Australia – Key Commercial Cases In 2017 And Areas To Watch For In 2018.

Contract & Tort

Two High Court decisions on contract

In Ecosse Property Holdings v Gee Dee Nominees the High Court decided that the deletion of words from a standard form contract can be taken into account when determining what the parties intended. In Thorne v Kennedy the Court clarified the grounds on which a contract can be set aside where it was procured by undue influence or unconscionable conduct.

Legislative reform 

The New South Wales legislature rewrote problematic provisions intended to allow plaintiffs to claim directly against a defendant's insurer, bringing greater certainty for parties with a claim against an insolvent defendant. 

Misfeasance in public office 

Even though claims in tort for misfeasance in public office are notoriously challenging, in Nyoni v Shire of Kellerberrin, the Full Federal Court upheld such a claim which had been rejected at first instance.

Areas to watch in 2018

While the High Court continues to deal with dual citizenship cases, the pipeline of forthcoming judgments includes decisions on judicial review of security of payment adjudications in the construction industry and a potentially landmark defamation case involving liability of internet search engine providers for search results.

Class Actions

Law Reform

The 25th anniversary of class actions in Australia saw the commencement of a new class action regime in Queensland and Law Reform Commission projects in Victoria and at the Commonwealth level. Proposals under consideration include the introduction of class certification at the commencement of class actions and lifting the ban on lawyers charging contingency fees.

Assessing shareholder loss where the claimants rely on market based causation

In HIH Insurance (In Liq) & Ors; Cuong Ly v HIH Insurance Limited (In Liq), the Court held that a shareholder who had purchased shares in HIH at an inflated price and subsequently sold those shares while the market price was still inflated should not be excluded from bringing a damages claim, contrary to the approach taken in the United States.

Class closure orders to facilitate settlement discussions

The Full Federal Court considered the circumstances in which class closure orders would be appropriate in Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited. 

Allco Class Action – late registrants and common fund orders

The Federal Court approved the settlement of the Allco Class Action in March 2017: Blairgowrie Trading Ltd v Allco Finance Group (Receivers & Managers Appointed) (In Liq) (No 3). In the settlement approval, the Court dealt with the approach to be taken to a surge of late registrations seeking to participate in the settlement. A "common fund order" was made after the funder offered to reduce its commission to less than the rate in agreements with group members who had signed up.

Areas to watch in 2018

Class actions will continue to focus attention on directors duties issues, increasing the existing pressure on D & O insurance. Strategic issues for settlements will remain contentious, such as eliminating so called "free riders", class closure and achieving finality. In addition, expect further examples of multiple class actions dealing with the same claims.

Anti-Bribery & Corporate Misconduct

Legislative changes in the areas of foreign bribery, deferred prosecution agreements and whistle-blower protections

During 2017, substantial public attention on anti-bribery and corruption saw the introduction of draft legislation to Parliament in December, laying the groundwork for stronger foreign bribery laws, the introduction of deferred prosecution agreements, and substantial reforms to whistle-blower protections in 2018. 

Financial Services & Regulatory Disputes

The banking industry under the microscope

2017 was another busy year of reform in the banking and financial services sector, culminating in the Government's announcement in November of a Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. We provide a snapshot of developments outside the Royal Commission, including the release of ASIC Report 515 – Financial Advice: Review of how large institutions oversee their advisers; the decisions in the first case brought by ASIC alleging contraventions of the “best interests obligations” introduced as part of the Future of Financial Advice reforms; the Banking Executive Accountability Regime (BEAR); the Australian Financial Complaints Authority (AFCA) and the ASIC Enforcement Review.

Areas to watch in 2018

Some expected changes to financial services regulation, such as the proposed compensation scheme of last resort, will be on hold while the spotlight is on the Royal Commission. Despite that, BEAR and AFCA are expected to commence this year and ASIC and APRA will be given new powers.

Energy & Resources

Interpretation of the Mining Act 1978 (WA) 

The High Court cast doubt on the validity of numerous Western Australian mining leases when its decision in Forrest and Forrest Pty Ltd v Wilson required the lodgement of a mineralisation report contemporaneously with the application for a mining lease.

Native Title developments

The Full Federal Court decision in McGlade v Registrar National Native Title Tribunal sent shockwaves through the industry with its rejection of established practices for the execution of Indigenous land use agreements. In addition, the highly anticipated appeal decision in the Timber Creek native title compensation claim (Northern Territory v Griffiths) was handed down in July 2017. The Full Federal Court upheld most of the trial judge's findings, but reduced the award for economic loss. As anticipated, the parties have applied for special leave to appeal to the High Court. 

Practice & Procedure

Non-assistance clauses in settlement agreements

The decision in Commonwealth v Sanofi may limit the enforceability of "non-assistance" clauses in settlement agreements, especially where such a clause would prevent a witness from discussing relevant evidence with remaining parties to the litigation.

Obtaining evidence from the United States

The Federal Court delivered judgment in Lavecky v Visa Inc endorsing an application to obtain documents from three overseas entities under the United States Code. It is the first time that such an endorsement has been sought in Australia. The Court stressed the importance of parties seeking an endorsement from the Australian court before making an application to the US court.

Admissibility of webpages and search results

The Federal Court in Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 2) held that evidence of webpages and internet search results was inadmissible hearsay.

Areas to watch in 2018

There is likely be an increasing role for litigation funders in corporate disputes. The Victorian and Commonwealth governments will put the regulation of litigation funding under the microscope when they receive law reform commission reports, due in March and December.

International Arbitration

In the Courts

In 2017 there were a number of important Australian judicial decisions on interpreting and enforcing arbitration agreements, enforcing arbitral awards and considering the availability of interim measures in support of arbitrations. These included Hancock Prospecting Pty Ltd v Rinehart, which confirmed that arbitration agreements are to be interpreted liberally, and Hui v Esposito Holdings Pty Ltd, which demonstrated that courts are prepared to set aside arbitral awards where a party has been deprived of a reasonable opportunity to present its case and denied a realistic possibility of a successful outcome.

Legislative reform, new guidelines and rules

2017 also saw legislative changes, and new guidelines and rules published by key arbitral institutions. These included proposed amendments to International Arbitration Act 1974(Cth) and the commencement of the Commercial Arbitration Act 2017 (ACT) which brought the Australian Capital Territory into line with all other Australian States and Territories. 

Investment Treaty Arbitration

In the area of investment treaty arbitration, the first Australian decision enforcing an award was handed down. In addition, Australia became a signatory to the Mauritius Convention on Transparency in Treaty-Based Investor-State Arbitration and the Investor-State Dispute Settlement provisions of two bilateral free trade agreements were agreed and amended respectively.