In Grapecorp Management Pty Ltd (in liq) v Grape Exchange Management Euston Pty, the Court allowed the insolvent company to set off mutual credits, mutual debts or other mutual dealings with the other party.

Facts:

The plaintiff, Grapecorp, was a member of the Timbercorp group of companies. The Timbercorp group operated some 33 managed investment schemes.

The defendant, Grape Exchange, is and was at all relevant times part of the Costa Exchange group of companies, whose parent company was CostaExchange Ltd (“Costa Exchange”). The business of the Costa Exchange group involved growing, packing, marketing and distribution of fresh produce.

Timbercorp Securities Limited (in liq) (“TSL”), another member of the Timbercorp Group, was the responsible entity of the Projects.

Subsequently, Grapecorp entered into agreements (TSL Management Agreements) with TSL in respect of each of the said Projects.

Also, Grapecorp and Grape Exchange entered into a management agreement (“Management Agreement”). The Management Agreement was, in effect, a back-to-back agreement with the TSL Management Agreement. Grapecorp subcontracted its obligations under the TSL Management Agreements to Grape Exchange.

At no time did title to the grapes pass to Grape Exchange which, in marketing and selling the grapes, acted as agent for Grapecorp.

The present issue arose when the liquidators of Grapecorp demanded payment of the Unpaid Net Proceeds from Grape Exchange. Correspondence between the parties and their solicitors followed. Grape Exchange refused to pay and Grapecorp issued these proceedings.

Key point:

Whether Grape Exchange was entitled to set off all of the amounts allegedly owed to it by Grapecorp against the amount that it received from the sale of the grapes?

Decision:

The Court, while dismissing the Plaintiff’s claim, made the following comments:

1. All relevant payment obligations on each side existed and vested so as to provide a proper foundation for set off in relation to the amounts that subsequently matured and crystallized and indeed ended in money claims.

2. Both proceeds received and expenses incurred by Grape Exchange were pursuant to the terms of the Management Agreement, which specifically remained on foot post-liquidation.

3. The events giving rise to the debits and credits took place in the natural course of events and in the ordinary course of business.

4. Post-liquidation receipts, payments and debts are capable of set-off provided they existed as contingent claims at the commencement of the winding-up and are of a kind that ultimately mature into pecuniary demands capable of set-off.

5. Costs and Expenses incurred by Grape Exchange during the relevant period were expenses properly incurred by the liquidators in accordance with s 556(1)(a) of the Act and Grape Exchange is entitled to priority.

Lesson:

This case elaborated and explained the provisions of the Act related to Insolvent companies, mutual credit and set-off.

In John Pinawin t/a RoseVi.Hair.Face.Body v Edwin Domingo the full bench allowed an appeal challenging the Senior Deputy President’s decision.

Facts:

Rose Vi was a small hairdressing business at St Marys NSW. Mr Domingo was employed by Rose Vi .

Eventually the business owners Mr and Mrs Pinawin became concerned about Mr. Domingo’s unprofessional appearance and behavioural issues.

Subsequently few repeated “out of hour” misbehaviour related incidents, drug abuse information and hospitalisation caused Mr and Mrs Pinawin’s to doubt his mental stability and capability to continue employment .

Later Mr Pinawin terminated Mr Domingo from the employment with immediate effect.

On receiving the termination letter Mr Domingo lodged an unfair dismissal application with Fair Work Australia. The decision passed by Senior Deputy President was in favour of Mr.Domingo.

Thus, the present appeal was filled challenging the decision of the Senior Deputy President.

Key point:

Whether Rose Vi’s appeal contending the decision of Senior Deputy President must be allowed or not?

Decision:

The Full bench passed the decision in favor of Rose Vi and held the following:

1. The decision passed earlier in this matter does not disclose a reasoning process in relation to all of the matters raised . In particular there is no consideration of whether the termination was consistent with the Small Business Fair Dismissal Code. As the appeal raises Issues of compliance with the decision- making process permission to appeal was granted.

2. As per the Small Business Fair Dismissal Code:

   “It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures …”

3. Generally employers have no right to control or regulate an employee’s ‘out of hours conduct’. But if an employee’s conduct outside the workplace has a significant and adverse effect on the workplace, then the consequences become a legitimate concern to the employer.

Thus for the above reasons the full bench allowed the appeal and quashed the decision of the Senior Deputy President.

Lesson:

This case elaborated the circumstances wherein of “out of hour “conduct can also be taken as a reason to terminating an employee.

InCollins v Sydney Ports Corporation Justice Harrison explored the provisions of the Workers Compensation Act and Civil Liability Act 2002 while deciding the case in favour of the injured employee.

Facts:

Mr Collins(plaintiff) was employed by Sydney Ports Corporation(employer) as a Port Officer Grade2. He performed some of his duties at Port Botany. From time to time in the course of his employment Mr Collins was required to board vessels moored at the port.

Subsequently during the course of his employment the plaintiff was walking across the gangway when the shackle fractured and failed and the counterweight was released. This caused the now unrestrained gangway to rotate suddenly and without warning to its vertical position. As a result of which, the Plaintiff was violently propelled from his location on the gangway onto the wharf below causing serious injury to the plaintiff.

This suit was filed by the plaintiff alleging that his employer was negligent and in breach of certain statutory duties and is liable to compensate him for his loss and damage. He also alleges that Australian Winch and Haulage(independent contractor) is liable because it selected, supplied and installed the shackle.

Key relevant point:

1. Whether employer is in breach of non-delegable duty by reason of negligent act or omission of independent contractor

2. Whether independent contractor exercised reasonable care in the performance of its work

Decision:

Justice Harrison while passing a decision in favour of the plaintiff observed the following:

1. The gangway had previously failed and Sydney Ports were aware of what caused it to fail. Sydney Ports was, or should have been, aware of the potentially serious consequences that someone in the position of Mr Collins might suffer if the events that befell him were to occur. Significant among the breaches alleged is the fact that Sydney Ports took no step to ensure that the gangway was covered or protected by a mechanism that anticipated the possibility of failure and which operated as a backup or fail safe in the event that the principal cause of failure eluded discovery upon proper inspection. Nor did Sydney Ports properly inspect or maintain the gangway system in any event.

2. Australian Winch and Haulage have not discharged its duty of care to Mr Collins as it had not ordered for a grade 316 stainless steel shackle. Counterweight support linkages had failed previously and these failures were notorious. Even though the likelihood of the event occurring whilst the gangway was in use in the horizontal position was probably quite low, the nature of the injury that a user of the gangway at the time might potentially suffer if catapulted from it without warning was very serious.

Thus, It was held that each of Sydney Ports and Australian Winch and Haulage has breached its duty of care to Mr Collins and is liable for his loss and damage.

Lesson:

This case highlighted an important lesson that ignorance of a prior error can hold an employer liable too for the subsequent error of the independent contractor.

In Bell v steele (no 3 ) Justice Collier granted compensation for damages to the applicant as per the provisions of the Copyright Act 1968 (cth).

Facts:

The applicant (RICHARD KENNETH BELL) is an artist based in Australia who had engaged the respondent (TANYA STEELE) to assist him in the United States to make film footage.

A film trailer made by the applicant was distributed to Milani Gallery at Wooloongabba in Brisbane.

Subsequently, the respondent claimed copyright In the footage and demanded the removal of the trailer from public exhibition. The removal of the trailer caused huge financial loss to the applicant.

Thus, the application was filled by the applicant claiming that the respondent’s threat of copyright infringement was unjustifiable pursuant to the provisions of the Copyright Act 1968 (Cth).

Key point:

Whether applicant’s undisputed evidence as to losses should be accepted?

Decision:

Justice Collier found in favour of the applicant and held the following:

As per the provisions of the Act:

Where a person, threatens a person with an action or proceeding in respect of an infringement of copyright, then, whether the person making the threats is or is not the owner of the copyright or an exclusive licensee, a person aggrieved may bring an action against the first-mentioned person and may obtain a declaration to the effect that the threats are unjustifiable and may recover such damages for the loss sustained.

Thus, in view of the evidence put forth by the applicant and absence of submission of material by the respondent or appearance at any time in the proceeding, the Court passed a decision in favor of the applicant.

Lesson:

This case highlighted the importance of taking due care and caution before raising copyright infringement claims as a failed claim can result in expensive claims for damages.

In Sugar Australia Pty Limited v Mackay Sugar Ltd,Justice McMurdo explored the ground of denial of natural justice as a basis for setting aside an arbitration award.

Facts:

SUGAR AUSTRALIA PTY LIMITED, (applicant) was the manager of a joint venture which operated a sugar refinery.

MACKAY SUGAR LTD (respondent) was a participant in that joint venture. It was also the owner and operator of a sugar mill. The raw sugar required by the refinery was provided from the mill.

Subsequently a dispute arose, in which the applicant claimed that the respondent’s failure to supply its requirements during certain months was a breach of contract for which it should be compensated.

Later the parties agreed that their dispute should be arbitrated and an award was made by the arbitrator.

The applicant filed the present application to set aside that award on the grounds that the arbitrator failed to provide the applicant with an opportunity to address a point which was a critical element in his reasoning.

Key points: 

1. whether the failure by the arbitrator to provide the applicant with an opportunity to address a point which was critical to his reasoning amounted to misconduct by denial of natural justice

Decision:

Justice McMurdo in setting aside the award made the following points:

1. In the present case, as in many of those which were cited, the respective arguments were premised upon certain descriptions of the relevant issues in the arbitration, demonstrating that it is possible to construct arguments either way depending upon the level of abstraction at which an issue is described.

2. The arbitrator’s reasoning was that after the expiry of the three year contract, there was no contract between the parties which contained any term which obliged the respondent, conditionally or otherwise, to supply any raw sugar to the applicant.

3. In that part of the applicant’s points of contention, there was an indication of how the relevant proviso within the clause might have operated within the existing contract.

4. In its response to the applicant’s points of contention, the respondent did not challenge the operation of the proviso which was indicated by the applicant’s contention. Therefore, it was unnecessary for the applicant to develop this contention by its submissions to the arbitrator.

5. It is clear that it was beyond the power of the arbitrator to reach his view as to the meaning of clause and as to its applicability after expiry of the contract. Thus, the applicant should not reasonably have apprehended that the arbitrator would dismiss its claim by this view of clause, without providing the applicant with an opportunity to make submissions on the point.

Thus, the order must be set aside as the applicant has established that there a failure to provide natural justice.

Lesson:

This case highlights 2 important facts:

1. An applicant must raise all relevant points of issue for arbitration in advance. The ground of denial of natural justice cannot be relied upon if any point of relevance was not raised in the application but was decided upon by the arbitrator later.

2. An arbitrator must make sure that both parties are given sufficient opportunity to address the issues the arbitrator has found to be of relevance.

In Larkden Pty Limited -v- Lloyd Energy Systems Pty Limited Justice Hammerschlag granted leave to for a party to continue arbitration proceedings against the company in administration.

Facts:

The plaintiff (or “Larkden”) is the holder of US patents, Australian patent (together “the Larkden patents”) and corresponding patents in other parts of the world, which embody inventions in the renewable energy field.

The defendant (or “Lloyd”) was engaged in various forms of research and development at a development facility in Cooma, NSW.

The parties entered into a written Licensing Agreement, a licence, applicable Worldwide (including the right to sub-license), to use, commercialize, exploit, adapt, modify and improve any and all aspects of the Technologies for the purpose of developing the Activities and exploiting the Project Objectives.

Subsequently the parties went into arbitration in connection with a dispute. When Larkden’s lawyers wrote to Lloyd’s lawyers seeking consent to a form of orders, the directors of Lloyd resolved that in their opinion, Lloyd was insolvent or likely to become insolvent at some future time and resolved appointment of voluntary administrators.

It is at this point the present application for leave was sought.

Key points:

Whether, an application for leave to recognition and enforcement of an arbitral award against a company in voluntary administration must be allowed?

Decision:

Justice Hammerschlag, while granting the leave observed the following:

1. As the High Court recently pointed out, in Westport Insurance Corporation v Gordian Runoff Ltd  following arbitral proceedings involving more than the performance of private contractual arrangements between the parties. The statutory regime involves the exercise of public authority whether by force of the statute itself or by enlistment of the jurisdiction of this Court.

2. It is unlikely that Parliament intended to disregard the distraction and cost considerations in relation to principal arbitral proceedings but nevertheless intended that they should be given weight when it comes to recognition and enforcement of an award, which is the culmination of those proceedings.

3. In the present case the distraction value to the administrators is minimal. The costs will be modest, compared to the arbitration proceedings themselves.

4. There is no suggestion that recognition and enforcement of the Award will allow Larkden to steal a march over any other creditor or potential creditor. Another factor in favour of the grant of leave is that Larkden is seeking to vindicate rights of an essentially proprietary nature. There is no good reason why the interests of unsecured creditors should be a barrier to Larkden at least seeking vindication of those rights

Lesson:

This case highlighted the importance of the discretionary power of courts when considering whether to grant leave to proceed against companies in external administration.

In Accessories Pty Limited v Sidawi Hon’ Justice Mukhtar held that the bailee cannot be liable for breach of bailment.

Facts:

The respondent Mr Sidawi took his recreational boat and trailer to the appellant’s (All Covers and Accessories Pty Limited) office and factory workshop in Chelsea Heights to have some things installed.

Subsequently on a later date , after closing of the business, a fire destroyed the factory premises and everything in it including the respondent’s boat and trailer.

He then sued the appellant in the Magistrates’ Court .The Magistrate court held that the bailee was obligated to inform the bailor that his business was not insured. The Hon’ Court applying a Canadian case, held that such a duty was imposed by the law where the goods were of an “unusually high value” which he regarded the goods here to be.

The appellant made the present appeal arguing that the determination lacked an authoritative or principled basis and imposed upon a bailee a duty which was unjust, commercially unreal and unknown under Australian law.

Key points:

Whether, or in what circumstances, a bailee for reward is under a duty to warn the customer of an absence of insurance?

Decision:

Justice Mukhtar observed, among other matters, the following:

1. It was established in trial before the Magistrate Court that a bailee is not an insurer of goods; and is not under a duty to insure. The principle of creating a duty to warn about the absence of insurance for goods of an unusually high value could only be conceivably attracted on the facts of a particular case where, somehow, insurance was as an aspect of the dealing. Canadian case did not establish a broad proposition, and was very much confined to its own facts in which the taking out of insurance by the bailee was part of the dealing.

2. On principle, the duty to warn in a bailment case could only arise where the bailee knew or could foresee risks or hazards to the goods, or had some other apprehension concerning the safe keeping and preservation of the bailed goods

3. In this case there were no unusual risks or hazards to the goods whilst they were in the appellant’s safekeeping that might possibly arouse a tortious duty to warn. The appellant was accepted to be blameless for the fire. There was nothing on the facts of this case giving rise to an obligation on the appellant to warn that it was not insured for the destruction of the goods.

Thus, it was held that the law of bailment called for the dismissal of the claim and the appeal was allowed.

Lesson:

This case explained the scope and ambit of a bailee’s obligation of duty of care.

In Phonographic Performance Company of Australia Ltd v Commercial Radio Australia Limited , Justice Foster elaborated on the definition of the “broadcasting service” within the Broadcasting Act.

Facts:

The applicant, Phonographic Performance Company of Australia Ltd (PPCA), was an incorporated copyright collecting society. It offered non-exclusive licences of a copyright of commercially released sound recordings. .

The respondent, Commercial Radio Australia Limited (CRA) was an incorporated industry body representing the interests of commercial radio broadcasters in Australia who make use of the commercially released sound recordings in their business.

By an umbrella Licence Agreement, PPCA agreed to grant to each member of CRA a non-exclusive licence to broadcast PPCA sound recordings.

By a further agreement between PPCA and CRA, the arrangements embodied in the Industry Agreement continued.

In furtherance to Digital Amendment and the interplay between the provisions of the Broadcasting Services Act, 1992, PPCA claimed that the licence which was granted to the members of CRA did not include the right to make available to the public PPCA Sound Recordings in radio programs delivered via the Internet at the same time as making those recordings available to the public by means of a radio broadcast.

Key relevant point:

Does the existing licence encompass within its scope the playing of recordings in both the FM radio programs delivered to the public using the broadcasting services bands and in the same radio programs delivered simultaneously to the public via the Internet?

Decision:

Honorable Justice Foster held:

1. The service which transmits the very same radio programs at essentially the same time both to the FM transmitters and beyond and to the web stream servers and beyond is the one service. The members of CRA who stream their radio programs on the Internet do so only as part of a program package which also simultaneously transmits those programs via frequency modulated radio waves to the consumer’s FM receiver. The service is but one service being a service which combines various delivery methods or platforms and which delivers the same radio program using the broadcasting services band.
2. The simulcast transmission of the same radio program via the FM waves and the Internet is also a “broadcast” within the current definition of that term in s 10(1) of the Copyright Act and, for that reason, is within the scope of the licence which PPCA agreed to grant to the members of CRA and which it did grant from time to time to members of CRA upon the terms and conditions set out in the Member Agreement.

Therefore, the service provided by the members of CRA was held to be a broadcasting service and the proceedings was dismissed with cost.

Lesson:

The case helps in understanding the broad definition of the terms “broadcast”,“Broadcasting Right” and “Broadcasting Services” and also explained what is included and excluded in these definitions.

In Re Willmott Forests Ltd Justice Davies explored the provisions of the CORPORATIONS ACT 2001 that discusses a party’s right to apply to the Court to determine the power of a liquidator to disclaim.

Facts:

The first plaintiff, Willmott Forests Limited (“WFL”) was the responsible entity and/or manager of a number of managed investment schemes (“MIS”). These MIS were forestry operations conducted on land which was either freehold land owned by WFL or leased by WFL from third parties

The members of the MIS (“the Growers”) had rights to grow and harvest trees on that land under project documents that include lease and licence agreements with WFL for the use and occupation of the land

Subsequently, WFL went into liquidation and the liquidators entered into independent contracts to sell the land.

The liquidators made application to the Federal Court:

1. to exercise the powers to terminate, relinquish or surrender the project documents of the registered MIS and Professional Investor MIS; and
2. to disclaim the project documents of the contractual and partnership MIS as onerous pursuant to the Act.

The Willmott Growers Group Inc (“WGG”) and the WILLMOTT ACTION GROUP INC (“WAG”) (which each represent different groups of Growers and have leave to intervene as contradictors) opposed the application and relief sought by the Liquidators.

Key relevant point:

1. Whether the liquidators disclaimer of the leases would have the effect of extinguishing the Growers’ leasehold estate or interest in the subject land

Decision:

Justice Davies while holding that a disclaimer of the leases by the liquidators of WFL will not have the effect of extinguishing the Growers’ leasehold estates, observed the following,

“A leasehold estate is a grant of property right and the grant of property right confers on the tenant different legal rights in the property than the rights attaching to the landlord’s reversionary interest. It is therefore unnecessary to extinguish the Growers’ leasehold estates in order to release WFL’s property from its liability. Moreover, the property proposed to be disclaimed is the contract for lease, under which WFL has already leased the land to the Growers. It is therefore unnecessary to interfere with the Growers’ property rights in order to release WFL from its liability to lease because the leases have been effected.”

Lesson:

This case highlighted an important lesson that a disclaimer of the lease by the liquidator of the landlord will not effect a tenant’s proprietary rights .The only effect of disclaimer is that the landlord’s interests and liabilities under the lease will be terminated.

In Usman Ali v Industries Services Training Pty Ltd , Vice President Lawler allowed an extension of time to file an application under unfair dismissal claims.

Facts:

The Applicant, Mr Usman Ali, was an employee of the Respondent (Industries Services Training Pty Ltd (IST).

The Applicant was given notice of dismissal in April. Termination letter read that the termination would take effect from May although the last working day of the applicant was in April.

The Applicant claimed that he had worked for IST for a period in Pakistan up until the time he came to Australia to commence working for IST in Australia.

This raised the possibility that the Applicant was an employee of IST while he was still in Pakistan and, thus, his period of employment by IST was longer than the period indicated on the application for relief.

The question to be decided was whether an extension could be allowed to file an application against the unfair dismissal.

Key relevant points:

1. Whether there was any valid reason in the delay to file the application?
2. Whether an extension to file the application must be allowed?
3. Whether such extension will cause prejudice to the employer (including prejudice caused by the delay)?

Decision:

1. It was noted that the delay was occasioned by the psychological impact of the dismissal of the Applicant. That impact is understandable given that continued employment was critical to a continuation of the 457 visa pursuant to which the Applicant was entitled to remain in Australia. The impact was sufficiently serious to require the Applicant to seek treatment from a psychiatrist.

2. Taking into account the matters specified in s.394 (3), there were exceptional circumstances in this case. The fact that the Applicant was present in Australia on a 457 visa meant that potentially the dismissal had significantly greater adverse impact on the Applicant than the dismissal of a citizen or permanent resident. He was mentally distressed by the dismissal such that he needed to seek treatment from a psychiatrist. That is an exceptional circumstance that accounts for delay of one day. Thus the discretion was to extend time enlivened by such finding should be exercised in the Applicant’s favour; particularly given his application was only one day out of time.

3. The dismissal letter recorded that the decision to dismiss was “based on applicant’s suitability for the role”. There is no suggestion in the evidence as to why the Applicant was regarded as unsuitable for the role. On the contrary, IST seems to have been more than satisfied with the Applicant’s work. He received a commendation for his work only shortly before he was terminated.

4. No prejudice would be caused to the Respondent as a result of an extension of time beyond prejudice of the sort that is inevitably suffered by a respondent who had to meet an unfair dismissal claim, that was otherwise statute-barred.

Lesson:

The case stand as a proof to the fact that every decision maker while deciding a case based on written law will also give reasonable consideration to his own idea of justice, equity and good conscience