In considering these factors, Cowdroy J held that iiNet did have the power to cancel or suspend the accounts of users, but that it would not have been reasonable for iiNet to have acted on the AFACT Notices.
The appeal therefore turned ultimately on whether it would have been reasonable for iiNet to act on the AFACT Notices by warning infringing users, or suspending or terminating their accounts.
Emmett J found that AFACT Notices did not contain sufficient information upon which iiNet could rely.
In addition (and more importantly according to Emmett J), the Copyright Owners did not offer to reimburse iiNet for any costs incurred in complying with the demands made in the AFACT Notices.
His Honour also stated that iiNet received so many infringement notices (both the AFACT and Robot Notices), that an automated system of warnings, suspension and termination would be required in order to deal with them.
Like Emmett J, Nicholas J held that the AFACT Notices were not sufficient to provide iiNet with "knowledge that its network was being utilised by users of particular accounts to infringe [the Copyright Owners'] copyright in the identified films", although His Honour noted that the AFACT Notices "must have given [iiNet] reason to suspect that such infringements had occurred".
25) According to Jagot J, iiNet could and should have relied on the information provided by the AFACT Notices and that by failing to do so, the infringement was authorised.
It was argued by iiNet that it was not able to identify the infringing users from the AFACT Notices because it would have been unlawful to do so.