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Federal Court judgments

Federal Court judgments

By Dan Star QC

Consumer Law Courts Judgment Practice & Procedure 

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Courts and judicial system

Apprehended bias – trial judge does not recuse himself – Full Court held hypothetical observer might reasonably apprehend that the trial judge might be influenced subconsciously by extraneous information

In GetSwift Limited v Webb [2021] FCAFC 26 (5 March 2021) the ultimate issue in the appeal was whether the primary judge should have disqualified himself from hearing the trial in a class action proceeding (Webb proceeding). The primary judge decided not to disqualify himself. The Full Court allowed the appeal. Relevantly, the appeal raised questions concerning the knowledge to be attributed to the hypothetical observer (the fair-minded lay observer) and the extent to which extraneous information in the mind of a fact finding judge which is to be discarded might still have a subconscious effect on the decision to be made by that judge.

The issue arose in circumstances where the primary judge was intending to hear a regulatory civil penalty proceeding and a representative proceeding under Pt IVA of the Federal Court Act 1976 (Cth) consecutively. In the Webb proceeding, Mr Webb made allegations against GetSwift Limited (GetSwift) of continuous disclosure contraventions under s674(2) of the Corporations Act 2001 (Cth) (Corporations Act), and of false or misleading statements and misleading and deceptive conduct in contravention of ss1041E and 1041H of the Corporations Act, s12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and s18 of Sch 2 to the Competition and Consumer Act 2010 (Cth). There were also allegations against a director of GetSwift, Mr MacDonald, by reason of knowing involvement in GetSwift’s contraventions. Civil penalty proceedings were also brought by ASIC against GetSwift and (among others) Mr Macdonald for alleged contraventions of the Corporations Act and the ASIC Act (ASIC proceeding). The allegations raised by ASIC and by Mr Webb were largely the same and the primary judge accepted that he would be dealing with largely the same course of events in the class action as in the ASIC proceeding.

The ASIC proceeding had been heard and judgment was reserved. The primary judge was due to commence hearing the Webb proceeding. The primary judge intended that judgment in each proceeding would be based on (and only based on) the evidence adduced in, and argument advanced in, each proceeding (that is, without regard to the evidence adduced in, and argument advanced in, the other proceeding). In both cases, it was highly likely that the factual issues would be determined by reference to the documentary evidence that was common to both the Webb and ASIC proceeding and inferences drawn from it. Therefore, the primary judge would have already formed some views about the documentary evidence adduced in the ASIC proceeding if he heard the Webb proceeding (at [10]).

GetSwift submitted that the primary judge erred in failing to conclude that a fair-minded lay observer might reasonably apprehend that the primary judge might not bring an impartial mind to the resolution of the Webb proceeding by reason of his having heard evidence and argument in the ASIC proceeding (at [13]). Middleton, McKerracher and Jagot JJ summarised the principles applicable to apprehended bias (at [26]-[45]). GetSwift succeeded on the ground that a fair-minded lay observer might reasonably apprehend that the primary judge, consciously or subconsciously, might be influenced by extraneous information from the ASIC proceeding (extraneous information ground) (at [46]-[62]). However, the Full Court did not accept the ground that a fair-minded lay observer might reasonably apprehend that, in hearing, considering, and forming views about the material in the ASIC proceeding, the primary judge might have prejudged the resolution of issues common to both proceedings (prejudgment ground) (at [63]-[69]).

Consumer law

Unconscionable conduct – whether Kobelt, precedent or statutory interpretation requires that exploitation or taking advantage of some pre-existing vulnerability, disadvantage or disability is a necessary element of statutory unconscionability 

In Australian Competition and Consumer Law v Quantum Housing Group Pty Ltd [2021] FCAFC 40 (19 March 2021) the Full Court determined an important issue as to the meaning and application of statutory provisions that call for a standard of business conduct in Australia that is not, in all the circumstances, unconscionable, in this case s21 of the Australian Consumer Law (ACL) being Schedule 2 to the Competition and Consumer Act 2010 (Cth). 

The ACCC brought proceedings against Quantum Housing Group Pty Ltd and its sole director and secretary, alleging conduct that involved misleading representations in contravention of ss18(1), 29(1)(l) and 29(1)(m) of the ACL and that was unconscionable in contravention of s21 of the ACL. The respondents admitted the contraventions including unconscionable conduct under s21 of the ACL. The primary judge made orders including declarations for the contraventions of ss18(1) and 29(1) of the ACL and ordered penalties. However, the primary judge refused to conclude and to declare that the conduct was unconscionable. The ACCC appealed the failure of the primary judge to make a declaration as to unconscionable conduct. 

The key issue in the appeal was whether, for conduct to be unconscionable under s21 of the ACL or cognate provisions such as s12CB of the Australian Securities and Investments Commission Act 2001 (Cth), there is required to be present vulnerability or disadvantage in the person or persons to whom the conduct can be seen as directed and that such was exploited or taken advantage of. Allsop CJ and Besanko and McKerracher JJ held “[w]hilst some form of exploitation of or predation upon some vulnerability or disadvantage of people will often be a feature of conduct which satisfies the characterisation of unconscionable conduct under s21, such is not a necessary feature of the conception or a necessary essence in the embodied meaning of the statutory phrase” (at [4]; see also [78]-[93]).

The Full Court’s judgment involved a deep analysis of the different reasons for judgment of the members of the High Court in Australian Securities and Investments Commission v Kobelt [2019] 267 CLR 1 (at [37]-[79]). Having done so, the Full Court held that the primary judge erred in his understanding and application of Kobelt. Allsop CJ and Besanko and McKerracher JJ “rejected[ed] the proposition that ratio or seriously considered obiter dicta of a majority of the High Court, indeed, of any justice of the Court in Kobelt (other than Keane J) requires in any case that for conduct to be unconscionable by reference to ss12CB and 12CC of the ASIC Act (or ss21 and 22 of the ACL) there must be found some form of pre-existing disability, vulnerability or disadvantage of which advantage was taken” (at [79]). 

The Full Court allowed the ACCC’s appeal and made a declaration of unconscionable conduct under s21 of the ACL. 

Costs

Public interest litigation – whether depart from usual orders as to costs

In Bob Brown Foundation Inc v Commonwealth of Australia (No 2) [2021] FCAFC 20 (26 February 2021) the Full Court considered costs following the hearing of a separate question resulting in unsuccessful public interest litigation. The Full Court examined and applied the principles in Oshlack v Richmond River Council [1998] 193 CLR 72. Having regard to particular facts and circumstances of the proceeding, the Full Court departed from the usual order as to costs and held there should be no order as to costs. ■


Dan Star QC is a Senior Counsel at the Victorian Bar, ph (03) 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 a paragraph number in the judgment.


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