaration that I made prior to the remainder of the remedies hearing (and hence Valve would make an application for leave as well as any appeal), then if special leave were sought after an appeal in this case, and if it were refused on the same basis as Baxter, then the inefficiency in splitting the remedies hearing could involve potentially six rounds of appellate level hearings (leave to appeal, an appeal, an application for special leave, another hearing concerning penalties, another appeal, another application for special leave, and another appeal). But if all remedies issues were dealt with at once then, at the very most, there could be no more than two or three appellate level hearings.

13    Seventhly, Valve did not give any consideration to the possibility that the ACCC might appeal from any of my orders. For instance, at the liability hearing the ACCC was unsuccessful in relation to its claims that Valve had contravened the Australian Consumer Law in relation to statements made to three individual consumers in online chats. The ACCC has chosen to wait until all orders, including penalties, are made before reaching any final conclusion about an appeal. If an appeal were brought by the ACCC then the complexity and number of hearings described in the previous paragraph would be increased even further.

14    Eighthly, Valve relied upon affidavit evidence asserting that its costs in preparing for a remedies hearing will “far exceed” its costs in relation to a “one day plus” appeal. This was an assertion that I doubt to be correct. The assertion was based in part upon the statement that a primary ground of appeal involves the construction of s 67 of the Australian Consumer Law. But the draft proposed grounds of appeal are not limited to that question of law. Rather, as far as I can tell, the proposed grounds of appeal seek to reagitate almost every legal issue that was raised at the trial of liability.

15    I accept that if Valve were successful on an appeal, and if any application for special leave by the ACCC were refused or any appeal to the High Court was dismissed, then there could be a saving to the parties of the cost of a one day penalty hearing and the significant preparation time for it. But the possibility of that saving is disproportionate to the possible cost and time involved in the circumstances of multiplied appeals that I have described.

16    Ninthly, the draft grounds of appeal which are annexed to Valve’s affidavit evidence illustrate some of the problems and confusion that is likely to arise if an application for leave to appeal is commenced at this stage. I have already mentioned the issue concerning whether an application for leave to appeal must be brought. Another issue is that Valve’s draft notice of appeal which accompanies its draft application for leave to appeal also seeks to appeal from both my reasons for decision on 24 March 2016, as well as any orders. Parties appeal from orders, they do not appeal from reasons. There is an obvious reason for this. A judgment is the formal order which disposes of, or deals with, the proceeding. Reasons do not require parties to do anything, nor do they directly affect a party’s rights. If authority were needed for this proposition then it can be found in the cases cited by counsel for the ACCC: Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 3) (1998) 86 FCR 374, 378 (Beaumont J); Maughan Thiem Auto Sales Pty Ltd v Cooper [2013] FCAFC 145; (2013) 216 FCR 197 (Katzmann J with whom Greenwood and Besanko JJ agreed); Qube Ports Pty Ltd v McMaster [2016] FCA 59 [19] (Buchanan J).

17    After delivery of these oral reasons, senior counsel for Valve explained that the proposed draft grounds of appeal (which had not been signed by him) were not intended as an appeal from my reasons. In light of this submission, I accept that this was merely infelicitous drafting. But until they are amended, the potential for confusion remains.

Conclusions

18    For these nine reasons Valve’s application is refused. This application was more than merely directions. It was supported by a substantial affidavit. It had the potential to have serious effect on the orderly conduct of these proceedings and any appeal. My preliminary view was that it should be dismissed with costs. However, senior counsel pointed to the necessity for the parties to attend the hearing in any event in relation to programming orders. On any view, the ACCC should not have all of its costs of the hearing. Senior counsel for Valve also pointed to delays by the ACCC in relation to responding to proposed programming orders. Counsel for the ACCC sensibly was content for costs to be reserved.

19    A separate and unrelated matter raised during the course of the hearing was an error in paragraphs [40] and [233] of my reasons for decision (Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196). It is common ground, and I accept, that I made an error in those paragraphs when I referred to the 2013 SSA as “(3 July 2013 to 10 November 2013) (Court Book pp 529-533)”. Those pages of the Court Book refer to the 2013 SSA. My error was the reference to 10 November 2013. I cannot recall the reason why I wrote 10 November 2013, but I accept the submission by senior counsel for Valve that the error was probably derived from the opening submissions by counsel for the ACCC. In her opening submissions counsel made the simple error of referring to 2013 rather than 2014. In the statement of agreed facts, the parties had agreed that that SSA was accessible on the Steam Website from 3 July 2013 to 10 November 2014. I will correct my reasons for this slip. However, this does not mean that Valve’s liability will extend to 10 November 2014, in circumstances in which the ACCC’s application only sought to establish liability for the period up to 28 August 2014.

Associate:    

Dated:    15 April 2016