New HCA Judgments: Miller; Kostas & Travelex

Three new decisions were handed down today.  Appeal allowed in all of them:

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 31

The High Court has allowed this appeal from the Victorian Court of Appeal.

The appellant, Miller, is an insurance broker which organised an insurance policy for a company called Consolidated Timber. The broker organised for Consolidated Timber to loan the premiums through a premium funding loan with the respondent, BMW.  Under premium funding loans, it is common for the insurance policy to be cancellable, thereby giving some protection and security to the lender in the case of default. The policy in this case was not cancellable. The borrower, Consolidated Timber, defaulted on the loan. BMW brought an action against Miller claiming that it had engaged in misleading and deceptive conduct by providing documentation that suggested that the insurance policy was cancellable or by not disclosing the fact that the insurance policy was not cancellable.

The Court (Heydon, Crennan and Bell JJ (French CJ and Kiefel J agreeing) found that the certificate of insurance that was inspected by BMW did not represent that the policy was cancellable simply because it appeared to relate to property insurance (a type of insurance that is often cancellable) (at [87]). The Court also found that notwithstanding some ambiguity in the documentation provided by Miller to BMW as to the precise nature of the policy, the failure by Miller to advise that the policy was not cancellable was not misleading. In so finding the Court had regard to the commercial knowledge and experience of the parties as well as the extent of investigations by BMW.

The Majority decision concerns itself primarily with the legal consequences of the facts, but there is some more general discussion of the law of ‘misleading silence’ in the joint reasons of French CJ and Kiefel J.

Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32

The High Court has allowed this appeal from the Court of Appeal of the Supreme Court of New South Wales.

The appellants, Mr and Mrs Kostas, hired a building company to build on a property. A dispute arose and litigation ensued between the Kostas and the builder’s insurers, HIA. The claim was brought to the Consumer, Trader and Tenancy Tribunal. The Tribunal made a finding, before the hearing of the full claim, that the contract had been repudiated by the Kostas.  A necessary step in reaching this conclusion was to find that the builder had properly served on the Kostas an application for extension of time to build the property in accordance with the contract. HIA appealed on the ground that the there was no evidentiary basis before the Tribunal to find that such service occured. The relevant Act provided for statutory appeal from the Tribunal in relation to “a question with respect to a matter of law". The issue for the High Court was therefore, whether the sufficiency of evidence to make a finding is a question with respect to a matter of law for the purposes of the Act.

The Court (Hayne, Heydon, Crennan and Kiefel JJ (French CJ reaching the same conclusion) found that a finding by the Tribunal that there was material properly before it which supported the conclusion that service had occurred was “a question with respect to a matter of law" and was therefore capable of being the subject of appeal. The Court found that there was no such evidence before the Tribunal and said that (at [91]) “[w]hat amounts to material that could support a factual finding is ultimately a question for judicial decision. It is a question of law.” French CJ said that the wording of the statutory appeal would allow appeal from questions of mixed law and fact (at [25]).

Travelex Ltd v Commissioner of Taxation [2010] HCA 33

The High Court has allowed this appeal from the Full Court of the Federal Court.

Travelex sold foreign currency at a store on the departures side of the international customs gate at Sydney airport. It sought to claim input tax credits for GST purposes for sales at that store, which could only occur if the supply was “GST Free” as defined in the Act. The question for the Court was therefore whether the sale of foreign currency is a taxable supply in relation to which GST attaches. Relevantly to the proceedings, a supply is “GST free” if (a) it is not a supply of goods or real property; (b) it is a supply made "in relation to rights"; and (c) "the rights are for use outside Australia". The parties agreed that this was a ‘supply’ and also that (a) and (c) were satisfied. The argument therefore centred on whether this was a supply made "in relation to rights".

The lead judgment was written by French CJ and Hayne J (Heydon J reaching the same conclusion) (Crennan and Bell JJ dissenting). It was said that the foreign exchange cannot be described merely as the sale of a “token” of foreign currency.  Rather, that token represents rights, including the right to present it as legal tender in the country on its face, without which the token would be worthless. Because the foreign currency attaches such rights, there was the necessary supply "in relation to rights". Accordingly, the supply was “GST free”.