Dan Star QC Federal Court judgments

DAN STAR QC

(03) 9225 8757 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.

Federal Court judgments

CONSUMER LAW AND PRACTICE AND PROCEDURE

Unfair contract terms – summary dismissal application – whether finding that terms are unfair is possible without identifying particular contracts between identified parties

In Australian Competition and Consumer Commission v Fuji Xerox Australia Pty Ltd [2021] FCA 153 (3 March 2021) the Court dismissed the interlocutory application for summary dismissal of the proceeding brought by the respondent (FX).

The applicant (ACCC) sought declarations and injunctions concerning the use by FX of nine different template forms of contract with its customers which were said by the ACCC to be “small business contracts” within the meaning of s23(4) of the Australian Consumer Law (ACL) (Sch 2 to the Competition and Consumer Act 2010) and “standard form contracts” within the meaning of s27 of the ACL. The ACCC’s case was that a number of the terms of the template form contracts were “unfair terms” within the meaning of s24 of the ACL. The ACCC also relied on analogous provisions of the Australian Securities and Investments Commission Act 2001 (Cth). FX submitted that the ACCC’s case was fundamentally flawed because (other than in an amendment to the relief in an amended originating application) it did not identify any particular contract between FX and any particular customer (at [16]). It argued that it was impossible to apply the relevant provisions to any given “contract” unless the contract in question had been identified (at [13]-[14]). FX submitted the Court was impermissibly being invited to give an advisory opinion on wholly abstract questions, namely whether if a term of the kind which appears in FX’s template document features in a contract which happens to have the characteristics of a standard form contract and happens also to satisfy the requirements for a small business contract, would that be an unfair term within the meaning of s24 of the ACL (at [16]; see also [40]).

Stewart J considered that an obstacle to FX in advancing its argument was that courts had on previous occasions ordered similar relief to that which was sought in this case, referring to ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224 and ASIC v Bendigo and Adelaide Bank Ltd [2020] FCA 716 (at [41]-[56]). The application for summary dismissal was dismissed. The Court held it is possible under the statutory scheme that the impugned terms were unfair notwithstanding that no actual contracts between identified parties were proved

(at [57]). The relief sought was not too uncertain (at [59][64]). Further, the relief sought by the ACCC would decide a real controversy, being the controversy between the ACCC (as “regulator” referred to in s250(2)(b) of the ACL) and FX with regard to whether the impugned terms in the identified template contracts were unfair (at [65]). The criticisms of the relief that FX made were not being finally dealt with at this stage. Rather, Stewart J was not satisfied at this stage that there is no reasonable prospect that the relief that is sought will ultimately be granted (at [66]).

EQUITY AND HUMAN RIGHTS

Discrimination and sexual harassment allegations – claim of vicarious liability of the Commonwealth – whether the Commonwealth restrained from unconscientious reliance on legal rights based on general words in Deed of Release

In Leach v Commonwealth of Australia [2021] FCA 158 (2 March 2021) the Court considered the equitable principle in Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 by which equity will restrain a party from unconscientious reliance on legal rights based on general words in a release.

The applicant (Ms Leach) was employed by the second respondent, a former Senator of the Commonwealth on behalf of the first respondent (the Commonwealth). Ms Leach claimed that her former employer discriminated against her on the ground of sex and engaged in sexually harassing conduct in contravention of ss5, 14, 26, 28A, 28G(2) and 28L of the Sex Discrimination Act 1984 (Cth). She also claimed that the Commonwealth was vicariously liable for the actions of the former Senator in accordance with s106 of the Act. Following an unfair dismissal claim by Ms Leach, there was a Fair Work Commission conciliation that ultimately led to Ms Leach signing a Deed of Release made on 16 January 2019 (Deed), by which Ms Leach released the Commonwealth from any “Claims” arising out of, or any way related to her former employment settling and bringing to an end the unfair dismissal claim.

The question arose as to whether the release in the Deed barred Ms Leach’s subsequent claims against the Commonwealth for vicarious liability for the discrimination and sexual harassment alleged against the former Senator for whom she was previously employed. More specifically, the Court determined a separate question directed to whether or not Ms Leach was entitled to declaratory relief against the Commonwealth in relation to the Deed. It was common ground that if Ms Leach was entitled to the declaration, then she would be entitled to pursue her other substantive claims against the Commonwealth; if she was not entitled to the declaration (meaning the Deed was able to be enforced according to its terms), she would be prevented from maintaining her claims in relation to sexual harassment against the Commonwealth and her proceeding against the Commonwealth must necessarily be dismissed.

Ms Leach, as the moving party, bore the onus of establishing that the reliance by the Commonwealth on the legal terms of the Deed would, in all the circumstances, be contrary to conscience such that equity would intervene (at [19]; see also [23]). Lee J found that Ms Leach did genuinely (but mistakenly) believe that in signing the Deed, this step would not prevent her maintaining the claims that she wished to pursue (at [41]). However Lee J explained (at [42]): “To state the obvious, however, this is a necessary but not sufficient basis upon which Ms Leach seeks relief. The objective theory of contract stands in command of the field: Taylor v Johnson (1983) 151 CLR 422 (at 429 per Mason ACJ, Murphy and Deane JJ). Although I am prepared to accept Ms Leach was operating under a genuine misapprehension, her mistake was entirely unilateral and her subjective misapprehensions as to the nature of the bargain she struck with the Commonwealth, without more, are neither here nor there. The inquiry relates to the state of knowledge of both parties concerning the existence, character and extent of the liability in question (as well as the actual intention of Ms Leach): Grant (at 129–30 per Dixon CJ, Fullagar, Kitto

and Taylor JJ). Hence, the real question for me in the present circumstances is whether the misapprehensions: (a) were known to be held by Ms Leach by representatives of the Commonwealth; and/or (b) came about by reason of some action or conduct of the Commonwealth which renders the Deed being enforced according to its terms by the Commonwealth as being contrary to conscience”.

The Court found that Ms Leach fell well short of proving, in accordance with s140(1) of the Evidence Act 1995, the factual premises on which her claim for declaratory relief was based (at [43]-[44]). Consequently, the Deed could be enforced in accordance with its terms and the proceeding against the Commonwealth was dismissed (at [47]).

EVIDENCE

Admissibility of prior written statements

In Australian Building and Construction Commissioner v Albert [2021] FCA 168 (3 March 2021) the Court ruled on certain objections to evidence in the proceeding. Some of the applicant’s witnesses gave evidence in chief by affidavit, which affidavits referred to and annexed copies of earlier statements. The respondents objected to evidence of this nature as being prior statements made to the applicant (category 1 evidence) and prior statements written, or purportedly written, by the deponent after the relevant events (category 2 evidence).

The objections of the respondent included that these statements were an attempt to bolster the credibility of the relevant witnesses and were thereby inadmissible. The applicant submitted (inter alia) that the statements were not included in the affidavits as an attempt to bolster the credibility of the respective witness. The witness was, in essence, adopting the veracity of statements he had earlier made, as evidence in chief.

The Court considered various authorities as to the relevance of and admissibility of prior written statements (at [11]-[31]). Having done so, the Court held the evidence to which objection was taken admissible for reasons including the following:

● The category 1 evidence and the category 2 evidence was relevant under s55 of the Evidence

Act 1995 (Cth) (at [33]).

● The evidence was deposed by way of evidence in chief of the relevant witnesses. It was not evidence subsequently sought to be adduced by the applicant as credit evidence to counter allegations of invention or reconstruction, and therefore was distinguishable from cases such as The Nominal Defendant v Clements (1960) 104

CLR 476 and Humphries v The Queen (1987) 17

FCR 182 (at [34]).

● •Authorities establish that s37(3) of the Evidence

Act 1995 anticipates that a previous statement of a witness (such as those statements in categories 1 and 2) can be adopted by the witness as true and correct, and as evidence in chief, of that witness (at [35]-[36]).

● There being no live issues of credit in the case in respect of the applicant’s witnesses, it was difficult to see any inherent unfairness in ruling the evidence admissible (at [37]-[38]).

● The impugned evidence was not inadmissible as credibility evidence within the meaning of s101A of the Evidence Act 1995 (at [43]-[44]).

● The impugned evidence was not hearsay. Collier

J explained (at [45]): “To paraphrase Bromwich

J in Australian Competition and Consumer

Commission v Australian Institute of Professional

Education Pty Ltd (No 2), the adopted written statements and file notes were no more hearsay than they would be if the text of that adopted material was instead simply copied into the adoption affidavit, but with the loss of the greater contemporaneity of the prior written account”.

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 fairminded 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]).

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.

CONSUMER LAW AND CIVIL PENALTIES

Appeal from primary judge rejecting agreed penalty and imposing substantially higher penalty

Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49 (9 April 2021) concerned the pecuniary penalty imposed on Volkswagen for its admitted contraventions of s29(1)(a) of the Australian Consumer Law (ACL) in relation to its deception of the Australian government and Australian consumers about the exhaust emissions of certain Volkswagen-branded motor vehicles which were imported into Australia for sale for about five years from January 2011 to October 2015. Volkswagen and the ACCC jointly submitted to the Court that a penalty of $75m was an appropriate penalty for the contraventions. The primary judge found that the proposed penalty was manifestly inadequate and instead imposed a penalty of $125m. The central issue raised by the appeal was whether the primary judge erred in rejecting the jointly proposed penalty and imposing instead the significantly higher penalty.

The Full Court made observations about the nature of the primary judge’s decision (at [119]-[133]). Wigney, Beach and O’Bryan JJ rejected the ACCC’s submission that the primary judge’s decision was not discretionary and concluded (at [131]): “. . . The Court’s task in such cases is not limited to simply determining whether the jointly proposed penalty is within the permissible range, though that might be expected to be a highly relevant and perhaps determinative consideration. Nor is the Court necessarily compelled to accept and impose the proposed penalty if it is found to be within the acceptable range, though the public policy consideration of predictability of outcome would generally provide a compelling reason for the Court to accept the proposed penalty in those circumstances. The overriding statutory directive is for the Court to impose a penalty which is determined to be appropriate having regard to all relevant matters. The fact that the regulator and the contravener have agreed and jointly proposed a penalty is plainly a relevant and important matter which the Court must have regard to in determining an appropriate penalty. It does not follow, however, that the determination is not discretionary in nature”.

However, the Full Court rejected Volkswagen’s various appeal grounds which in the main were supported by the ACCC.

● The Full Court accepted that the primary judge erred in adopting an overly narrow interpretation of s224(2)(c) of the ACL and in not considering whether the absence of prior contraventions on the part of Volkswagen was capable of constituting a mitigating circumstance (at [137]). However, in the circumstances of this case this could not have had any material effect on the ultimate penalty imposed (at [138]-[146]).

● There was no error by the primary judge in finding that the agreed penalty of $75m was not sufficient to achieve deterrence (at [147][167]). In determining this ground, the Full Court examined the circumstances where there may be a relationship between the penalty imposed and the profit derived from the contravening conduct (at [148]-[149]).

● It did not follow that, in not accepting that the agreed penalty was an appropriate penalty and instead fixing a significantly higher penalty, the primary judge gave no or insufficient weight, to the agreement or settlement that had been reached between Volkswagen and the ACCC, or to the important public policy consideration concerning the promotion of the predictability of outcome in civil penalty proceedings (at [168]-[173]).

● There was no error in the way that the primary judge dealt with the penalties imposed on Volkswagen in overseas jurisdictions (at [174]-[184]).

● The findings that were made by the primary judge in relation to harm to consumers were findings based on inferences that were open

to be drawn, irrespective of the joint submission of the parties (at [185]-[192]).

● Nor was there error in relation to certain matters that Volkswagen contended that the primary judge had regard but were extraneous or irrelevant matters (at [193]-[201]).

● The penalty of $125m imposed by the primary judge was not manifestly excessive (at [202]-[213]).

INDUSTRIAL LAW AND PRACTICE AND PROCEDURE

Challenge to a report of a referee regarding causation under s545 of the Fair Work Act 2009

In Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2021] FCA 348 (1 April 2021) the Court rejected a report of a referee pursuant to s54A(3)(c) of the Federal Court of Australia Act 1976 (Cth) (FCA Act).

In a previous judgment the Court found the union contravened the Fair Work Act 2009 (Cth) (FW Act): [2019] FCA 451; (2019) 286 IR 52. The remaining issues in the litigation were (1) the identification and quantification of any entitlement to statutory compensation; and (2) whether the Court should impose any pecuniary penalty. The Court referred some aspects of the issues as to the entitlement to statutory compensation to a referee for inquiry and report: see (No 2) [2020] FCA 1093. The referee prepared a report and the parties were in dispute as to whether the report should be adopted or rejected.

The power of the Court to determine how to proceed with a referee report after it has been “provided to the Court” is in s54A of the FCA Act and rule 28.67 of the Federal Court Rules. Lee J relied on the principles in Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784 at [7] as setting out the considerations relevant to the Court’s discretion as to whether or not to adopt a referee report (at [15]).

Lee J held that the referee’s report should be rejected in whole. In summary, this was because the referee had gone beyond the questions and concepts that the Court asked him to address, being those related to factual causation. Further, the referee misunderstood the legal principles applicable to causation in the context of s546(2)(b) of the FW Act, the scope of the questions and, more specifically, blurred the line between factual and legal causation and that misunderstanding coloured the referee’s report on the evidence before him (at [9]). Rather than referring the matter back to the referee, the Court will in due course determine all remaining issues (at [53]).

Lee J observed at [47]: “For reasons I have already explained, the line was blurred between the task of the Court and the specific questions put to the Referee for resolution, in this case the line between factual and legal causation. I mean this with no disrespect to the Referee. I thought it was clear, given the nature of my Reference Judgment, but perhaps in future in matters such as this it may be useful for there to be a case management hearing where a non-subject matter referee is apprised directly by the Judge of the precise nature of the task the referee is being asked to undertake”.

PRACTICE AND PROCEDURE AND LEGAL PRACTITIONERS

Application to restrain solicitor from acting against former client

In Sacca v El Saafin [2021] FCA 383 (20 April 2021) the Court dismissed an interlocutory application by the first defendant seeking an order restraining a solicitor from acting for the plaintiff in the proceeding. In doing so, Anastassiou J summarised the three potential basis that might justify the exercise of the Court’s jurisdiction to restrain a solicitor from acting against a former client, being:

1. misuse of confidential information (at [26]-[27])

2. the duty of loyalty owed by a solicitor to their former client even after the solicitor’s retainer has been terminated (at [28]-[29])

3. the due administration of justice to protect the integrity of the judicial process (at [32]-[33]).