Thursday, September 30, 2010

Poniatowska: the special leave fast lane

On Monday, the High Court fast tracked a special leave application for an appeal by Malgorzata Poniatowska (transcript here). Malgorzata first made headlines when she won a record breaking sexual harassment payout from Hickinbotham's Real Estate for some seriously derogatory comments made by her employer. Unfortunately for her, the Commonwealth Government must follow Federal Court rulings because she was promptly charged with failing to report her income from her employment to Centrelink. She originally pleaded guilty to 17 charges of obtaining a financial advantage, but she then appealed to the Full Court of the South Australia Supreme Court, who - surprisingly to most - set aside the convictions: Poniatowska v DPP (Cth) [2010] SASCFC 19.

Doyle CJ and Duggan J found that liability for an omission under the Criminal Code requires a legal duty, as is the case at common law. Their Honour's said that no legal duty had been identified by the prosecution and that therefore the complaints could not be sustained.

Obviously, this decision disrupts a great deal of Centrelink prosecutions around Australia, given that "obtaining a financial advantage" is the principal weapon in the Centrelink prosecutions' arsenal. And whilst common lawyers tend to abhor codification of legal rules that departs from well established common law traditions, as Sulan J said in dissent, the intention of the Parliament was clearly directed at capturing offences of this very type. It's a difficult question and, accordingly, at the High Court hearing on Monday, Hayne J fast tracked the case to the November special leave sittings where, I suggest, it will be likely to receive leave. Watch this space.

More from Heydon J waxing lyrical

I‘ve posted before on Heydon J’s increasing predilection for sexing up his judgments. In the decision handed down yesterday of Travelex Ltd v Commissioner of Taxation [2010] HCA 33, the High Court had to decide whether foreign currency was just the paper on which it was written or whether there was something more to it.

According to Heydon J (at [47]):

The rights supplied were the rights enjoyed by the holder of the currency as created by the statute law of Fiji. The handing over of the pieces of paper constituted, evidenced, and was not capable of disaggregation from, the supply of rights. Apart from those rights, the pieces of paper had little value. They might have been used to stop an uneven table wobbling, or to jam shut a loose door, or to amuse small children, or to light a cigar. If the currency included coins, the coins might have been used to turn stiff screws or to lay on railway lines for the purpose of being flattened. But uses of that kind, which are very remote from their real purpose, would not prevent both the pieces of paper and the coins from being almost worthless. The supply of the currency was a supply in relation to the rights it gave because these rights constituted the pith and substance of the transaction.
(Emphasis added.)

Wednesday, September 29, 2010

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”.

Thursday, September 23, 2010

More Commentary on Dickson

I posted yesterday on the High Court decision in Dickson v The Queen [2010] HCA 30. In addition I would recommend taking a look at the interesting discussion at Quis Custodiet Ipsos Custodes and Don Mathias’s Blog, as well as an interesting comment to my post from Jeremy Gans.

New HCA Judgment: Dickson v The Queen

This decision was handed down today:

Dickson v The Queen [2010] HCA 30 

The High Court has unanimously allowed this appeal against a decision of the Victorian Court of Appeal. The case concerns s 109 of the Constitution which invalidates State legislation if it is inconsistent with Commonwealth legislation. The appellant was a former Federal Police officer who was convicted of conspiracy to commit theft of a large quantity of cigarettes from a Commonwealth Customs’ storage facility. The property which housed the facility was owned by a company called Dominion and because the owner of the property where the theft occurred was not a Commonwealth agency, the appellant was charged under state legislation. That legislation adopted the common law requirements of conspiracy. However, the Customs Department was leasing the property for storage. Accordingly, the cigarettes were also in the “possession” of Customs (being a Commonwealth agency) and so the appellant could have been charged under the Commonwealth Criminal Code. This was important because the Commonwealth Criminal Code provided for a far more limited test for the requirements of conspiracy. The High Court said that the State Act was inconsistent in so far as it purported to provide for an offence in such a case. It was said that the Commonwealth Act provided for a charge prohibiting a conspiracy to steal Commonwealth property, which charge specifically limited the requirements of conspiracy. Accordingly, any State Act that purported to provide for a charge in the same circumstances, but with fewer requirements would impose greater obligations on the accused and therefore “alter, impair or detract” from the operation of the Federal Act. Accordingly the state law was directly inconsistent with the Federal law and therefore invalid under s 109.

It is interesting to note that the Court relied on direct inconsistency rather than the “covering the field” test. Obviously it would seem easier to simply say that the Federal Act evinces an intention to be exhaustive on the subject of conspiracy to steal Commonwealth property. Instead the Court said that, by restricting the requirements of the charge, a state law which was wider than those restrictions was invalid. This case therefore has potentially wide implications to other offences of concurrent state and federal jurisdiction. This is particularly so given that the Court considered it relevant to the requirements of the offence that s 80 of the Constitution would require the jury verdict under Commonwealth law to be unanimous whereas state law would allow a majority verdict. As this is the case with most offences these days, an argument could be run that the Commonwealth Act need always be used if there may be concurrent jurisdiction. I don’t think the Court’s language was so wide as to suggest that the requirement of a unanimous verdict would be sufficient in itself to show that a state law “alters, impairs or detracts” from the operation of a Federal Act, but I’m sure there will be argument in Courts around the Country that it is. In any event, the moral of the story is that if a client of yours has been charged with a state offence, it is worth finding out whether the client has also committed a Commonwealth offence in so doing (eg it was done over the internet). You might be able to attract a charge which requires a unanimous verdict.

Monday, September 6, 2010

September Special Leave Rundown

Plenty of special leave grants on Friday, they were:

Byrnes v Kendle [2009] SASC 385 (and subsequent decision at (No 2) [2010] SASC 64)

Leave was granted in an appeal from the Full Court of the South Australian Supreme Court. The case concerned a written “acknowledgement of trust” by Kendle in favour of Byrnes over half of a residential property which was then leased to Kendle’s son. The Court found that there was a declaration of trust but that Kendle’s failure to collect rent from the son did not amount to a breach of duty by Kendle as trustee and, in the alternative, Byrnes had acquiesced in the breach. The key issue raised in this decision is the determination of the scope of a trustee’s duties by reference to the nature of the trust.

In a subsequent hearing of the appeal, the appellant tried to argue that the Full Court should reopen the case because it proceeded on an incorrect assumption of fact. This raises what is sometimes a delicate distinction between matters that are sufficient to reopen a case, and matters that ought to be the subject of an appeal.

Jemena Asset Management Pty Ltd v Coinvest Limited [2009] FCAFC 176

Leave was granted on limited grounds in an appeal from the Full Court of the Federal Court dismissing an application to declare provisions of the Construction Industry Long Service Leave Act 1997 (Vic) invalid. The appellants argued that certain provisions in that Act, which require employers to make contributions towards long service leave benefits for their employees, and the Federal Employment Awards to which the employers are subject, are inconsistent within the meaning of s 109 of the Constitution. The appellants said that the Federal Employment scheme intends to “cover the field” relating to long service leave and so the State law is invalid under s 109. The Court said that the “field” which the Federal scheme covers does not extend to that with which the State legislation deals, and so the State law is not invalid.

Haxton v Equuscorp Pty Ltd [2010] VSCA 1

Leave was granted in an appeal from the Full Court of the Victorian Supreme Court. The case concerns the right in restitution, on the ground of “total failure of consideration”, to recover moneys provided under loan agreements which have been found to be illegal and unenforceable. The case also concerns the topic of whether such a claim in restitution is capable of assignment or whether it is, in the words of the authorities, “a bare cause of action” (a topic that is very close to this author’s heart).

R v Momcilovic [2010] VSCA 50

Leave was granted in an appeal from the Full Court of the Victorian Supreme Court. The case involved a defendant who was charged with possession of drugs for sale. The evidence was that the drugs were found in the applicant’s apartment. Under s 5 of the Drugs, Poisons and Controlled Substances Act 1981 (Vic), the defendant was deemed to be in possession of the drugs unless she ‘satisfie[d] the court to the contrary’. The Full Court found that this provision could not be interpreted in a manner that was consistent with the presumption of innocence as provided for by the Charter of Human Rights (Vic). Accordingly the Full Court made a declaration of incompatibility under s 36 of the Charter.

Commissioner of Taxation v BHP Billiton Finance Limited [2010] FCAFC 25

Leave was granted in an appeal from the Full Court of the Federal Court. The Full Court upheld the decision of the trial judge who had found that BHP Billiton’s finance company had carried on the “business of lending money” for the purposes of the Income Tax Assessment Act 1997 (Cth) and was therefore able to write off around $2.2 billion of bad debts as tax deductions.

Gordian Runoff Limited v Westport Insurance Corporation [2010] NSWCA 57

Leave was granted (on limited grounds and referred to an enlarged Court on other grounds) in an appeal from the Full Court of the Supreme Court of New South Wales. The case concerns the nature of an appeal from an award of an arbitrator following an arbitration conducted under the Commercial Arbitration Act 1984 (NSW). The decision chiefly deals with the similarities between such an appeal and an application for judicial review. It also deals with the degree of detail necessary in an arbitrator’s reasons.

Firedam Civil Engineering Pty Ltd v Shoalhaven City Council [2010] NSWCA 59

Leave was granted in an appeal from the Full Court of the Supreme Court of New South Wales. The case concerns a building contract which stated that certain disputes are to be referred to for “expert determination” which will be binding on the parties. The Full Court found that the expert report was not binding on the parties because the expert had displayed inconsistencies in his reasons for determination. The important issue in this case is the degree to which an expert must err before a court will declare the expert’s determination to be not binding on the parties.

Notable cases for which leave was refused:

The High Court refused special leave for Qantas to appeal from the Full Court of the Federal Court’s decision in Leonie's Travel Pty Ltd v Qantas Airways Limited [2010] FCAFC 37. In that case the Full Court found that Qantas was not entitled to make unilateral determinations under agency contracts to the effect that certain commissions were not payable to travel agencies. The full quantum of the amount due by Qantas to the travel agents is not yet calculated (at [105]) but it is reported to be in excess of $26 million.

Friday, September 3, 2010

New HCA Judgment: Public Trustee v Fortress Credit Corp

This decision was handed down on Wednesday:

Public Trustee of Queensland v Fortress Credit Corporation (Aus) 11 Pty Ltd [2010] HCA 29

The High Court has dismissed this appeal against a decision of the Full Court of the Queensland Supreme Court. The case concerns what constitutes “a variation in the terms of a registrable charge” for the purpose of the registration requirements in the Corporations Act 2001 (Cth).

A variation in the terms of a charge must be registered under the Act or else it is void. In this case, a "Charge Document" secured any amount payable under what it called “Transaction Documents”. “Transaction Documents” were defined in another document, called the “Facility Agreement”, to include anything that the parties agree in writing to be a Transaction Document.

Subsequent to the registration of that charge the parties entered into a deed which deemed a particular guarantee to be a “Transaction Document” for the purposes of the "FAcility Agreement" and therefore the charge. This therefore resulted in an increased amount of money secured by the charge. The Court found that the phrase “terms of the charge” referred to the terms of the written instrument representing the charge and not necessarily to the scope of the charge or to the amount charged. Accordingly, this transaction did not constitute “a variation in the terms of a registrable charge” or a “creation of a charge” and so there was no requirement to register.

Wednesday, September 1, 2010

New HCA Judgment: Spencer v Commonwealth of Australia

The High Court handed down a new judgment today. This is the third installation of the ICM Agriculture / Arnold saga regarding s 51(xxxi) of the Constitution:

Spencer v Commonwealth of Australia [2010] HCA 28
The High Court has allowed the appeal from the Full Court of the Federal Court. This case relates to the Native Vegetation Conservation Act 1997 (NSW), which put restrictions on the clearing of vegetation on land in NSW. The Act was passed as part of bilateral funding scheme between the Commonwealth and NSW. The Act prevented Peter Spencer – a farmer who is famous for his hunger strike late last year – from clearing certain vegetation on his land. He argues that the scheme amounts to an acquisition of his carbon sequestration rights. He therefore argues that the Act or the State/Commonwealth agreement is invalid as an acquisition of property on other than just terms, contrary to s 51(xxxi) of the Constitution. The Judge at first instance, in reliance on Pye v Renshaw, gave summary judgment to the defendant on the ground that the constitutional restriction on acquisition of property does not apply to the States, regardless of whether the State legislation was brought about by a Commonwealth grant. Following this, the High Court decided the cases of ICM Agriculture and Arnold v Minister Administering the Water Management Act 2000 which found that s 51(xxxi) could apply to state legislation which is passed pursuant to a Commonwealth funding agreement.

Accordingly, the High Court today set aside the order striking out Mr Spencer’s claim. The case will therefore return to the Federal Court for hearing.

Additionally, according to the court listings, the High Court was also supposed to hand down its decision today in the appeal from Public Trustee of Queensland v Fortress Credit Corporation (Aus) 11 Pty Ltd [2009] QCA 282, regarding the Octaviar litigation. However, the case has not come up on Austlii for me yet. I will update when more information comes to hand.

[[UPDATE: the decision in Public Trustee of Queensland v Fortress Credit is now up, see here]]
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