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Federal Court judgments

Federal Court judgments

By Dan Star QC

Judgment 

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Class actions

Dispensation from giving notice to group members of the commencement of the proceedings, of their right to opt out of the proceedings and of the application for approval of the settlement 

In Sister Marie Brigid Arthur (Litigation Representative) v Northern Territory of Australia [2019] FCA 859 (30 May 2019), the Court made orders:

  1. pursuant to s33X(2) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), for the applicant to be relieved from the requirement to give notice to group members of the commencement of the proceeding and of their right to opt out of the proceeding; and
  2. pursuant to s33X(4) of the FCA Act, for the applicant to be relieved from the requirement to give notice to group members of the application for approval of the settlement.

The proceeding is a class action under Part IVA of the FCA Act seeking declarations and injunctions for alleged breaches by the Northern Territory and/or those in charge of certain detention centres of duties owed by them under the Youth Justice Act 2005 (NT), the Youth Justice Regulations 2005 (NT), Policy Determinations made under the regulations and, in addition, for alleged breaches of the Racial Discrimination Act 1975 (Cth). Group members comprise children detained in Alice Springs Youth Detention Centre and the Don Dale Youth Detention Centre. No damages are sought by the proceeding. 

The parties negotiated a settlement of the proceeding, approval of which has not yet been heard or determined by the Court. White J exercised discretions under s33X(2) and (4) to relieve the applicant from having to give notice to group members of the commencement of the proceedings, of their right to opt out of the proceedings and the application for approval of the settlement.

Contracts

Specific performance – “fourth category” of Masters v Cameron

In Lucas v Zomay Holdings Pty Ltd [2019] FCA 830 (4 June 2019), the Court determined a dispute about the sale of a pharmacy business in the Eastlands Shopping Centre at Rosny Park, in Tasmania. The applicant contended that he entered into a legally binding contract for the purchase of the Priceline Pharmacy Eastlands business and he sought specific performance of it. The respondent contended that the offer to purchase was not binding.

The Court considered the category of contract dubbed the “fourth” category of agreements to contract described in Masters v Cameron (1954) 91 CLR 353 at 360-361 (at [60]-[63]). O’Callaghan J stated at [70]: “In my view, the Offer to Purchase is clearly an agreement that falls within the so-called fourth category of Masters v Cameron. That is to say, the parties intended to be bound immediately, notwithstanding that they contemplated the need for further documentation.”

The Court would have granted declaratory relief and made an order for specific performance (at [89]). However after the hearing, but before judgment, an administrator was appointed to the respondent so the Court did not do so yet having regard to the operation of s440D of the Corporations Act 2001 (Cth).

Practice and procedure

Application for extension of time – apprehended bias

In Gambaro v Mobycom Mobile Pty Ltd [2019] FCA 910 (14 June 2019), the Court granted an application for an extension of time for leave to appeal from interlocutory orders of the Federal Circuit Court of Australia. Rangiah J held that the applicant’s proposed appeal had sufficient prospects of success for apprehended bias and unfair conduct by the primary judge (at [23]-[24] and [29]). The appeal is to be heard by a Full Court.

Industrial law 

Breach of right of entry laws by union and union officials – personal payment orders

In Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The Laverton North and Cheltenham Premises case) (No 2) [2019] FCA 973 (21 June 2019), the Court imposed pecuniary penalties in total of $100,000 on the union, $7,800 on one union official and $11,500 on another union official. The penalties were for a number of contraventions of s500 of the Fair Work Act 2009 (Cth) (FW Act) and also for a contravention of s340(1) of the FW Act (at [108]).

Bromberg J made personal payment orders against the union officials so as to require the individuals to pay the penalty imposed and not to seek or encourage the union to pay to them any money or provide any financial benefit referable to the payment of the penalty, and additionally, not accept or receive from the union any money or financial benefit referable to that payment (at [86]-[94]). 

Bromberg J explained at [93]: “The systemic willingness of the CFMMEU, through the Divisional Branch, to support the unlawful conduct of the officials of the Divisional Branch by paying the pecuniary penalties imposed upon them demonstrates that it is likely that officials of the Divisional Branch will not personally pay for penalties imposed for their contraventions. But that is not all. It also demonstrates that there will be no condemnation or other detrimental consequence inflicted upon those officials by the Divisional Branch.”

Furthermore, at [94]: “The unique circumstances demonstrate that it is likely that, in the absence of a personal payment order, MacDonald and Long will not feel the sting or experience the burden of any pecuniary penalty imposed upon them.”

Insurance

Interpretation of professional indemnity insurance policy – insolvency exclusion

In AIG Australia Limited v Kaboko Mining Limited [2019] FCAFC 96 (14 June 2019) the Full Court considered the meaning of an insolvency exclusion endorsed on an insurance policy covering directors and officers liability. The primary judge found that the insolvency exclusion did not preclude cover under the insurance policy for the claims made by the respondent (Kaboko). The applicant’s appeal was dismissed.

The insolvency exclusion endorsed on the policy was expressed as follows:

The Insurer shall not be liable under any Cover or Extension for any Loss in connection with any Claim arising out of, based upon or attributable to the actual or alleged insolvency of the Company or any actual or alleged liability of the Company to pay any or all of its debts as and when they fall due.

The key question was whether it is the subject matter of the Claim that must have the specified insolvency link or whether the link is also established where, by reason of the circumstances that have led to the bringing of the Claim, it can be said that the Claim arises out of, is based upon or is attributable to the actual or alleged insolvency of Kaboko or its inability to pay its debts when due.

Allsop CJ, Derrington and Colvin JJ held at [50]: “. . . for the purposes of the insolvency exclusion, a Claim does not arise out of, is not based upon and is not attributable to the insolvency of Kaboko or its inability to pay its debts unless the subject matter of the Claim has that character (being a character derived in the case of civil proceedings from the acts, errors or omissions that are the subject of the proceedings and the associated loss that may become the Loss if the proceedings are successful). The exclusion is not to be read as applying where the insolvency of Kaboko or its inability to pay its debts might be said to have motivated or led to the Claim being brought (for reasons other than providing a material part of the basis of the Claim).

Dan Star QC is a Senior Counsel at the Victorian Bar, ph 9225 8757 or email danstar@vicbar.com.au. 

The full version of these judgments can be found at www.austlii.edu.au. Numbers in square brackets refer to paragraph numbers in the judgment.


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