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Federal Court judgments

Federal Court judgments

By Dan Star QC

Consumer Law Judgment Practice & Procedure 

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Administrative law 

Procedural fairness – McKenzie friend

For a third time, the Federal Court has made orders setting aside orders of the Federal Circuit Court in litigation in bankruptcy proceedings involving Brett John Hayes. In Hayes v Pioneer Credit Acquisition Services Pty Ltd [2019] FCA 1260 (13 August 2019) Rangiah J set aside a sequestration order against the estate of Mr Hayes on the ground of a denial of procedural fairness. 

At the commencement of the hearing in the Federal Circuit Court, the primary judge refused to allow Mr Hayes to be represented by Mr Welch, who was not a lawyer. His Honour also directed Mr Welch to leave the area where he was sitting behind the bar table near Mr Hayes and move to the public gallery. The primary judge subsequently called security staff into the courtroom and threatened to remove Mr Hayes. However the hearing continued, with Mr Hayes making submissions on his own behalf.

In the appeal, the Federal Court considered the concept of a McKenzie friend from McKenzie v McKenzie [1971] P 33: at [25]-[30]. Rangiah J stated at [30]: “In Australia, the prevailing view is that in criminal cases, the court has a discretion as to whether to allow a litigant a McKenzie friend: for example, Smith v R (1985) 159 CLR 532 at 534; R v EJ Smith [1982] 2 NSWLR 608; R v Dodd (No 2) [1985] 2 Qd R 282 at 283–284; Crown v Burke [1993] 1 Qd R 166 at 167, 173, 178–179. The position is different in civil cases. I understand the Queensland Court of Appeal to have held in Coffey v State of Queensland [2010] QCA 29 at [37]-[38] that in a civil case, an unrepresented litigant may have a person attend as a McKenzie friend, subject to the power of the court to disallow such assistance where that becomes necessary”.

The Court held at [31] and [40] that Mr Hayes was denied procedural fairness by being denied that assistance of Mr Welch as a McKenzie friend. However, it was not shown that it was unreasonable for the primary judge to call in security staff, or that it was otherwise an error in doing so (at [39]). The matter was remitted again to the Federal Circuit Court for a new trial.

Consumer and credit law

ASIC case – alleged contraventions of s128 of National Consumer Credit Protection Act 2009 (Cth)

In Australian Securities and Investments Commission v Westpac Banking Corporation (Liability Trial) [2019] FCA 1244 (13 August 2019) Perram J dismissed ASIC’s case that Westpac breached the National Consumer Credit Protection Act 2009 (Cth) (the Act) in the manner in which it extended hundreds of thousands of Westpac-branded home loans across the period 12 December 2011 to March 2015. The Court considered the provisions in Division 3 of Part 3-2 of Chapter 3 of the Act. 

Relevantly, the Act requires a credit provider to ask itself only whether “the consumer will be unable to comply with the consumer’s financial obligations under the contract” or, alternatively, whether the consumer “could only comply with substantial hardship”: s131(2)(a) (the s131(2)(a) Questions) (at [3]).

The alleged breaches fell into two categories. The first was an allegation that in approving its home loans Westpac failed to have regard to any of the living expenses declared by consumers on their loan application forms. The Court rejected this case on the facts (at [2], [21]-[35] and [86]). In any event, the Court held that the Act does not operate as ASIC alleged (at [56]-[85] and [87]-[92]). Perram J summarised his conclusion at [3]: “Whilst I accept that the Act requires a credit provider to ask the consumer about their financial situation (s130(1)(b)) and, in turn, to ask itself – and to answer – the s131(2)(a) Questions, I do not accept that this has the further consequence that the credit provider must use the consumer’s declared living expenses in doing so”.

The second category of alleged contraventions of the Act was where Westpac calculated proposed repayments with principal amortised over the life of loans in the case of loans having an initial interest only period before payment of principal was required (at [7]-[8]). ASIC’s case on these allegations was also rejected (at [93]-[103]).

There is a section in the Court’s judgment about the Household Expenditure Measure (HEM) benchmark, which measures household expenditure across the Australian community (at [26]-[47]). ASIC did not allege that Westpac was entirely prohibited by the Act from using the HEM benchmark, rather its case was that Westpac had not used the consumer’s declared living expenses and had, rather, relied solely on the HEM benchmark (at [10]). While following the judgment there was media comment about this aspect of the case, Perram J stated that the HEM benchmark was of “marginal relevance” to the case (at [36]). Further, “the capacity of the HEM benchmark to serve as a proxy for substantial hardship is not an issue which is actually live in the litigation” (at [38]).

Consumer law and damages

Damages assessment under s236 of the Australian Consumer Law

In Flogineering Pty Ltd v Blu Logistics SA Pty Ltd (No 3) [2019] FCA 1258 (9 August 2019) Greenwood J determined an interlocutory dispute concerning the production of documents and particulars following the Court’s judgment on the separate question in which it was held that the respondents had engaged in conduct in contravention of ss18 and 29 of the Australian Consumer Law (ACL). The interlocutory dispute related to the applicant’s claim for damages pursuant to s236 of the ACL. The Court considered the formulation of the text on causation in s236 of the ACL of “a person suffers loss because of [contravening] conduct” as compared with the earlier test of s82(1) of the Competition and Consumer Act 2010 (Cth) of “a person who suffers loss or damage by conduct of another . . .” (at [23]-[28]). Greenwood J held that, notwithstanding the difference in text, the principles in the cases on s82 “properly characterise the approach to s236, having regard to the text, context and purpose of the Competition and Consumer Act 2010 (Cth) and Schedule 2 to that Act” (at [27]).

Native title and administrative law

Tension between gender restriction orders and the natural justice hearing rule

In Stuart v State of South Australia (Oodnadatta Common Overlap Proceeding) [2019] FCA 1282 (15 August 2019) the Court heard an application for orders to take account of cultural and customary concerns of claimant groups regarding the evidence in proceedings for the determination of two overlapping claims of native title. One of the claimant groups (the Walka Wani People) sought a range of orders the effect of which would preclude any Aboriginal man who has not been initiated into the relevant Men’s Law which is to be the subject of evidence from hearing that evidence or being informed of it. The other claimant group (the Arabana People) and the State objected to aspects of the orders, namely the limitation with respect to the Aboriginal men who may hear or be informed of the evidence. In the case of the Arabana People, that was because the restriction would preclude any member of the Arabana People from hearing, or being informed of, the male gender restricted evidence and such a restriction would thereby inhibit their ability to give instructions concerning that evidence, to contest that evidence to the extent thought appropriate, and to give evidence themselves concerning those matters (at [17]).

The Court considered its powers authorising the exclusion of persons from a hearing (s17 of the Federal Court of Australia Act 1976 (Cth)) and in native title matters to take account of the cultural and customary concerns of Aboriginal peoples and Torres Strait Islanders (s82 of the Native Title Act 1993 (Cth)) (at [25]-[39]). The Court also considered the entitlement of a party to litigation to hear, or at least be informed about, the evidence presented for the purpose of defeating the party’s claim as an incident of the natural justice hearing rule (at [45]-[48]). 

White J held at [66]: “In summary, I am satisfied that orders in the form proposed by the Walka Wani Applicants would prejudice unduly the Arabana People in the proceedings as they would involve an abrogation of the natural justice hearing rule with respect to matters which appear to be at the heart of the contest between the two claimant groups. As already indicated, that rule is fundamental to the provision of procedural fairness. Taking account of the cultural and customary concerns of the Walka Wani by precluding any member of the Arabana People from hearing, or being informed about, the restricted gender evidence would, in my judgment, prejudice the Arabana People unduly”.

Practice and procedure

Application by litigation representative for approval of settlement

In James v WorkPower Inc [2019] FCA 1239 (8 August 2019) the Court made an order approving the settlement by a litigation representative of the applicant’s claims of discrimination contrary to the Disability Discrimination Act 1992 (Cth) and a contravention under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth). 

After referring to rules 9.70 and 9.71 of the Federal Court Rules which deal with settlement of a proceeding involving a litigation representative and approval by the Court, Mortimer J said at [11]: “. . . in determining whether or not to approve a settlement, for the purpose of rendering it binding on an applicant under a legal incapacity, the Court must be satisfied the settlement is in the applicant’s best interests, or beneficial to the applicant’s interests. That is not a requirement of the Rules themselves but stems from the nature of the jurisdiction exercised by the Court where a party is under a disability and unable to conduct or conclude a proceeding himself or herself”.

The Court also noted that a relevant factor in considering the risks attending the full litigation of a proceeding include the emotional and psychological strain of litigation on the person under a disability (at [14]). ♦

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 paragraph numbers in the judgment.


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