High Court of Australia Judgment Summary Notes

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 (5 August 2009) Three days into a four week trial the Australian National University (ANU) sought an adjournmentin order to make an application to the Supreme Court of the Australian Capital Territory to amendits statement of claim against its insurance broker significantly, Aon Risk Services Australia Ltd

The primary judge granted the adjournment and leave to amend. The ACT Court of Appeal dismissed an appeal against that decision except in relation to costs. The High Court has allowed an appeal against the decision of the Court of Appeal. The bushfires in and around Canberra in January 2003 destroyed property belonging to ANU at its Mt Stromlo complex. In December 2004, ANU commenced proceedings against three insurance companies claiming indemnity for the Mt Stromlo losses. It subsequently joined Aon to th proceeding, claiming that it had acted negligently in failing to renew insurance over certain ANU properties

A four week trial was listed to commence on 13 November 2006. On that day, ANU and two of the three insurance companies commenced mediation which led to the settlement of ANU’s claims against them. ANU also settled its claim against the third insurance company. Those three claims having been resolved, ANU sought an adjournment of the trial on the basis that certain events that occurred and information received before and during the mediation made it necessary to seek leave to amend its statement of claim against Aon. Despite Aon’s opposition, the primary judge granted the adjournment and also granted ANU leave to amend its claim against Aon substantially. A majority of the Court of Appeal dismissed Aon’s appeal against the primary judge’s orders but ordered ANU to pay costs to Aon arising out of the amendment on an indemnity basis. The High Court granted Aon special leave to appeal. All members of the Court considered the proposed amendments did not fall into the category of amendments to which Rule 501 of the Court Procedure Rules 2006 (ACT) applied, that is, amendments which were required to be made for the purpose of deciding the real issues in the proceeding, or for the purpose of avoiding multiple proceedings. Rule 502 was the applicable rule.

It required the Court to exercise its discretion in deciding whether to grant leave to ANU to make the amendments. Taking into account the objects and purposes of the Rules as set out in Rule 21, matters relevant to the exercise of the discretion would include, but not be limited to, the extent of the delay in seeking to amend, and the costs associated with that delay; prejudice to the opposing party if leave were to be granted; the nature and importance of the amendment to the party applying; the point the litigation had reached, relative to the trial commencement date; prejudice to other litigants awaiting trial dates; and the proposing party’s explanation for the delay in applying for the amendment. To the extent that statements in the case of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 suggested only a limited application for case management principles in determining applications for leave to amend, the Court held that such statements should not be applied in the future.

The High Court held that the primary judge and the majority in the Court of Appeal had not had sufficient regard to the following salient features of ANU’s application for leave to amend: it sought to introduce new and substantial claims which would require Aon to prepare a new defence as if from the beginning; the application was brought during the time which had been set for trial and would result in the abandonment of the remaining scheduled weeks of trial; it was not clear that even an order for indemnity costs would overcome the prejudicial effects on Aon; and ANU had offered no explanation about why the case had been allowed to proceed to trial in its existing form when the basis upon which it was now seeking to amend had been known to it for at least 12 months. The abandonment of the trial date would also have had deleterious effects on other litigants whose trial dates would have to be put back. In the Court’s view, adjourning the trial date and granting ANU leave to amend in the circumstances of this case was contrary to the case management objectives set out in Rule 21 of the Rules.

The High Court allowed Aon’s appeal and ordered that ANU’s application for leave to amend its statement of claim be dismissed

ACQ Pty Limited v Cook; Aircair Moree Pty Limited v Cook [2009] HCA 28 (5 August 2009) The High Court has dismissed appeals by ACQ Pty Ltd and Aircair Moree Pty Ltd, the owner and operator of a crop-dusting aircraft. They had appealed against findings that they were liable for damages to Gregory Cook for serious injuries he suffered when he received an electric shock from a power line knocked down by the aircraft.   On 28 December 2000 the aircraft was crop dusting a cotton field over which a high voltage conductor hung at a height of at least 6.2 metres. During the flight the aircraft struck the conductor. It was dislodged from its supporting pole and left hanging about 1.5 metres above the ground. The responsible energy company (at the time — NorthPower; now known as Country Energy) sent two employees — Mr Cook and Mr Buddee — to deal with the dislodged conductor. The two men agreed that Mr Buddee would drive to a links site about seven kilometres away and isolate the conductor, after which Mr Cook would commence an assessment of the situation in the cotton field. Despite this Mr Cook entered the field before the conductor had been isolated. The ground in the field was uneven and very boggy. Mr Cook stumbled in the muddy conditions. He fell close to the conductor, received an electric shock and was badly injured.

Section 10 of the Damage by Aircraft Act 1999 (Cth) (DAA) provides that both the operator and the owner of an aircraft are liable if a person suffers an injury caused by, amongst other things, something that is the result of an impact with an aircraft that was in flight immediately before the impact happened. The effect of section 11 of the DAA is that damages are recoverable from both the owner and the operator of the aircraft in respect of an injury to which section 10 applies without the injured person having to prove that the injury had been caused by the owner’s and the operator’s wilful actions, negligence or default.   Mr Cook sued both ACQ and Aircair for damages pursuant sections 10 and 11 of the DAA. He was successful before the primary judge in the District Court of New South Wales, who awarded him damages of $953,141.00. The Court of Appeal of the Supreme Court of New South Wales dismissed ACQ’s and Aircair’s appeals. The High Court granted both ACQ and Aircair special leave to appeal.   The appeals raised the issue of what had “caused” Mr Cook to suffer injury. ACQ and Aircair acknowledged that Mr Cook would not have been in the field except for the fact that the aircraft impacted the conductor and dislodged it. However they argued that, even though the dislodged conductor was potentially unsafe, there would have been no danger to Mr Cook if he had not voluntarily departed from his agreement with Mr Buddee to do nothing until the conductor had been isolated. While they did not argue contributory negligence, ACQ and Aircair submitted that there was not a close enough temporal, geographical and relational connection between the dislodgement of the conductor and the injuries Mr Cook suffered.

In a unanimous decision the High Court rejected these arguments. The Court considered it did not strain the language of the DAA to characterise the events following the impact of the aircraft with the conductor as having “caused” Mr Cook’s injuries. The Court concluded that Mr Cook’s injuries were caused by the dangerous position of the conductor. The conductor was in a dangerous position because the aircraft had struck it. The High Court dismissed both appeals and ordered ACQ and Aircair to pay Mr Cook’s costs of the appeals. Lane v Morrison [2009] HCA 29 (26 August 2009) The High Court has determined that Colonel Peter Morrison, a Military Judge, may not proceed with trying charges against Mr Brian Lane, a former member of the Royal Australian Navy (RAN), because the legislation creating the Australian Military Court, in which the charges were to be heard, is constitutionally invalid.

Mr Lane was a member of the RAN before transferring to the Naval Reserve on 14 March 2007. On 8 August 2007 he was charged with offences alleged to have occurred in August 2005 when he was still a member of the RAN. He was discharged from the Naval Reserve with effect from 3 September 2007. On 26 November 2007 the Chief Military Judge of the Australian Military Court (AMC) nominated Colonel Morrison to try the charges against Mr Lane. When the matter first came before the AMC on 25 March 2008, Mr Lane objected to the jurisdiction of the AMC. In May 2008 he filed an application in the High Court seeking an order prohibiting Colonel Morrison from hearing the charges, and a declaration that the provisions of the legislation which created the AMC are invalid.

The AMC was created by the insertion of new provisions into the Defence Force Discipline Act 1982 (Cth), to replace the system of courts-martial which had previously existed.  The new provisions state that the AMC is a court of record, and that it consists of a Chief Military Judge and such other Military Judges as hold office from time to time in accordance with the Act. A Note to section 114 of the Act specifically states the AMC is not a court for the purpose of Chapter III of the Constitution.

Having regard to the attributes of the AMC and the way in which it operates, the Court concluded that the legislation requires the AMC to exercise the judicial power of the Commonwealth, without being set up as a court established under Chapter III of the Constitution (in which the power to create the federal judiciary is contained). For that reason the legislation creating the AMC was invalid.

The High Court ordered that a writ of prohibition should issue, prohibiting Colonel Morrison from proceeding with the charges against Mr Lane, and made a declaration that Division 3 of Part VII of the Defence Force Discipline Act 1982 (Cth), which created the AMC, was invalid.

Minister for Immigration and Citizenship v SZLFX [2009] HCA 31 (26 August 2009) The High Court has held that the Refugee Review Tribunal (RRT) may, under section 424(1) of the Migration Act 1958 (Cth), get information, relevant to a review, by telephone without first sending a written invitation. Procedural restrictions on the specific power to invite a person to give additional information contained in sections 424(2) and (3), and 424B of the Act do not apply to the general power, contained in section 424(1) of the Act, to get any information the RRT considers relevant.

The Minister’s appeals in relation to SZKTI and SZLFX were heard together by the High Court because both cases concerned the issue of whether the RRT may obtain information by telephone from a person without writing to that person to invite him or her to provide the information.

SZKTI arrived in Australia on 23 April 2006 and applied for a protection visa one month later. He claimed to fear persecution in China because he is a member of a religious group which the Chinese Communist Party refers to as the ‘Shouters’, but which its members call the ‘Local Church’. He alleged that if he returned to China he would be arrested because of his membership of the Local Church. The Minister’s delegate refused to grant SZKTI a protection visa and he applied to the RRT for review of the delegate’s decision. SZKTI provided information concerning his membership of the Local Church in Australia to the RRT, including mobile phone contact details for an Elder of the Local Church. The RRT rang the Elder and obtained certain information which, in the RRT’s view, tended to indicate that SZKTI had not been an adherent of the Local Church in China and had only commenced attending the Local Church following his arrival in Australia. The RRT notified SZKTI of the information provided by the Local Church Elder and the preliminary conclusions the RRT had drawn from it, and invited SZKTI to comment on the information. Having considered the evidence, including SZKTI’s response to the invitation to comment, the RRT affirmed the delegate’s decision to refuse the protection visa. A Federal Magistrate dismissed SZKTI’s appeal, however the Full Court of the Federal Court allowed an appeal and ordered the RRT to reconsider the original application for review. The High Court granted the Minister special leave to appeal.

SZKTI argued that, when obtaining the information from the Local Church Elder, the RRT was obliged by sections 424(2) and (3), and 424B of the Act to give, in one of the ways specified in section 441A of the Act, a written invitation to the Elder to provide the requested information. He argued that when the RRT obtained the information via a phone call, it failed to comply with those obligations. The High Court however accepted the Minister’s submissions that section 424(1) of the Act empowered the RRT to “get any information” that it considered relevant without limiting the ways in which the RRT might get the information. Section 424(2) was concerned with how information should be obtained in the specific circumstance when a person was “invited … to give additional information”.

In the view of the Court the RRT, when it called the Local Church Elder to make enquiries about SZKTI, had not breached its obligations in relation to the way in which it may obtain information. The Court also held that the information provided by the Local Church Elder did not raise new issues requiring a further hearing under section 425 of the Act. The High Court allowed the Minister’s appeal and reinstated the RRT’s decision to affirm the decision to refuse SZKTI’s application for a protection visa.

SZLFX arrived in Australia on 16 October 2002, on a student visa. He was arrested in March 2007 because his student visa had expired. SZLFX applied for a protection visa on 10 April 2007, claiming to fear persecution if he returns to China because he is a Falun Gong practitioner. In his application SZLFX described having started to practise Falun Gong with a group of practitioners every morning in Belmore Park in Sydney in January 2005. He stopped practising for a period but took it up again and continued to practise thereafter. The Minister’s delegate refused to grant SZLFX a protection visa and SZLFX applied to the RRT for review of the delegate’s decision. Before the RRT hearing an RRT employee telephoned regarding Belmore Park Falun Gong activities and filed a note recording the details of the call. SZLFX was not notified of the existence of the file note. The RRT affirmed the delegate’s decision, however a Federal Magistrate allowed SZLFX’s appeal. The Full Court of the Federal Court followed the Full Court’s decision in SZKTI v Minister for Immigration & Citizenship concerning the RRT’s obligation to obtain information in the manner set out in sections 424(2) and (3), and 424B of the Act and dismissed the Minister’s appeal. The Minister sought and obtained special leave to appeal to the High Court.

For the reasons set out in relation to the case of SZKTI, the Court held that the RRT had not breached its obligations in relation to the way it obtains information. The Court also held that the RRT had not breached section 424A of the Act in respect of giving notice of adverse information. The High Court allowed the appeal and reinstated the RRT’s decision to affirm the delegate’s refusal of a protection visa for SZLFX.

Bruton Holdings Pty Limited (in liquidation) v Commissioner of Taxation [2009] HCA 32 (26 August 2009) Today the High Court held that the Commissioner of Taxation could not recover part of a tax debt owing by a company in liquidation by requiring payment from the company’s solicitors of monies held in trust for the company.  The Commissioner had issued a notice to the solicitors under section 260-5 in Schedule 1 of the Taxation Administration Act 1953 (Cth) requiring payment of money which had been paid into their trust account by the company Bruton Holdings Pty Ltd.

Bruton Holdings was incorporated on 27 May 1997, solely to act as trustee of the Bruton Educational Trust. The Commissioner of Taxation refused Bruton’s application for endorsement as a tax exempt entity in April 2006, and Bruton commenced proceedings challenging the refusal.  It retained a firm of solicitors, Piper Alderman, to act on its behalf and paid approximately $470,000 into the Piper Alderman trust account in respect of the costs and disbursements of the litigation.  On 28 February 2007 the Directors of the company appointed administrators.

The appointment of the administrators immediately terminated Bruton’s trusteeship of the Bruton Educational Trust.  No replacement trustee was appointed.  On 26 March 2007 the Commissioner issued to “the Trustee for Bruton Educational Trust” a notice of assessment for $7,715,873.73 in respect of its tax liability for the 2003/04 financial year.  On 30 April 2007 the creditors of Bruton Holdings resolved to place the company into voluntary liquidation. The administrators of Bruton Holdings were appointed liquidators.  The Commissioner lodged a formal proof of debt in the winding up for the amount of the assessment issued on 26 March 2007.

On 8 May 2007 the Commissioner issued a notice under section 260-5 of the Taxation Administration Act to Piper Alderman, requiring the firm to pay to the Commissioner the amount of $447,420.20 held in its trust account to the credit of Bruton Holdings.  Bruton Holdings sought declarations in the Federal Court that the notice issued under section 260-5 was void, arguing that section 500(1) of the Corporations Act 2001 (Cth) invalidated it. Bruton Holdings was successful before the primary judge, but the Full Court of the Federal Court allowed the Commissioner’s appeal. The High Court granted Bruton Holdings special leave to appeal.

The High Court held that the Commissioner could not use section 260-5 in relation to the debts of a company in liquidation.  In the Court’s view, section 260-45 of the Taxation Administration Act provides a specific regime for the collection and recovery of tax liabilities of such companies by requiring liquidators to set aside from available assets of the company, an amount sufficient to pay the Commissioner the amount recoverable as an unsecured creditor in the liquidation.  The provisions of section 500 of the Corporations Act, which would invalidate any attachment on the property of a company in liquidation, support the view that section 260-5 does not apply to the recovery of debts owing to companies in liquidation.  Were that not the case section 260-5 would have been in conflict with section 500.

The High Court allowed Bruton Holdings’ appeal and ordered that the Commissioner’s appeal to the Full Court of the Federal Court be dismissed with costs.

Clarke v Commissioner of Taxation [2009] HCA 33 (2 September 2009)

The Commonwealth’s attempt to impose a surcharge tax on members of State parliaments, based on their notional entitlements under defined benefit superannuation schemes, was constitutionally invalid, the High Court has held.

Ralph Clarke was elected to the South Australian Parliament in 1993. He served as a member of parliament from 11 December 1993 until 8 February 2002. Mr Clarke was a member of three state superannuation schemes: the Parliamentary Superannuation Scheme (PS Scheme); the Southern State Superannuation Scheme (SSS Scheme); and the State Superannuation Benefit Scheme which was rolled into the SSS Scheme under South Australian superannuation scheme merger legislation.   Between February 2000 and February 2005 the Commissioner of Taxation issued superannuation contribution surcharge assessments to Mr Clarke, pursuant to the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) (the Imposition Act) and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) (the Assessment Act). Mr Clarke’s objections to the assessments were disallowed by the Commissioner. He applied to the Administrative Appeals Tribunal (AAT) for review of the Commissioner’s decisions and the AAT referred questions of law, including a question about the constitutional validity of the Imposition Act and the Assessment Act, to the Full Court of the Federal Court. The Full Court held that both Acts were valid. The High Court granted special leave to Mr Clarke to appeal the decision of the Full Court.   The Imposition Act and the Assessment Act applied to “constitutionally protected funds” which included the schemes of which Mr Clarke was a member. Liability was imposed on a fund member if the member’s adjusted taxable income exceeded a defined threshold amount. (South Australian state parliamentarians fell within this group.) The two Acts obliged fund members to pay amounts calculated on the basis of notional contributions that bore no necessary relation to the pension he or she would actually receive. Potentially the benefits received could be less than the amounts assumed in the calculation of the surcharge. Also, the tax accrued, compounding at market interest rates, until the member actually received his or her superannuation benefits. Potentially the tax due could approximate the whole of the pension due in the first year of receipt. To ameliorate these potential effects the South Australian government passed legislation whose general aim was to ensure that persons with an accumulated surcharge debt with the Australian Taxation Office had at retirement a method of obtaining a lump sum to expunge the debt with the ATO.   The High Court concluded that the Constitution recognises the States as independent entities and will not support laws which impair or interfere with the capacities or functions conferred on the States or which inhibit the execution of their constitutional powers. The Court found that the Imposition Act and the Assessment Act were not laws of general application, but rather laws which placed a special disability or burden on the States in relation to the way in which they remunerated members of State parliaments. Remuneration of members of parliament, as one aspect of the capacity to fix terms and conditions of those elected to parliament, is critical to each State’s capacity to function as a government. The Court determined that for these reasons, both the Imposition Act and the Assessment Act were beyond the legislative power of the Commonwealth and made orders reflecting that determination.

Visscher v The Honourable President Justice Giudice [2009] HCA 34 (2 September 2009)

The High Court has  held that the Australian Industrial Relations Commission must reconsider Mr Visscher’s application for wrongful termination.  The Commission had held that he had not been demoted from the position of Chief Officer in early 2004, because his earlier promotion to that position in September 2001 had been rescinded by his employer shortly thereafter.  The High Court held by a 4-1 majority that general principles of contract law applied to the employee’s actions and required Mr Visscher to have accepted the employer’s repudiation before the contract came to an end.  The AIRC had not determined the matter according to those principles.   A Full Court of the Federal Court also upheld the AIRC’s decision on the basis that Mr Visscher’s status fell to be determined according to the Certified Agreement.  The High Court, by majority, held that that was not a subject dealt with in the Agreement.   Mr Visscher was employed with Teekay Shipping (Australia) Pty Limited.  In September 2001 he was promoted from the position of Third Mate to the position of Chief Officer.  Teekay gave Mr Visscher notice, some days later, that the promotion was rescinded.  However, Mr Visscher continued to perform the duties of a Chief Officer and receive a salary equivalent to that of Chief Officer until early 2004.  At that time, according to Mr Visscher, Teekay asked him to sail as a Second Mate.  He considered this to be a demotion and subsequently treated this request as a termination of his employment.   A Certified Agreement between Teekay and the Australian Maritime Officers Union which came into effect in early 2002 listed Mr Visscher’s position as being that of Third Mate.   The AIRC proceeded upon the basis that the rescission of Mr Visscher’s promotion was effective to terminate his contract of employment as Chief Officer.  This meant that Mr Visscher could not have been demoted from that position in early 2004.  The Full Court of the Federal Court upheld this finding on the basis that contracts of employment, as contracts for personal service, have some special features.  One of these was that the employment relationship may be effectively discharged by the employer’s wrongful termination of the contract of employment, even if the employee remained in employment.  The Full Court also held that, in any event, Mr Visscher’s interests were subordinated to the “superior legal force” of the Certified Agreement, which listed him as a Third Mate.   The High Court, in allowing the appeal, confirmed that general contractual principles applied in the present case.  This meant that Teekay’s repudiation, in rescinding Mr Visscher’s promotion, would not of itself be effective to terminate his contract of employment as Chief Officer.  Mr Visscher must have first accepted the repudiation.  Whilst the High Court did not have the necessary facts before it to determine whether Mr Visscher had in fact accepted Teekay’s repudiation, the majority noted that silence on the part of Mr Visscher would not necessarily amount to acceptance, or some form of estoppel.  There would likely need to be some sort of obligation to speak, and evidence that Teekay acted to its detriment on the basis of Mr Visscher’s conduct.   In regard to the Certified Agreement, the majority of the High Court held that it did not display an intention to alter the position of employees held at the time the Certified Agreement came into force.  Rather, the reference to employees’ positions in the Certified Agreement was to assist in determining future promotions and transfers.   The High Court remitted the matter to the AIRC for reconsideration

Leighton Contractors Pty Ltd v Fox; Calliden Insurance Limited v Fox [2009] HCA 35 (2 September 2009)

There is no common law duty requiring a principal contractor to provide to a subcontractor training in the safe methods of carrying out the subcontractor’s specialised task, the High Court has held.   Leighton Contractors Pty Ltd was the principal contractor for the Hilton hotel construction project in Sydney. Leighton had contracted with Downview Pty Ltd to carry out the concreting for certain works on the construction site. Downview subcontracted the concrete pumping to Quentin Still and Jason Cook, who engaged Brian Fox and Warren Stewart in connection with the pumping for a concrete pour on 7 March 2003. Once the concrete pour had been completed, Mr Still, Mr Stewart and Mr Fox started to clean the concrete delivery pipes. This involved blowing an object through the pipes with compressed air. They moved the end pipe into position over a waste bin but did not secure it to the bin. The pipe whiplashed away from the waste bin and struck Mr Fox, significantly injuring him.   Mr Fox filed negligence claims against Leighton, Downview and Warren Stewart Pty Ltd (which had employed Warren Stewart) in the New South Wales District Court. The primary judge found that the accident was caused by the negligent conduct of Mr Still and Mr Stewart, but that there had been no relevant breach of duty by either Leighton or Downview. She gave judgment against Warren Stewart Pty Ltd, and ordered the company to pay damages of $472,561.95 to Mr Fox. Warren Stewart Pty Ltd has since been de-registered.   The Court of Appeal of the Supreme Court of New South Wales allowed Mr Fox’s appeal against the dismissal of his claims against Leighton and Downview, and ordered each of them to pay damages to Mr Fox of $472,562. The High Court granted Leighton and Downview special leave to appeal, and after Downview was de-registered, granted leave to substitute Downview’s insurer, Calliden Insurance Ltd, for Downview.   The High Court held that Leighton was not subject to a duty of care requiring that it provide training to subcontractors in the safe methods of carrying out the subcontractor’s specialised work. It found that Downview had engaged a competent independent contractor to do the concrete pumping and that it was not subject to a duty of care requiring that it provide safety training to that contractor. The Court of Appeal’s finding that Leighton and Downview were liable to pay damages to Mr Fox could not be sustained.   The High Court allowed each appeal and set aside orders made by the Court of Appeal. The Court ordered that Mr Fox’s appeals to the Court of Appeal should be dismissed.