Judgments to be delivered this week in the High Court of Australia

The High Court will deliver judgment in three cases in which it is currently reserved.

On Thursday, 3 May 2012 the High Court will deliver judgment in ASIC v Shafron, in which ASIC seeks to re-instate findings made at trial but set aside by the NSW Court of Appeal that certain non-executive directors of James Hardie Industries had breached the Corporations Act 2001in approving a draft statement to the ASX about the funding of the Medical Research and Compensation Foundation, established to manage and pay out asbestos-related claims made against the James Hardie Group.

On Friday, 4 May 2012 the High Court will deliver judgment in two cases.  The first is Australian Education Union v General Manager of Fair Work Australia, which raises the somewhat technical issue of whether section 26A of the Fair Work Act operates to validate the registration of the Australian Principals Federation (which had earlier been quashed by the Federal Court), and if so whether section 26A impermissibly usurps or interferes with the judicial power of the Commonwealth.

The second judgment to be delivered on Friday is in Crump v State of NSW in which address the validity of section 154A of the Crimes (Administration of Sentences) Act 1999 is challenged on the grounds that it contravenes the so-called Kable doctrine to the extent that the section prevents the Parole Authority from considering Crump’s release on parole, despite a decision of the Supreme Court prior to the enactment of the section that he should be eligible for consideration for parole.

As usual, the case names link to the High Court's webpage where you will find copies of the written submissions and links to relevant transcripts etc.

This week in the High Court of Australia

This week there are two cases being heard in the High Court of Australia.

The first is Barclay v Penberthy, listed for hearing on Tuesday and Wednesday, 1 and 2 May 2012.  This case arose out of an aircraft accident in Western Australia on 11 August 2003.  Penberthy was the pilot of the aircraft, which had been chartered by Nautronix Holdings to conduct surveillance and aerial work in connection with marine technology it was developing.  Two passengers died and three were injured: all were employees of Nautronix.  At trial, it was held that the cause of the accident was a failure of an engine during takeoff, and the negligent handling of the aircraft in response to that failure.  The engine failure was caused by a faulty sleeve bearing.  The bearing was not the original bearing but a substitute that had been designed by Barclay, an aeronautical engineer.  As a result of the loss of the death and injury to Nautronix’s employees, its capacity to develop and commercially exploit the marine technology was inhibited, leading to a claim by Nautronix for pure economic loss.  At issue in the case is whether or not Penberthy and/or Barclay owed Nautronic a duty to exercise reasonable care to prevent it from suffering pure economic loss.  Determining that issue will involve an examination of the action by an employer for loss of services of its employees (per quod servitium amisit), and its interaction with the rule on Baker v Bolton (which held that at common law the death of a person causes solely emotional and pure economic loss to their dependants, neither of which sounds in damages – this case resulted in the enactment of Lord Campbell’s Act).

The second case is Burns v The Queen, to be heard on Thursday and Friday, 3 and 4 May 2012.  This is an appeal from the NSW Court of Criminal Appeal which upheld the appellant’s conviction on a charge of manslaughter in circumstances where she and her husband had either supplied methadone by injection to the deceased (constituting manslaughter by unlawful and dangerous act), or they owed a duty of care to the deceased but failed to render assistance to the deceased when he became ill as a result of the effects of the methadone (constituting manslaughter by criminal negligence), or both.

As usual, the case names link to the High Court's webpage where you will find copies of the written submissions and links to relevant transcripts etc.

High Court dismisses Hollywood's piracy complaint

This morning the High Court delivered judgment in the highly-anticipated case of Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16, which considered the question of whether iiNet had “authorised” the infringement of certain film copyrights of the appellants, and thereby itself infringed those copyrights.

The appellants were the owners, or exclusive licensee, of the copyright in “cinematograph films”.  The statutory monopoly conferred by the copyright in a cinematograph film includes the exclusive right “to communicate the film to the public”.  For present purposes the term “communicate” the film means to “make available online or electronically transmit” the film. 

iiNet is an internet service provider that, for reward, contracts with its customers or “subscribers” to provide them with access to the internet.  The agreements with iiNet subscribers prohibited the use of the iiNet service to infringe the rights of others, and forbad the subscriber to “allow anybody else to do so”.  The agreements also empowered iiNet to cancel, suspend or restrict the supply of the service if iiNet reasonably suspected illegal conduct by the subscriber, or any other person, in connection with the service.

The appellants complained that computers used by iiNet subscribers were used (among other inoffensive activities) to make their films available online.  The online availability of the films was as a result of peer-to-peer communication between internet users using the BitTorrent software, and constituted an infringement of the copyright by those BitTorrent users.  The appellants argued that iiNet had the power to prevent its customers from infringing copyright in the appellants’ films by issuing warnings and suspending or terminating customer accounts. They also argued that AFACT notices provided credible information of past infringements by iiNet's customers sufficient to raise a reasonable suspicion that acts of infringement were

continuing, and that, once iiNet had received this information, its failure to take action amounted to authorisation of its customers' infringements.  The appellants submitted that these infringements were authorised by iiNet notwithstanding that as the ISP iiNet had no power to modify the BitTorrent software, no power to take down the infringing material (because it was not acting as host), and there was no “common design” between the infringers and iiNet (as had previously been found with respect to the Kazaa file sharing system).

The factors relevant to whether or not an entity such as iiNet has “authorised” an infringement include the extent (if any) of the person’s power to prevent the infringement, and whether they took any other reasonable steps to prevent or avoid the infringement, including whether the person complied with any relevant industry codes of practice.

The High Court unanimously dismissed the appellants’ claims.  The Court observed that iiNet had no direct technical power to prevent its customers from using the BitTorrent system to infringe copyright in the appellants’ films.  All that iiNet could do was to terminate the provision of its services to its customers. The information contained in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers’ accounts.  Neither suspension, or the threat of suspension, would necessarily have prevented the infringements, given the capacity of the subscriber to continue to infringe simply by moving to another ISP.  For these reasons, the Court held that it could not be inferred from iiNet's inactivity after receiving the AFACT notices that iiNet had authorised any act of infringement of copyright in the appellants’ films by its customers.

The havoc that is the Australian Consumer Law

When Perram J described the amendment of the name of the Trade Practices Act 1974 to the Competition and Consumer Act 2010 as misleading because it suggested the Act was originally passed in 2010 I thought (respectfully, of course) that his Honour was off his trolley.

However, one feature of the amendments to the TPA has caused considerable havoc, and that is the removal of the consumer protection provisions from the body of the Act and their re-enactment as the Australian Consumer Law in Schedule 2 to the Act.

At least one publisher in the header to their text simply records this part of the Act as "Sch 2", with no indication of which section in schedule 2 is being discussed. This makes it embarrassingly cumbersome to try and find relevant provisions which are interspersed between numerous pages of commentary. Good luck trying to find Australian Consumer Law section 18 (for those who can't find it, that's the old section 52).

That same publisher also, by the way, has simply omitted any reference to the transitional provisions that are operative in relation to the ACL: quite unforgivable. the only explanation is the irritating practice of Commonwealth parliamentary counsel enacting transitional provisions in the Amending Act rather than inserting them into the Principal Act (as is done in NSW) where they will have ongoing utility.

As legal research is increasingly done on-line, the amendments have also caused considerable difficulties for on-line publishing. If one now uses the AUSTLII "note up" function for section 82 (the provision dealing with damages) one would be led to believe that there were only 3 cases in the case law of Australia that had ever referred to this section. The true number is, of course, in the tens of thousands.

Even worse, one cannot "note up" section 18 of the Australian Consumer Law at all, because it is simply one of more than 200 items in Schedule 2, all of which will therefore be noted up together (personally, that's not such a bad thing as it won't be so easy to include hundreds of marginally relevant cases in a footnote in submissions, but the capacity should still be there).

I could go on, but the basic point is that the Commonwealth parliamentary counsel dropped the ball, and the publishers have done little to regather.

 

Judgments to be delivered in the High Court of Australia

Next week the High Court will deliver judgment in two reserved cases.

The first judgment will be delivered on Wednesday, 18 April 2012 in the case of Aytugrul v The Queen.  At issue is the manner in which statistical evidence relating to DNA samples found at the crime scene were presented to the jury.  Two different formulations were adopted: a random occurrence percentage (ie the frequency with which a particular DNA profile is expected to occur in a population – one in every X persons); and an exclusion percentage (ie the proportion of people in that same population who would not be expected to have that same DNA profile).  The appellant argues that the DNA evidence expressed as exclusion percentages, being expressed as percentages of close to 100%, were unfairly prejudicial and should have been rejected.

The second judgment will be delivered on Friday, 20 April 2012 in the case of Roadshow Films Pty Ltd v iiNet Ltd, which addresses the issue of the extent to which an internet service provider may be liable for breach of copyright by its customers using BitTorrent, on the basis that it has “authorised” those copyright infringements.

As always, the case names link to the High Court's webpage, where details of the case and the written submissions can be downloaded.

One.Tel - yet another failure

Today the NSW Court of Appeal rejected an appeal by the Special Purpose Liquidator of One.Tel against the dismissal of proceedings brought against the Packer and Murdoch empires:  Weston in Capacity as Special Purpose Liquidator of One.Tel Ltd (in liquidation) v Publishing and Broadcasting Ltd [2012] NSWCA 79.

The background may be shortly stated.  The proceedings arise out of the announcement and subsequent cancellation by One.Tel of a $132 million renounceable rights issue, which was to be underwritten by PBL and News, and was announced on 17 May 2001.  On 29 May 201, however, the board of One.Tel resolved not to proceed with the renounceable rights issue, and instead to appoint administrators.  One.Tel went into liquidation in July 2001.  In December 2003 a Special Purpose Liquidator was appointed to consider whether any rights of action existed in relation to the cancellation of the renounceable rights issue and whether proceedings should be instituted against any person. 

On 25 May 2007 proceedings were commenced by filing a statement of claim naming inter alia PBL, News, James Packer and Lachlan Murdoch as defendants.  The statement of claim had to be serve within 6 months or it would become stale, unless the Court extended the time for service.  Six applications for an extension of time were sought and granted by the Supreme Court.  These applications were made ex parte without hearing from the defendants, and the extensions were granted on the understanding that once the statement of claim was served it would be open to the defendants to challenge those extensions. 

The supposed purpose of the delay in serving the statement of claim was to enable the SPL to take into account whatever decision was made by Austin J in civil penalty proceedings arising out of the collapse of One.Tel.  That decision (ASIC v Rich [2009] NSWSC 1229) was not handed down until 18 November 2009. Austin J’s decision was a spectacular failure for ASIC and, understandably, made the SPL and potential litigation funders somewhat nervous.  Nevertheless, funding arrangements were made and the SPL presumably received advice that notwithstanding ASIC’s failure, the claim against the Packer and Murdoch empires remained viable.

The statement of claim was finally served on 23 August 2010.  Predictably, the defendants challenged the extensions granted and Ward J discharged the fifth and sixth extensions of time, with the result that the statement of claim was stale at the time it was served, and the proceedings were accordingly dismissed, and the appeal against that decision, unsuccessful.

The decision of the SPL not to serve the statement of claim, ultimately, resulted in the creditors of One.Tel losing a potential asset said by the SPL to be worth $132 million plus interest since 2001 (a total of approximately $260 million).

A notable feature of the decision is the extent of the criticism of the SPL’s conduct (albeit much of the criticism was muted or understated, and often implicit rather than explicit).   The criticisms of the SPL’s conduct include the following:

• The SPL made a conscious decision not to provide the defendants with details of the allegations made in the statement of claim (see [26] to [28] of the judgment) and insisted that the claim be kept “confidential”: see [27], [28] and [172]).  Quite why the SPL thought that was a good idea is not clear.  But of course it backfired badly because the defendants were later able to complain, and did complain, about a statement of claim containing very serious allegations having been withheld from them (apparently only for tactical reasons) for many years.
• The SPL neglected to ask the defendants, after he had rejected the defendants’ offer to delay the proceedings in return for foregoing public examinations, whether they remained willing to delay the proceedings until after delivery of judgment in ASIC v Rich: see at [148]. 
• It is not clear what, if anything, the SPL did between April 2009 and September 2009 to secure funding.  Certainly there is no evidence of the SPL moving diligently during that period: see at [112] and [132].
• It appears that the SPL did not enter into the ultimate funding agreement until shortly before 14 May 2010 (nearly six months after the fifth extension was granted).  Again there is no evidence of the SPL moving diligently during that period:  see at [125].
• The SPL (at the behest it appears of the litigation funder) engaged fresh lawyers which further delayed service of the statement of claim: see at [183].
• The delays in relation to litigation funding were difficult to justify because in essence they involved an attempt by the SPL to secure a gilt-edged funding package to cater for a “catastrophic” cost scenario ($40 million), a figure that was was arrived at by little more than a highly dubious “back of the envelope calculation”: see at [187].  In that regard the SPL failed to pay sufficient regard to “the importance of litigation being pursued with reasonable speed and diligence”: see at [195].
• In effect the SPL abdicated control of the time at which the originating process would be served to litigation funders: see at [195].
• The SPL failed to pay sufficient regard to the prejudice that he was causing to the defendants and the risk that the claim (said by him to be worth upwards of $260 million) might be lost completely if the defendants, once served, applied to the Court to discharge the orders extending the time for service of the statement of claim: see at [195].

The creditors have, by the SPL’s conduct, lost the benefit of the proceeds of the litigation.  The SPL has also spent upwards of $13 million in pursuing the claim to the dead-end it has reached, and faces a liability to the defendants for their costs of the original application to dismiss the proceedings and the costs in the Court of Appeal.

The offer of $17 million made by the defendants in 2009 now looks decidedly less derisory. 

[NB: My gratitude to a colleague (who wishes to remain nameless, but who some will know has a fondness for Sunbears and Kakapos) for his substantial contribution to the above analysis]

Next week in the High Court of Australia

Next week in the High Court sees three days of hearing in British American Tobacco Australasia Limited v Commonwealth, and the associated case of J T International SA v Commonwealth, the challenge by Big Tobacco to the Tobacco Plain Packaging Act 2011.  Argument has been set down for three days commencing Tuesday, 17 April 2012.

Then, on Friday, the High Court will hear argument in Clodumar v Nauru Lands Committee, an unusual case in many ways as it involves the question of whether or not the High Court is entitled to receive “fresh evidence”, a question that arises in the context of the High Court of Australia sitting as the ultimate court of appeal in the judicial hierarchy of the Republic of Nauru in relation to certain matters.