FEATURE ARTICLE -
Case Notes, Issue 70: Oct 2014
Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36
Today the High Court unanimously allowed an appeal from a decision of the Court of Appeal of the Supreme Court of New South Wales. The High Court held that Brookfield, the builder of a strata-titled apartment complex, did not owe a duty of care to the Owners Corporation to avoid causing it economic loss resulting from latent defects in the common property.
Brookfield built the complex pursuant to a design and construct contract with a developer who owned the land on which it was built. Upon the registration of a strata plan in relation to the part of the complex which was to be used for serviced apartments, the Owners Corporation was created by operation of law. The common property was vested in the Owners Corporation as manager of the strata scheme and as agent for the owners of the serviced apartments.
The design and construct contract contained detailed provisions with respect to the quality of the work to be performed by Brookfield and required Brookfield to remedy defects or omissions in the work within a defined defects liability period. The standard form contract of sale to purchasers of the serviced apartments, annexed to the design and construct contract, conferred on each purchaser specific contractual rights in relation to defects in the property, including the common property.
The Owners Corporation commenced proceedings against Brookfield in the Supreme Court of New South Wales to recover damages including the cost of repairing latent defects in the common property of the apartment complex. Brookfield was said to be liable in negligence for breach of a duty to take reasonable care to avoid a reasonably foreseeable economic loss to the Owners Corporation in having to make good the consequences of latent defects caused by the building’s defective design and/or construction. The primary judge held that Brookfield did not owe the duty propounded by the Owners Corporation. On appeal, the Court of Appeal unanimously held that Brookfield did owe the Owners Corporation a duty of care, albeit a narrower duty to avoid causing loss resulting from latent defects which were structural or dangerous or which made the serviced apartments uninhabitable.
By grant of special leave, Brookfield appealed to the High Court. The Owners Corporation was granted special leave to cross-appeal, and sought orders providing for a wider duty of care than that found by the Court of Appeal. The High Court allowed the appeal, dismissed the cross-appeal, and held that Brookfield did not owe the duty of care propounded by the Owners Corporation or found by the Court of Appeal.
Tajjour v New South Wales; Hawthorne v New South Wales; Forster v New South Wales [2014] HCA 35
Today the High Court by majority upheld the validity of s 93X of the Crimes Act 1900 (NSW) which makes it an offence habitually to consort with convicted offenders.
Section 93X provides that any person who habitually consorts with convicted offenders, after having been given an official warning in relation to each of those offenders, is guilty of an offence, punishable by imprisonment, fine, or both. In Australian law, to “habitually consort” is understood to mean to seek or accept association or to keep company with persons of a particular class. Section 93W further provides that, in the relevant provisions of the Act, “consort” means consort in person or by any other means, including by electronic or other form of communication. Section 93Y provides that certain forms of consorting are to be disregarded if the person accused of consorting satisfies the court that the consorting was reasonable in the circumstances.
Three plaintiffs separately charged with an offence against s 93X brought proceedings in the Supreme Court of New South Wales seeking a declaration that s 93X is invalid. Those proceedings were removed into the High Court. Each plaintiff alleged that s 93X is invalid because it impermissibly burdens the freedom of communication concerning government and political matters implied in the Commonwealth Constitution. Two of the plaintiffs further alleged that s 93X is invalid because it infringes a freedom of association which they said should be found to be implied in the Constitution, and because the provision is inconsistent with Australia’s obligations under the International Covenant on Civil and Political Rights (“the ICCPR”).
By majority the High Court upheld the validity of s 93X. The Court accepted that the provision effectively burdens the implied freedom of communication about government and political matters. But the majority of the Court held that s 93X is not invalid because it is reasonably appropriate and adapted, or proportionate, to serve the legitimate end of the prevention of crime in a manner compatible with the maintenance of the constitutionally prescribed system of representative government.
The High Court unanimously concluded that the provisions of the ICCPR, where not incorporated in Commonwealth legislation, impose no constraint upon the power of a State Parliament to enact contrary legislation. Each member of the High Court who considered it necessary to answer the question about a free-standing freedom of association concluded that no such freedom is to be implied in the Constitution.
Plaintiff S4-2014 v Minister for Immigration and Border Protection [2014] HCA 34
Today the High Court unanimously held invalid the grant by the Minister for Immigration and Border Protection of a temporary safe haven visa to the plaintiff which had the effect of precluding the plaintiff making a valid application for a protection visa, in circumstances where the plaintiff’s detention had been prolonged for the purpose of the Minister considering the exercise of power to allow the plaintiff to make a valid application for a visa of his choice.
The plaintiff arrived at Christmas Island without a visa to enter or remain in Australia and was lawfully taken into immigration detention. Section 46A(1) of the Migration Act 1958 (Cth) prevented the plaintiff from making a valid application for any visa unless the Minister determined, under s 46A(2), that the prohibition in s 46A(1) did not apply to an application by the plaintiff.
The Minister decided to consider whether to exercise his power under s 46A(2) to permit the plaintiff to apply for a protection visa. The plaintiff remained in detention for more than two years while the Minister’s department inquired into the plaintiff’s eligibility for such a visa. The department determined that the plaintiff satisfied the requirements for the grant of the visa. However, the Minister made no decision to permit or refuse the making of a valid application. Instead, the Minister, acting of his own motion under s 195A(2) — which gives the Minister power to grant a visa to a person in immigration detention if the Minister thinks it is in the public interest to do so — granted the plaintiff a temporary safe haven visa and a temporary humanitarian concern visa. Although the prohibition in s 46A(1) no longer applied once the plaintiff became a lawful non-citizen by reason of the grant of the visas, the grant of the temporary safe haven visa engaged a similar prohibition in s 91K.
In proceedings commenced in the High Court, the plaintiff claimed that the grants of the visas were invalid and that, that being so, the Minister must determine under s 46A(2) that the plaintiff may make a valid application for a protection visa or, alternatively, determine how the s 46A(2) power will be exercised. A special case stated questions of law for determination by the Full Court.
The High Court held that where a person’s detention is prolonged for the purpose of considering the exercise of power under s 46A(2), other powers given by the Act do not permit the making of a decision which would foreclose the exercise of the power under s 46A(2) before a decision is made, thus depriving the prolongation of detention of its purpose. The Court quashed the decision to grant both visas and held that it was not appropriate to answer the questions stated about whether and how the Minister is bound to exercise his power under s 46A(2).
Maxwell v Highway Hauliers Pty Ltd [2014] HCA 33
Today the High Court unanimously dismissed an appeal from a decision of the Court of Appeal of the Supreme Court of Western Australia, and held that s 54(1) of the Insurance Contracts Act 1984 (Cth) operated to prevent the insurers from refusing to pay claims for indemnity made by the insured, in circumstances where the insured failed to comply with an endorsement forming part of the contract of insurance.
Section 54(1) of the Act states that “where the effect of a contract of insurance would, but for [that] section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into … the insurer may not refuse to pay the claim by reason only of that act”, but that “the insurer’s liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer’s interests were prejudiced” by that act. Section 54(2) provides that the insurer may nonetheless refuse to pay a claim where the relevant act could reasonably be regarded as being capable of causing or contributing to a loss in respect of which insurance cover is provided by the contract.
The respondent, Highway Hauliers Pty Ltd, had been refused indemnity for two accidents involving its vehicles. An endorsement forming part of the contract of insurance stated that no indemnity was provided when a vehicle was being operated by a driver unless, among other things, the driver had a PAQS driver profile score of at least 36 (or an approved equivalent). Drivers of the respondent’s vehicles in both accidents had not undertaken a PAQS test or an equivalent. It was conceded that the fact that each vehicle was being operated by an untested driver could not reasonably be regarded as being capable of causing or contributing to any loss incurred by the respondent as a result of each accident, and that the insurers’ interests were not prejudiced as result of the vehicles being operated, at the time of the accidents, by untested drivers. The respondent was successful in proceedings for indemnity under the policy and for damages for breach of the insurance contract in the Supreme Court of Western Australia and before the Court of Appeal. By special leave, the appellant, a nominated authorised representative of the insurers, appealed to the High Court.
Rejecting the appellant’s argument that the “claim” to which s 54(1) refers is a claim for an insured risk, the High Court held that, the respondent having made claims in relation to accidents which occurred during the period of insurance, it was sufficient to engage s 54(1) that the effect of the contract of insurance was that the insurer may refuse to pay those claims by reason only of acts which occurred after entry into the contract. Section 54(1) applied to the respondent’s claims because the operation of each vehicle by an untested driver was properly characterised as having been by reason of an “act” that occurred after entry into the contract of insurance.
Commonwealth Bank of Australia v Barker [2014] HCA 32
Today the High Court unanimously allowed an appeal from a decision of the Full Court of the Federal Court of Australia and held that a term of mutual trust and confidence should not be implied by law in employment contracts.
Stephen Barker’s employment with the Commonwealth Bank of Australia (“the Bank”) was terminated by reason of redundancy on 9 April 2009. On 2 March 2009, Mr Barker was told that his position was to be made redundant and that if he was not redeployed within the Bank, which was the Bank’s preference, his employment would be terminated approximately four weeks thereafter. Having been deprived of access to his Bank email account and voicemail, Mr Barker was not informed about an alternative position within the Bank until 26 March 2009. He was not contacted by the recruitment consultant involved in facilitating the recruitment process for that position, nor was the possibility of retraining for that role discussed with him.
Mr Barker commenced proceedings against the Bank in the Federal Court of Australia. He alleged that the conduct of the Bank was in breach of an implied term of mutual trust and confidence and resulted in him being denied the opportunity of redeployment. The primary judge held that there was a term of mutual trust and confidence implied in the agreement between Mr Barker and the Bank and that the Bank’s serious breach of its own redeployment policy amounted to a breach of that implied term. The Full Court, by majority, agreed that a term of mutual trust and confidence was implied by law into the agreement, but held that the primary judge erred in treating the term as co-extensive with an obligation to observe the redeployment policy. The majority held that the implied term required that the Bank take positive steps to consult with Mr Barker about alternative positions within the Bank and give him the opportunity to apply for them. By failing to make contact with him for a period which the primary judge had found to be unreasonable, the term had been breached.
By grant of special leave, the Bank appealed to the High Court. The question in the appeal was whether employment contracts contain a term of mutual trust and confidence implied by law that the parties will not, without reasonable cause, conduct themselves in a manner likely to destroy or seriously damage the relationship of trust and confidence between them. Allowing the appeal, the Court held that the proposed term was not necessary in the sense that would justify implying it by law into all employment contracts.
