10 June 2016

Lawyer scam

You might be interested in the latest email scam I received. Lawyers are often targeted with these and while the story differs (debt collection, family law settlement, purchase transaction...) the scam is the same - the lawyer ends up out of pocket and in trouble with the trust account inspector.

What would have happened is that:

  • we would have received a cheque from a purchaser to deposit into our trust account;
  • told by our "client" to deduct our professional fees; and
  • remit the balance to the vendor.

If you do your job properly and ensure true cleared funds are available then you'll get a letter from your bank telling you the cheque is fake or has bounced.

However, the "client" will badger you to remit the balance from your trust account as soon as you have provisional cleared funds. Weeks later perhaps, because the cheque might be a foreign one, the provisional clearance will be withdrawn, and you now have paid a scammer a lot of money and you have no recourse. You've also probably breached the trust account rules because you've 'used' other client funds to pay out of the trust account or the trust account is now overdrawn.

You won't breach professional responsibility by ensuring you have true cleared funds in your trust account despite your client telling you it's urgent, unless you've already agreed to remit the funds before they're properly cleared.

The language of these emails is usually a bit of a giveaway - poor English, too much detail to make it sound legitimate, unnecessary detail and use of inappropriate terms. Finally, if you inspect the email headers the email address will be a variant of a real person's name but at a free account such as gmail or hotmail.

Of course, both Anchorage Marine Holdings Pty Limited and Kramer Marine Services exist, but are not in any way at all involved.

Steer clear.

Sent: Friday, 10 June 2016 3:59 AM
Subject: Re: Hello

Dear {XXX} ,
We appreciate your prompt response. Our Company is selling a “200' x 48' x 10' Deck Barge and 1,500 hp Tug Combo” to a buying company in Australia. We need a lawyer that will help us draft the sales & purchase agreement for the transaction. As part of our reason to hire your firm is to prepare the agreement that will form a more legal framework in this process, so that our company can take any legal action against any payment default, hence it is going to be a cash transaction. I have attached the Barge images and description for your review, Please advise on your rate, retainer/legal fee and forward us your engagement letter/POA for us to review and if satisfied I shall have it signed and email back to you, sales price: $1,127,820 ( One Million One Hundred and Twenty-Seven Thousand, Eight Hundred and Twenty Dollars).
Kindly, see below the proposed buyer’s name for your conflict check:
Anchorage Marine Holdings Pty Ltd
Suite 15 North Sydney, NSW 2060, Australia
Best regards,
Robert Rush,
Kramer Marine Services
36 Osborne Crescent,
Oakville, Ontario, L6H 1G1 Canada.
Phone: 813-642-6418

Scam email.

15 February 2016

Giving notices under a contract

In-house lawyers with standard contracts should review the Notices clauses in their contracts since Australia Post changed its delivery guidelines.

Most contracts have a clause that says that notices that need to be given under a contract will be deemed to be received, if posted and received in Australia, after three days. However, Australia Post has changed all that.

If you put a regular (currently $1) stamp on a letter for domestic delivery, then Australia Post says it will be delivered within 2 to 6 business days from the day after posting.

Note that Australia Post says "Delivery times apply from the day after posting".

If you add 50 cents you can send a Priority letter which should be delivered 1 to 4 days from the day after posting.

Action you need to take: Do your contracts allow sufficient time for delivery of postal notices? If you need to respond within a very short timeframe you don't want to lose some or even all of that time because you simply haven't received it.  You may want to specify that notices must be sent at least by Priority letter, and deem receipt 4 days from the day after posting. You might even require a faster service option such as email, but make sure that clause is properly drafted as well.

09 February 2016

State Owned Corporations may need to take care when changing approved material lists of products that may be used in a utility network

Many power, gas and water utilities maintain lists of products that are approved to be used on their network. Contractors may only use products from these lists when connecting customers or building or maintaining infrastructure. Could a change to such a list give rise to a cause of action by a supplier whose products were removed?

In a recent interlocutory judgement, the Supreme Court of NSW held that a supplier had shown that there are serious questions to be tried in relation to whether the electrical utility’s decision to remove products from its list:

  1. is an administrative decision which is reviewable on the grounds of denial of procedural fairness, or improper purpose; and
  2. could form the basis, together with representations made by the defendant to the plaintiff, on which the plaintiff is said to have relied, of a promissory estoppel such as would prevent the defendant acting on the decision in accordance with its terms.

In Power Grid Cables Pty Ltd v Endeavour Energy [2016] NSWSC 34 (8 February 2016) Justice Adamson refused the application for an interlocutory injunction, but nevertheless found that there were serious questions to be tried.

A competition issue was also raised, but the court wasn't ready to deal with it in the interlocutory hearing:
In these circumstances, it is unnecessary to form, or express, any view about whether there is a serious question to be tried whether the defendant’s conduct is otherwise unlawful on the ground that it infringes the prohibition on third-line forcing. In any event, it will be necessary to consider whether the proceedings, or some aspect of the proceedings ought be transferred to the Federal Court as it involves a “special federal matter”: ss 3 and 6 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth).
The Competition and Consumer Act 2010 issue will be an important issue for utilities, as they have an obligation to ensure the reliability and safety of their networks in a cost-effective manner. It seems unlikely from a policy perspective that State owners would permit competition issues to interfere with those obligations. It seems equally unlikely that the courts would find that it is a form of third-line forcing, but the decision will provide welcome clarity.

The substantive hearing on 2 March 2016 is likely to be of great interest to Australian utilities and their suppliers.

27 January 2016

Australians have access to a number of on-demand video services, such as Presto, Stan and Netflix, and these are changing the way we consume video entertainment.

Netflix in particular has a global reach, and you may not know that your "Australian" Netflix account is really a global account, and the content you see varies, depending on what country you're in when you log in.

Netflix will happily let you use your account all over the world, but if some content has not been licensed for a particular country, then you won't even see it in search results while you're in that country.

It's all about maximising investment in creating content, which is obviously usually a sensible idea. If you pump capital into something, you're usually doing it to get a commercial return.

Here's an example; Miss Fisher's Murder Mysteries, made in Australia, funded by the ABC, Film Victoria, Screen Australia and AII3Media International, and shown on the ABC. But here's the issue: Seasons 1, 2 and 3 are available on Netflix in the USA, but only seasons 1 & 2 are available on Netflix in Australia.

Why? Because Netflix hasn't been able to obtain the geographic rights to make season 3 available in Australia. Why is that? I don't really know, but I imagine it is because the rights owners such as the ABC wants to exploit season 3 further in Australia, before licensing it more cheaply to Netflix for Australian viewers. The ABC probably doesn't see any particular value in trying to exploit the USA rights itself, and has let Netflix and possibly others do that instead.

As you can see, Netflix doesn't make these decisions - the owners of the rights decide where Netflix can exploit the content. The contract between Netflix and a content owner will no doubt have a clause in it requiring Netflix to use best efforts to prevent content being watched in unlicensed countries.

Some customers of Netflix are aware of these geographic restrictions, and use services such as Getflix to convince the Netflix servers that they are in another country.  A Getflix customer can (at least for the time being) be in Australia but appear to be in any of about 20 countries. It also works in reverse, so you could be in Vietnam (where you can't watch Netflix at all) but appear to be in Australia.

Is this geo-dodging legal? It's probably not a breach of the Australian Copyright Act 1968, because simply watching a streamed video at home is not one of the rights controlled by copyright law here. Copyright is more about copying, reproducing, performing publicly and adapting works. The Act does deal with broadcasting and unauthorised decoding of subscription broadcasts, but Netflix isn't a broadcaster within the technical meaning of that term.

So it might not be a breach of legislation to do this, but it is most definitely a breach of your contract with Netflix. Clause 4.3 says:

4.3.   You may view a movie or TV show through the Netflix service primarily within the country in which you have established your account and only in geographic locations where we offer our service and have licensed such movie or TV show. The content that may be available to watch will vary by geographic location and will change from time to time. The number of devices on which you may simultaneously watch depends on your chosen subscription plan and is specified on the "Your Account" page.

You should note though that using, say, Getflix is not the problem - the problem is watching something that is not licensed in your geographic location.

If Netflix catches you breaching the contract, it is entitled to give you notice of the breach, and its intention to terminate the contract if you don't remedy the breach by stopping watching videos you shouldn't be watching.