Monday, May 30, 2011

This week in the High Court - 30 May 2011

There are three cases being heard in the High Court this week, and a judgment to be delivered in a suite of related cases.

On Tuesday, 1 June 2010 the High Court will hear the appeal in Michael Wilson & Partners Ltd v Nicholls.  In this case the respondents (Nicholls and Slater) were employees of the appellant, a law firm operating in Kazakhstan.  One of the partners of that law form was a Mr Emmott. The appellant commenced arbitration proceeding against Emmott in London alleging breach of fiduciary duty.  Subsequently, the appellant also commenced proceedings in the Supreme Court of NSW against Nicholls and Slater.  In those proceedings the appellant alleged Nicholls and Slater were knowingly-concerned in breaches of fiduciary duty by Emmott.  Justice Einstein found in favour of the appellant.  The Court of Appeal allowed the appeal by Nicholls and Slater.  There are three issues on the appeal to the High Court:
  • The first is the finding of the Court of Appeal that the appellant’s proceedings should be dismissed as an abuse of process because after Justice Einstein’s judgment was delivered, the Arbitrators in London published an interim award on liability in which they dismissed most of the claims against Emmott.  The Court of Appeal held that to the extent the appellant was unsuccessful in the arbitration against Emmott, they should not be able to pursue claims against Nicholls and Slater based on Emmott’s supposed liability.  This would constitute a collateral challenge to the Arbitrator’s findings and would therefore be an abuse of process. 
  • The second is the finding by the Court of Appeal that Justice Einstein should have recused himself on the grounds of apprehended bias. 
  • The third is the rejection of a contention by the appellant that Nicholls and Slater had waived their entitlement to rely upon apprehended bias because they did not appeal against Justice Einstein’s refusal to recuse himself.

On Wednesday, 2 June 2011 the High Court will hear argument in Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd.  This appeal addresses the complex interaction between a covenant in a subdivision of land preventing certain parts of the land from being used as a hospital, the Ku-Ring-Gai Local Environment Plan 194 and certain provisions of the Environmental Planning & Assessment Act 1979.  Unless you work in “parks & gardens”, probably not very interesting.

On Thursday, 3 June 2011 the High Court will deal with HIH Claims Support Ltd v Insurance Australia Ltd.  This case arose out of the collapse of a large video screen during the 1998 Australia Grand Prix as a result of inadequate structural support.  The NSW Supreme Court found the scaffolder liable to the tune of almost $1.5 million.  The scaffolder had an insurance policy with HIH, but that company collapsed before making any payment.  The scaffolder then sought assistance from the Commonwealth Government assistance scheme established after the HIH collapse.  The Australian Grand Prix had a policy of insurance with the respondent that also responded to the claim.  The HIH support scheme paid over $1.3 million in satisfaction of the judgment against the scaffolder, and then sought contribution from the respondent on the basis it had a co-ordinate liability.  At trial the judge found that there was no co-ordinate liability because the HIH support scheme had no obligation to the scaffolder at the date of the collapse of the screen, as it did not at that stage exist.   Ultimately, the Victorian Court of Appeal held that the liabilities and burdens imposed upon the appellant and the respondent were different, and therefore no entitlement to contribution could arise.  This was demonstrated by considering what the position would have been had it been the respondent, and not the appellant, who paid out the claim by the scaffolder.  If the scaffolder had been paid under the respondent’s policy, there would have been no occasion for the scaffolder to make a claim under the support scheme, and therefore no liability of the support scheme to pay anything to the scaffolder.

Finally, on Wednesday, 2 June 2011 the High Court will deliver judgment in Commissioner of Taxation v BHP Billiton Ltd.  If you’re interested in the taxation treatment of limited recourse debts and inter-company loans and asset write-downs, this case is for you.

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