Carter Newell's 12 Cases of Christmas 2022

Dec 2022 |

On the twelfth day of Christmas, the legislature gave to me, permanent reforms to suit the 21st century …

In a post-script to our 2021 twelfth day of Christmas note, the Queensland legislation that we referred to came into force on 30 April 2022 – amending the Oaths Act 1867 to enable the electronic signing and witnessing of affidavits and statutory declarations (including doing so in person). Additionally, the Property Law Act 1974 was amended so as to, relevantly, permit the making and signing of a deed electronically, remove the requirement for an individual to execute a deed in the presence of a witness, and expand the manner in which corporations could execute a deed. Similarly, a few months earlier, the Corporations Act 2001 was amended to make permanent the ability to electronically sign and send various documents, and to expand the provisions dealing with the manner of execution of documents (including deeds) by corporations.

Additionally, in 2023, certain Queensland Courts and Tribunals should see the arrival of a modern e-filing system!

The Litigation & Dispute Resolution Team at Carter Newell wish you a safe and happy festive season.

 

On the eleventh day of Christmas, the High Court gave to me, a decision upholding denial of indemnity…

On 14 December 2022, the majority of the High Court in Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2022] HCA 38 found that Allianz’ gratuitous waiver of a defence under s28(3) of the Insurance Contracts Act 1984 (for non-disclosure) was revocable and was in fact revoked. Delor Vue did not establish that Allianz was precluded from revoking its waiver by reason of ‘election’, ‘waiver’, estoppel, or the duty of utmost good faith. Much will likely be written as to the importance of this decision in relation to insurance, and the duty of utmost good faith. However the decision has broader application.

The Court held that in the law of contract there are limited circumstances in which a gratuitous waiver of rights becomes irrevocable. The general rule is that, despite a ‘mere naked promise ... not founded upon any consideration’ not to enforce a legal right, the legal right may continue to be enforced until it is fully satisfied. It was held that the development of loose legal rules for an irrevocable waiver would undermine formalities where they are required for written contracts.

The Court also examined the principles of election by affirmation, recognising that aspects of it presented difficulties (‘like Schrödinger's cat’). The Court opined that replacing it with the doctrine of estoppel may be too large a step now for the common law, but that the common law should not take the opposite step of vastly expanding the operation of election by affirmation. The election principle was found to have no application to the conduct of Allianz. The Court also examined other principles of ‘waiver’, finding that there were relevantly two other categories which concerned extinguishment of rights. It rejected attempts to expand this to include a third category of merely taking steps that evidenced a choice between two inconsistent courses. Finally, as to estoppel, the Court found that Delor Vue did not prove any acts, facts or circumstances from which detriment could be inferred.

 

On the tenth day of Christmas, the Qld Court of Appeal gave to me, confirmation that the CHO acted legislatively…

In Hunt & Ors v Dr John Gerrard, Chief Health Officer & Anor; Ishiyama & Ors v Dr Peter Aitken, Former Chief Health Officer & Ors; Baxter & Ors v Dr John Gerrard, Chief Health Officer & Anor [2022] QCA 263, the Court considered whether five public health directions (imposing vaccination requirements in certain contexts) made under s362B of the Public Health Act 2005 by the Chief Health Officer (CHO) were decisions of an administrative or legislative character. The appellants were seeking reasons for the directions, under the Judicial Review Act 1991 (JRA). Necessarily, such reasons were only required to be provided if the directions were of an administrative character. At first instance, Justice Dalton held that the directions were of a legislative character.

The majority in the Court of Appeal upheld the decision at first instance and found no error in her Honour’s approach. While recognising that the Explanatory Notes could be used to support the competing contentions, the Court determined that the issue was better addressed by the application of well-established principles from previous case law. It was held that a comparison of the powers conferred on the CHO with the content of the relevant directions supported the conclusion that the directions went well beyond ‘gap-filling, and determined the content of a law as a rule of conduct rather than the application of a general legislative provision to particular cases. The remedial nature of the JRA was found not to justify treating a decision as administrative if it was otherwise of a legislative character.

Interestingly, Justice Davis came to the oppositive view. His Honour held the question went to the heart of the separation of powers in the Westminster system, and that the provisions showed all the classic features of a grant of administrative power. His Honour concluded, by drawing attention to the Explanatory Notes for the provision in question, that there was no doubt that the legislature actually intended that the powers be administrative.

 

On the ninth day of Christmas, the UK Supreme Court gave to me, a case sure to ruin this year's Hogmanay...

On 23 November 2022, the Supreme Court of the United Kingdom delivered judgment in Reference by the Lord Advocate of devolution issues under paragraph 34 of Schedule 6 to the Scotland Act 1998 [2022] UKSC 31. The judgment answered a question referred to it by the Lord Advocate (the senior law officer of the Scottish Government) in light of a draft bill of the Scottish Parliament that made provision for a referendum: ‘Should Scotland be an independent country?’

Section 29 of the Scotland Act 1998 states that the Scottish Parliament cannot legislate on ‘reserved matters’, such as the ‘Union of the Kingdoms of Scotland and England’ and ‘the Parliament of the United Kingdom’. [An exception was made by way of Order in Council in 2014 for that year’s unsuccessful independence referendum.]

The critical question was whether the proposed Bill would ‘relate to’ a reserved matter, with the legislation providing that this was to be determined ‘by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances.’ The Court held that ‘relates to’ required more than a loose or consequential connection. In this context, determining the purpose was different from the purposive interpretation of legislation. Similarly, the ‘effects’ were not confined to considering the direct effects prescribed by the legislation. The Court held that the purpose was clear on the face of the Bill, and that it encompassed the question whether the Union should be terminated. The Court also held that the effect would at the very least have important political consequences, given a referendum is a democratic expression of the view of the electorate. The Court was, therefore, in no doubt that the Bill related to a reserved matter. Finally, the Court gave consideration to submissions raised by the Scottish National Party in relation to the right to self-determination – holding, in particular, that the principle was not in play as it is normally limited to situations of colonial type or foreign occupation, and does not confer a right to secede.

 

On the eighth day of Christmas, the Queensland Supreme Court gave to me, declarations about a coal mining royalty...

On 7 November 2022, Justice Bradley of the Supreme Court of Queensland answered separate questions in Glencore Coal Queensland Pty Ltd v State of Queensland & Anor [2022] QSC 240, determining that coal on or below the surface of certain land was not the property of the State, and that Glencore was not precluded from making a claim for restitution in respect of royalties paid to the State.

For nearly 14 years Glencore had been mining coal under mining leases granted by the State. It had paid more than $54m in royalties to the State in respect of a lot that it owned, and over $80m in respect of a lot owned by a third party. Glencore claimed to have paid royalties to the State in the mistaken belief that the State owned the coal, and that the State was obliged to make restitution. The State opposed the claims, and counterclaimed against Glencore for royalties in respect of coal mined from the land owned by the third party.

It was not in dispute that the original grants in the late 1800s were effective to grant the fee simple in the land and, at the time, also granted ownership of any coal on or under the surface. His Honour reviewed subsequent events, including surrenders of the grants and fresh grants, and found that ownership of the coal was unaffected and that the State did not regain ownership of the coal. The State’s arguments that legislation in respect of royalties ‘covered the field’ and precluded restitution was also rejected. In this regard, his Honour held that the legislation did not express or imply a restriction or prohibition on bringing a claim for a common law remedy (unlike certain other legislation).

 

On the seventh day of Christmas, the United States Supreme Court gave to me, the right for a footy coach to take the knee...

In the spirit of Christmas, we take a look at a landmark United States Supreme Court case rooted in Christianity, namely Kennedy v. Bremerton School District, 597 U.S 21-418 (2022).

In this case, a public high school football coach in Bremerton, Washington had a long and active history of praying in the middle of the football field immediately after each game. The prayer was eventually joined by members of his team, bystanders, and even members of the opposing team on some occasions. The school board, concerned that they were infringing on the separation of church and state, requested the appellant to pray elsewhere or at a later time, however the appellant refused. Ultimately, his contract was not renewed, and the coach unsuccessfully sued the school board in the lower courts, and then appealed to the Supreme Court.

The Supreme Court found by a 6-3 majority that the schools’ actions against the appellant violated his rights under the First Amendment. This was due to a number of factors, including the fact that there was no obligation on students to participate, the audience was not captive, it was not publicly broadcast, and principally there remains ‘no historical understanding that the Establishment Clause permits governing bodies to be hostile to religion in this way.’ In dissent, Justice Sotomayor raised issue with the court’s interpretation of the facts, alleging that the prayers were ‘demonstrative’ and ‘disruptive’ rather than ‘quiet’ and ‘private’. Her Honour also opined that the majority decision rested on an erroneous understanding of the Religion Clauses and a disregard of the balance that the Court had previously sought to strike among the clauses.

 

On the sixth day of Christmas, the WA Supreme Court gave to me, no common interest with an old trustee...

On 22 November 2022, Justice Curthoys of the Supreme Court of Western Australia delivered a decision in Horwood v Aeges Pty Ltd (In Liq) [2020] WASC 299 (S2) in respect of a claim for common interest privilege. Some two years prior, the court had made orders for the outgoing trustee, Aeges Pty Ltd (in liq), to provide the incoming trustee with books and records of the trust. Relevant documents had been provided in stages, although the liquidator remained in possession of a number of documents over which an interested third party (Ms Davenport) claimed common interest privilege. Ms Davenport was the executor of the estate for Mr Horwood (who had been the director of Aeges) and, with Aeges, was defendant to a proceeding alleging breach of trust or fiduciary duties in management of the trust, and assistance or involvement in those breaches on the part of Mr Horwood.

It was recognised that a new trustee has a prima facie entitlement to be placed in as good a position as the outgoing trustee, whereas beneficiaries have more limited rights to access trust documents and information. Nevertheless, as part of its equitable supervisory jurisdiction, the court has a discretion to direct that documents be provided. In this case it was not the outgoing trustee but Ms Davenport who was opposed to release of the documents - on the basis that the documents aided her defence in the proceedings and were privileged.

His Honour referred to the principles of common interest privilege, noting that it is not separate to legal professional privilege but is an exception to the general rule that privilege does not attach to communications to third parties. It did not matter that Aeges had not asserted the privilege. Rather, the court should ‘treat all persons interested as if they were partners in a single firm or departments in a single company.’ Importantly however, the privilege ‘cannot subsist in cases where the interests of the parties claiming it are 'selfish and potentially adverse to each other.' It was held that, upon appointment of a liquidator, Aeges’ interests were potentially adverse to those of Ms Davenport. Further, even if a liquidator had not been appointed, his Honour was not persuaded that the interests were not potentially adverse in light of the breach of trust allegations.  Accordingly, the claims for common interest privilege were not established.

 

On the fifth day of Christmas, ChatGPT gave to me, an AI generated case summary...

We could not resist jumping on the bandwagon and testing out the ability of OpenAI’s ChatGPT to generate a case summary using AI. The following was the response to a request for a 2 paragraph summary of the most significant US Supreme Court decision in 2020 (it does not currently have access to later cases):

One of the most significant US Supreme Court decisions in 2020 was the decision in Bostock v. Clayton County, Georgia, which was announced on June 15, 2020. The case centered around the question of whether Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of sex, also applies to discrimination on the basis of sexual orientation and gender identity. In a 6-3 decision, the Court ruled that discrimination on the basis of sexual orientation and gender identity is a form of sex discrimination and is therefore prohibited under Title VII. This decision was significant because it extended federal protections against discrimination to LGBTQ individuals in the workplace.

 

On the fourth day of Christmas the Federal Court gave to me, a valuable lesson on cyber security….

In Australian Securities and Investment Commission v RI Advice Group Pty Ltd [2022] FCA 496, an Australian Financial Services Licensee was found to have contravened its general obligations under subsections 912(a) and (h) of the Corporations Act 2001, for failing to have documentation and controls in respect of cybersecurity and cyber resilience in place that were adequate to manage risk in respect of cybersecurity and cyber resilience across its network. The licensee and its network of authorised representatives were the subject of multiple cyber attacks over a period of six years. The licensee eventually took steps to improve its cyber security, including by engaging a third party consultant and introducing a Cyber Resilience Initiative, although its implementation was around two years from the most significant cyber event and almost 6 years from the first cyber event. Investigations revealed that computer systems did not have up-to-date antivirus software, no filtering or quarantining of emails, inadequate backups, and poor password practices.

While the orders were made by consent, the court offered some helpful insights into how cyber security may be treated by the courts in future cases (which are likely not too far away given recent events). In particular, the court noted the following:

  1. ‘It is not possible to reduce cybersecurity risk to zero, but it is possible to materially reduce cybersecurity risk through adequate cybersecurity documentation and controls to an acceptable level.’

  1. ‘cyber risk management is a highly technical area of expertise...[and] the Court’s assessment of adequacy of any particular set of cyber risk management systems will likely be informed by evidence from relevantly qualified experts in the field.’

We encourage your holiday reading to include the Australian Cyber Security Centre’s Essential Eight.

 

 

On the third day of Christmas the Federal Court gave to me, tips re bank guarantees in insolvency...

In Hastie Group Ltd (In Liq) v Multiplex Constructions (Formerly Brookfield Multiplex Constructions Pty Ltd) (No. 3) [2022] FCA 1280 Justice Middleton was asked to determine whether the respondents were obliged to pay $60 million in “receivables”, and to pay $63.5 million in respect of bank guarantees provided to the respondents by the Hastie Group prior to its winding up, but drawn down after the liquidators’ appointment. 

In a lengthy decision delivered on 2 November 2022, his Honour determined that the respondents were entitled to the benefit of a s553C set off, despite a proof of debt not having been lodged in the winding up. Justice Middleton also gave consideration to issues concerning the conferral of proprietary interests in the bank guarantees or their proceeds. In this respect, his Honour recognised that it was the bank guarantees and not the subcontracts that provided that the bank would unconditionally pay the amount demanded. It was held that the bank guarantees conferred proprietary interests in not only the guarantees but, more significantly, the proceeds of the bank guarantees once received by the respondents. Further, the Hastie Group did not possess any proprietary interests in the bank guarantees that affected the respondents’ proprietary interests in the proceeds.

 

On the second day of Christmas, the Land Court gave to me, an enviro decision - albeit recommendatory…

On 25 November 2022, President Kingham of the Land Court of Queensland delivered judgment in Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21 recommending that Waratah Coal’s applications (for a mining lease and environmental authority) to allow it to mine thermal coal in the Galilee Basin be refused. The Court’s role, in circumstances where objections were made to Waratah Coal’s applications, was to make recommendations to the ultimate relevant decision maker. In making its recommendations, the Court had to take into account various prescribed factors under the legislation governing the applications, as well as comply with its obligations under the Human Rights Act 2019 not to make a decision incompatible with human rights.

The purpose of Waratah Coal’s project was to mine and export thermal coal to Southeast Asia for electricity production. A key issue in the proceeding concerned climate change, and it was held that emissions from combustion of the coal to be exported could be taken into account in considering, amongst other things, whether the applications were in the public interest. It was ultimately decided that “the climate scenario consistent with a viable mine risks unacceptable climate change impacts to Queensland people and property, even taking into account the economic and social benefits of the Project”.

The Court also considered social and economic benefits, as well as human rights implications. In relation to human rights, it was found that project would limit the right to property, and to privacy and home, of the owners of a privately owned protected area (known as the Bimblebox Nature Refuge). Additionally, in relation to climate change, it was found that “the following rights of certain groups of people in Queensland would be limited: the right to life, the cultural rights of First Nations peoples, the rights of children, the right to property and to privacy and home, and the right to enjoy human rights equally.” President Kingham held that the importance of preserving each right, given the nature and extent of the limitation on the right, weighed more heavily in the balance than the economic benefits of the mine and the benefit of contributing to energy security for Southeast Asia. Finally, although climate change and human rights take up a considerable proportion of the 372 page decision, certain other of the statutory criteria applicable to the applications were found not to have been satisfied.

 

On the first day of Christmas, the High Court gave to me, Google search results are not defamatory…

In Google LLC v Defteros [2022] HCA 27, the majority of the High Court found in favour of Google in holding that publication of “organic search results” (generated from the operation of the ranking algorithm) does not make Google a publisher for the purposes of the law of defamation. In this case, a search using the respondent’s name produced results that included a hyperlinked headline from a publication by The Age, and a short snippet from the article. There was no allegation that the search result itself was defamatory. Rather, the allegation was that, by publication of the particular search result containing the hyperlink, Google published the relevant article. The relevant principles were accepted, namely that a person who has been instrumental in, or contributes to any extent to, the publication of defamatory matter is a publisher. These principles were reinforced by the High Court last year (in our second day of Christmas case).

However, in the case of Google search results, this was found not to have amounted to a relevant act of participation. In short, the provision of the results had no connection to the creation of the article, its creation was in no way approved or encouraged by Google, and Google did not participate in it being placed on The Age’s website. Gageler J, while concurring, posited that the provision of a hyperlink might combine with other factors to amount to participation in the process of publication. – providing the example of a “sponsored link”. According to Edelman and Steward JJ, in such a case it would at least be arguable that there was a relevant common intention to publish, although this appeal did not present the occasion to consider this further.