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BHL19 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCAFC 94 per Wigney J
Relevant principles – Legal unreasonableness
The relevant principles in relation to legal unreasonableness have been given detailed consideration and analysis in many cases in recent times. (citation omitted) It is unnecessary to add significantly to what has already been written on the topic. It is sufficient to provide a brief summary of the general principles that emerge from those cases. The general principles are now so well accepted in the authorities that it is unnecessary to provide specific case citations. Following are the main points.
First, the concept of legal unreasonableness concerns the lawful exercise of power. Legal reasonableness, or an absence of legal unreasonableness, is an essential element in the lawfulness of decision-making.
Second, the Court’s task in determining whether a decision is vitiated for legal unreasonableness is strictly supervisory. It does not involve the Court reviewing the merits of the decision under the guise of an evaluation of the decision’s reasonableness, or the Court substituting its own view as to how the decision should be exercised for that of the decision maker. Nor does it involve the Court remaking the decision according to its own view of reasonableness.
Third, there are two contexts in which the concept of legal unreasonableness may be employed. The first involves a conclusion after the identification of a recognised species of jurisdictional error in the decision-making process, such as failing to have regard to a mandatory consideration, or having regard to an irrelevant consideration. The second involves an “outcome focused” conclusion without any specific jurisdictional error being identified.
Fourth, in assessing whether a particular outcome is unreasonable, it is necessary to bear in mind that, within the boundaries of power, there is an area of “decisional freedom” within which a decision maker has a genuinely free discretion. Within that area, reasonable minds might differ as to the correct decision or outcome, but any decision or outcome within that area is within the bounds of legal reasonableness. Such a decision falls within the range of possible lawful outcomes of the exercise of the power. It is only if the outcome falls outside the area of decisional freedom that it can be said to be legally unreasonable.
Fifth, in order to identify or define the width and boundaries of this area of decisional freedom and the bounds of legal reasonableness, it is necessary to construe the provisions of the statute which confer the relevant power. The task of determining whether a decision is legally reasonable or unreasonable involves the evaluation of the nature and quality of the decision by reference to the subject matter, scope, and purpose of the relevant statutory power, together with the attendant principles and values of the common law concerning reasonableness in decision-making. The evaluation is also likely to be fact-dependant and to require careful attention to the evidence.
Sixth, where reasons for the decision are available, the reasons are likely to provide the main focus for the evaluation of whether the decision is legally unreasonable. Where the reasons provide an evident and intelligible justification for the decision, it is unlikely that the decision could be considered to be legally unreasonable. However, an inference or conclusion of legal unreasonableness may be drawn even if no error in the reasons can be identified. In such a case, the Court may not be able to comprehend from the reasons how the decision was arrived at, or the justification in the reasons may not be sufficient to outweigh the inference that the decision is otherwise outside the bounds of legal reasonableness or outside the range of possible lawful outcomes.
Seventh, the evaluation of whether a decision is legally unreasonable should not be approached by way of the application of particular definitions, fixed formulae, categorisations, or verbal descriptions. The concept of legal unreasonableness is not amenable to rigidly defined categorisation or precise textural formulary. That said, the consideration of whether a decision is legally unreasonable may be assisted by reference to descriptive expressions that have been used in previous cases to describe the particular qualities of decisions that exceed the limits and boundaries of statutory power. The expressions that have been utilised in past cases include decisions which are “plainly unjust”, “arbitrary”, “capricious”, “irrational”, “lacking in evident or intelligible justification”, and “obviously disproportionate”: Muggeridge at [65]. It must be emphasised, however, that the task is not an a priori definitional or “checklist” exercise: Singh at [42]. Rather, it involves the Court evaluating the decision with a view to determining whether, having regard to the terms, scope, and purpose of the relevant statutory power, the decision possesses one or more of those sorts of qualities such that it falls outside the range of lawful outcomes.
Eighth, defective, illogical, or irrational reasoning or fact finding may support a finding that the ultimate decision or exercise of discretion was legally unreasonable, particularly where the illogicality relates to a critical matter upon which the decision or exercise of discretion turned. Muggeridge was such a case. That provides an appropriate segue to a consideration of the principles relating to the finding of jurisdictional error on the basis of illogicality or irrationality.
Relevant principles – Illogicality and irrationality
There is a degree of overlap between the principles of legal unreasonableness and the principles of illogicality and irrationality in administrative decision-making. That is because, as just noted, an exercise of discretion which is based on illogical or irrational reasoning or decision-making may be considered to be legally unreasonable. There is, however, another species of cases where illogical or irrational findings of fact may give rise to a finding that an administrative decision maker has failed to lawfully exercise their jurisdiction. That is where the illogical or irrational reasoning or finding relates to a jurisdictional fact: a necessary pre-condition to the exercise of power.
As Derrington J convincingly explained in EHF17 v Minister for Immigration and Border Protection[2019] FCA 1681, the principles relating to judicial review for jurisdictional error, including legal unreasonableness arising from illogical or irrational reasoning or fact finding, are separate and distinct from the principles relating to judicial review in respect of a “jurisdictional fact error”; that is, review of an administrative decision on the basis that the decision maker’s finding of the relevant jurisdictional fact was illogical, irrational, or not based on probative evidence. The significance of that distinction was doubted, to an extent, by the Full Court in BFH16 at [29]-[34], though it was ultimately unnecessary for the Full Court to decide that issue. Nor is it necessary or desirable for that issue to be addressed or determined in this case. It is not desirable because it was not an issue which was ventilated at first instance or addressed at all in the parties’ submissions on appeal. The matter was argued essentially on the basis that the Minister committed a jurisdictional error because, in making the findings or determinations that provided the basis for his decision, he acted “irrationally, illogically and unreasonably”.
That said, some of the impugned findings and reasoning of the Minister concerned a jurisdictional fact, albeit a fairly obscure and subjective one. In simple terms, that jurisdictional fact was that the Minister was not satisfied that the appellant passed the character test, specifically the criterion in subs 501(6)(d)(v) of the Act. Expressed in terms of the relevant statutory provisions (including the unfortunate double negative), the Minister’s discretion to refuse the appellant’s visa application under subs 501(1) only arose if the Minister was not satisfied that the appellant was not a person in respect of who it could be said that, in the event that he was allowed to remain in Australia, there is a risk that he would represent a danger to the Australian community or to a segment of that community, whether by way of being liable to become involved in activities that are disruptive to, or in violence threatening harm to, that community or segment in any other way.
As obscure as that jurisdictional fact may be, it is clear that if the Minister’s state of non-satisfaction was based on illogical or irrational reasoning or findings of fact, including findings not supported by logically probative evidence, he acted without jurisdiction in refusing to grant the visa to the appellant: Minister for Immigration and Multicultural Affairs v Eshetu[1999] HCA 21; (1999) 197 CLR 611 at [147]; Minister for Immigration and Multicultural and Indigenous Affairs v SGLB(2004) 207 ALR 12; [2004] HCA 32 at [38]; Minister for Immigration and Citizenship v SZMDS(2010) 240 CLR 611 at [122].
That is not, however, the only basis upon which the Minister may be found to have erred in a jurisdictional sense in cancelling the appellant’s visa. If, having found that he was not satisfied that the appellant passed the character test, the Minister exercised his discretion to refuse to grant the visa on the basis of factual findings that were illogical or irrational, or not supported by probative evidence, that too would amount to a jurisdictional error: Muggeridge at [35] and [58]. Illogical or irrational findings made by a decision maker “on the way” to a final conclusion may establish jurisdictional error: SZMDS at [132]; see also Minister for Immigration and Citizenship v SZRKT(2013) 212 FCR 99; [2013] FCA 317 at [151]–[153]; SZWCO v Minister for Immigration and Border Protection[2016] FCA 51 at [61]–[62]; Minister for Immigration and Border Protection v SZUXN(2016) 69 AAR 210; [2016] FCA 516 at [54].
It is critical to emphasise, however, that illogicality or irrationality in this context must mean something more than emphatic disagreement with the reasoning or findings: SZMDS at [124]; CQG15 v Minister for Immigration and Border Protection(2016) 253 FCR 496; [2016] FCAFC 146 at [61]. If “probative evidence can give rise to different processes of reasoning and if logical or rational or reasonable minds might differ in respect of the conclusions to be drawn from that evidence, a decision cannot be said by a reviewing court to be illogical or irrational or unreasonable, simply because one conclusion has been preferred to another possible conclusion”: SZMDS at [131].
It should equally be emphasised that, for an administrative decision to be vitiated for jurisdictional error based on illogical or irrational findings of fact or reasoning, “extreme” illogicality or irrationality must generally be shown, “measured against the standard that it is not enough for the question of fact to be one on which reasonable minds may come to different conclusions”: SZRKT at [148]. The “critical question” whether an administrative decision is irrational, illogical, and not based on findings or inferences of facts supported by logical grounds, “should not receive an affirmative answer that is lightly given”: SZMDS at [40]. A high degree of caution must be exercised before concluding that a finding is irrational or illogical in order to ensure that the Court does not embark impermissibly on “merits review”: SZMDS at [96]; SZVAP v Minister for Immigration and Border Protection (2015) 233 FCR 451; [2015] FCA 1089 at [14]–[15].
It should finally be observed, in this context, that in considering whether an administrative decision maker’s decision or exercise of discretion was the product of, or was materially affected by, illogical or irrational reasoning or factual findings, the decision maker’s reasons should not be the subject of over-zealous scrutiny: Minister for Immigration and Ethnic Affairs v Wu Shan Liang(1996) 185 CLR 259 at [272].
In a judgment of the Court of Appeal of the Supreme Court of Western Australia in Billabong Gold Pty Ltd v Vango Mining Ltd [No 2] [2023] WASCA 58 (18 April 2023) as delivered on 18 April 2023, the validity of an assignment of a bare cause of action was confirmed. In its decision the Court referred with approval to the Queensland Court of Appeal decision in Workcover Queensland v AMACA Pty Limited ([2012] QCA 240 (7 September 2012) 2 Qd R 276), and in particular the comments of McMurdo P at [16] – [17] Gotterson JA at [65] – [66].
Relevantly, the judgment of the Court stated:
This is an appeal against orders of Kenneth Martin J pursuant to reasons for judgment published in Billabong Gold Pty Ltd v Vango Mining Ltd [No 2]1 (primary decision).
In the primary proceedings, the appellant (Billabong) sued the first respondent (Vango) and the second respondent (Dampier) in relation to alleged breaches of an Ore Treatment Agreement dated 23 September 2014 (OTA). The dispute essentially concerned the proper construction and application of a ‘right of first refusal’ clause in the OTA and its assignability.
Billabong was not a party to the OTA when it was formed. The OTA was entered into by Vango and Dampier on the one hand, and a company called Northern Star Resources Ltd (Northern Star) on the other. At the time, Vango2 and Dampier were joint venturers pursuant to a joint venture agreement dated 18 November 2013. The joint venture (Plutonic Dome JV) held a number of tenements, including tenements from which gold was produced at a deposit known as the ‘K2 Deposit‘. At the time, Dampier was a subsidiary of Dampier Gold Ltd (Dampier Gold). Subsequently, on 24 August 2016, Vango acquired from Dampier Gold all of the shares in Dampier, and Dampier became a wholly owned subsidiary of Vango. The practical effect of this was that Dampier Gold had no continuing direct or indirect interest (via Dampier) in the Plutonic Dome JV or its tenements from the end of August 2016.
Pursuant to the OTA, Northern Star, which had its own gold operations nearby, could be called on to crush and treat gold ore produced by the Plutonic Dome JV from the K2 Deposit. The K2 Deposit was a component of a greater number of mining tenements the subject of the Plutonic Dome JV.3 The OTA contained, in cl 12.6, a ‘right of first refusal’ clause in favour of Northern Star which, when triggered required, Vango/Dampier to offer Northern Star an interest in the tenements held by the Plutonic Dome JV.
On 12 August 2016, Northern Star entered into an asset sale and purchase agreement with Billabong (Billabong Sale and Purchase Agreement) under which Northern Star agreed to sell its gold mining operations, including its tenements, to Billabong. Billabong was a subsidiary of a Canadian company and was incorporated on 27 July 2016, shortly prior to the entry into the Billabong Sale and Purchase Agreement.
As part of the sale to Billabong, Northern Star and Billabong also entered into a General Deed of Assignment and Assumption dated 11 October 2016 (Billabong Assignment Deed).
In broad terms, in the primary proceedings, Billabong alleged that, via the Billabong Sale and Purchase Agreement and the Billabong Assignment Deed:
it acquired, by way of assignment, Northern Star’s rights under the OTA;
Vango/Dampier breached cl 12.6 of the OTA by failing to provide offers for the transfer of tenements to Northern Star in early 2016, and to Billabong in 2017, when the offer criteria in the OTA were engaged; and
Billabong, as assignee of Northern Star, was entitled to mandatory injunctions requiring equivalent offers to be made to it in relation to the Vango/Dampier tenements.
In general terms, Billabong claimed that cl 12.6 of the OTA was engaged:
by events in around May 2016 involving a transaction by which Dampier conditionally agreed to sell its 40% interest in the Plutonic Dome JV Tenements to Vango; and
by transactions in 2017 involving Vango/Dampier and Dampier Gold under which it was agreed that Dampier Gold could, in effect, reacquire an interest in the K2 Tenements by the commitment of certain capital expenditure.
The learned primary judge found that:
Vango/Dampier breached cl 12.6 of the OTA in 2016 by failing to offer the tenements to Northern Star.
The 2016 cause of action in favour of Northern Star arising from that breach was a bare cause of action which was not assignable to Billabong. Accordingly, his Honour held, Billabong had no claim to relief in respect of the breach of the OTA in 2016.
Even if that cause of action were assignable, the delay by Northern Star (as assumed assignor) in enforcing the obligation meant that Billabong (as assumed assignee) was disentitled to mandatory injunctive relief, and Billabong would have been confined to a remedy of damages at law.
Vango/Dampier breached cl 12.6 of the OTA in 2017, and Billabong was entitled to mandatory injunctive relief requiring an offer to be made to it in relation to the K2 Tenements.
Pursuant to the last‑mentioned finding, the judge made final orders requiring Vango/Dampier to make an offer to Billabong in respect of the K2 Tenements. An offer was made and accepted by Billabong prior to the hearing of this appeal.
As explained in more detail later, in this appeal Billabong challenges the judge’s finding that the cause of action vested in Northern Star in 2016 was not assignable to Billabong, and the finding that even if it were assignable, Billabong would only be entitled to common law damages for the breach. Vango/Dampier contends that the judge was correct to find that the cause of action in 2016 was not assignable, but accepts that if it were assignable, the judge erred in finding that the breach precluded the grant of mandatory injunctive relief. Vango/Dampier also contends that having succeeded at trial in respect of the 2017 breach of the OTA, and obtained and accepted an offer in respect of the K2 Tenements, Billabong is now precluded from obtaining mandatory equitable relief in respect of the 2016 cause of action, including on the basis that it would cause hardship to Vango/Dampier. Accordingly, Vango/Dampier contends, even if the grounds of appeal succeed, this court ought not in any event grant mandatory injunctive relief in respect of the 2016 breach of the OTA.
For the reasons which follow, the appeal should be allowed. The assignment by Northern Star to Billabong of the cause of action for breach of cl 12.6 of the OTA in 2016 is not properly characterised as the assignment of a bare cause of action. Also, Vango/Dampier has not established any basis for refusing the grant of mandatory equitable relief. In particular, Vango/Dampier is not entitled to raise the defence of hardship for the first time on appeal.
…
Issue 1 – assignability Principles
It has long been said that generally a ‘bare right of action’ is not assignable. This remains the general rule.4 This general rule is founded on public policy notions related to the doctrines of maintenance and champerty.5 In general terms, maintenance is the financial support of litigation without just cause, and champerty is an aggravated form of maintenance marked by the feature that the stranger supporting the litigation will receive, in return, a share of the proceeds.6 It has been described as ‘trafficking in litigation’.7
Historically under the general law, champerty was ‘especially feared’ because the champertor’s financial stake in the litigation was regarded as providing a temptation to suborn witnesses or pursue worthless claims. In particular, the early concern expressed was that the remedial processes of the law might be used as a tool of oppression, particularly by powerful nobles and officers.8 In the Court of Appeal in Giles,9 Steyn LJ observed, with reference to Professor Winfield’s article on ‘The History of Maintenance and Champerty’:10
At the risk of oversimplifying the results of Professor Winfield’s research, it seems that one of the abuses which afflicted the administration of justice was the practice of assigning doubtful or fraudulent claims to royal officials, nobles or other persons of wealth and influence, who could in those times be expected to receive a very sympathetic hearing in the court proceedings. The agreement often was that the assignee would maintain the action at his own expense, and share the proceeds of a favourable outcome with the assignor. Often these disputes involved a claim to the possession of land, and the subsequent sharing of land if the action was successful.
The law of maintenance and champerty did not however stand still, but accommodated itself to changing times.11 The adverse consequences inimical to the public interest, that maintained actions were thought likely to produce, altered over the course of time and with changing social conditions, as did the recognition of what constituted a sufficient interest to justify interference in another’s litigation by supporting it.12 By the early 20th century:13
The law of maintenance and champerty depended upon the application of qualifications and exceptions hinged, for the most part, about what was an item of property as distinct from a bare right to litigate and what sufficed as a common interest between maintainer and the maintained. In British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd, Fletcher Moulton LJ said:14
‘The truth of the matter is that the common law doctrine of maintenance took its origin several centuries ago and was formulated … and defined … in such a way as to indicate plainly the views entertained on the subject by the Courts of those days. But these decisions were based on the notions then existing as to public policy and the proper mode of conducting legal proceedings. Those notions have long since passed away, and it is indisputable that the old common law of maintenance is to a large extent obsolete … The present legal doctrine of maintenance is due to an attempt on the part of the Courts to carve out of the old law such remnant as is in consonance with our modern notions of public policy … Speaking for myself, I doubt whether any of the attempts at giving definitions of what constitutes maintenance in the present day are either successful or useful. They suffer from the vice of being based upon definitions of ancient date which were framed to express the law at a time when it was radically different from what it is at the present day, and these old definitions are sought to be made serviceable by strings of exceptions which are neither based on any logical principle nor in their nature afford any warrant that they are exhaustive … [T]here is still such a thing as maintenance in the eye of the law, … and the general character of the mischief against which it is directed is … against wanton and officious intermeddling with the disputes of others in which the defendant has no interest whatever, and where the assistance he renders to the one or the other party is without justification or excuse. But in my opinion it is far easier to say what is not maintenance than to say what is maintenance.’ (emphasis added) (footnotes omitted)
As the boundaries of unlawful maintenance were pushed back, the prohibition on the assignment of a bare right to litigate became more strictly confined.15 Moreover, the exceptions or justifications which allow a person or body to maintain a litigant in a suit do not form a closed category.16
Whilst the class of exceptions and justifications is not closed, there are a number of well‑recognised categories of case which are exceptions to the general rule prohibiting the assignment of a bare right of action, or to which the general rule does not apply.
First, a right of action can be assigned if it is annexed to or ancillary to a property right being assigned.17 Secondly, and more broadly,18 even where the right of action is not annexed or ancillary to a property right, the rule does not apply if the assignee of the subsisting cause of action itself has a genuine and substantial interest, or a genuine commercial interest, in enforcing the claim that is otherwise distinct or separate from the interest merely derived from the assignment itself.19 The requirement that the commercial or other interest be ‘distinct or separate’ exists because, were it otherwise ‘the exception would swallow the rule because the assignment itself would always provide the commercial interest’.20 Thirdly, albeit perhaps illustrative of the second category, there is no prohibition on an assignee taking an assignment of a cause of action to support and enlarge a right already acquired.21 Fourthly, where the benefit of a contract is assigned, there is no impediment, on the grounds of maintenance or champerty, to the assignee pursuing a cause of action for breach which has occurred after the date of assignment.22
In Trendtex, the bank, Credit Suisse, took an assignment of a right of action being pursued by its customer, Trendtex, in connection with a consignment of cement to Nigeria in which a letter of credit had been dishonoured. Credit Suisse was held, in effect, to have a sufficient commercial interest in the litigation as it was a substantial creditor of Trendtex in connection with the arrangements for the consignment. However, the assignment agreement also provided for Credit Suisse to on sell the cause of action to a third party, and this latter aspect of the assignment was held to savour of champerty. That was effectively because the third party had no interest in the assignment that was distinct from the assignment itself.23
Genuine commercial interests have also been found in the relationship of members of the one corporate group, as well as in the relationship of shareholders and company.24
In WorkCover Queensland, a statutory body which had paid compensation in excess of $0.5 million to a worker injured by asbestos when working for the defendant, took an assignment of the worker’s common law claims against the defendant from the worker’s personal legal representative after his death. It was held that the statutory body had a genuine commercial interest in recouping its payment to the worker.25
In Rialto Sports Pty Ltd v Cancer Care Associates Pty Ltd,26 the facts were that in 2014, the owner/developer of a strata building (Rialto) sold lots to various purchasers, including a lot to a company called SRProp. In 2018, SRProp and other purchasers commenced proceedings in the District Court against Rialto for breach of contract in respect of defective work in the common areas. On 20 May 2020, SRProp entered into an agreement to sell its lot to another company (CCA). The contract for sale was completed on 1 July 2020. On the same date (1 July 2020), SRProp also assigned, by deed, its claims in the District Court proceedings against Rialto. Rialto contended that the assignment was ineffective on the basis that CCA did not establish that it had a substantial pre‑existing commercial interest in the action by SRProp. It was held that the assignment was effective for two reasons. First, CCA had a sufficient interest in the action as at the time of the assignment (1 July 2020), having completed by then the purchase of the lot. Secondly, CCA also had a genuine and substantial pre‑existing commercial interest in the suit at that time by reason of having entered into the contract to purchase the lot on 20 May 2020.27
In every case, the totality of the transaction must be considered.28 As has been observed, the concept of a genuine commercial interest is to be applied in a broad and practical way.29 So long as the asserted commercial interest is both genuine and distinct from the assignment itself, there is no reason in principle to give a limited ambit to the notion of a sufficient commercial interest.
Vango/Dampier nevertheless contended that for the assignment of a cause of action not to savour of maintenance, the relevant commercial interest must exist prior to the assignment. Reference was made to WorkCover Queensland and, in particular, to the observations of McMurdo P30 and Gotterson JA (with whom Martin J agreed). Gotterson JA said:31
From the discussion in the cases, several characteristics for sufficiency as a genuine commercial interest in this context can be discerned. In the first place, where the assignee relies on a genuine commercial interest to sustain an assignment, that interest must be one that has come into existence prior to the assignment. Plainly, a commercial interest in exploiting an assigned right, even if to recoup an amount paid in exchange for the assignment, would not, of itself, suffice. A commercial interest merely of that kind would tend to taint the assignment as savouring of maintenance or as champertous. It was on that basis that the assignment in Trendtex failed. The anonymous third party assignee had had no prior dealings with the parties to the assigned causes of action from which a genuine commercial interest might have arisen prior to the assignment.
Secondly, the pre-existing commercial interest need not be an interest which, itself, is enforceable at law or in equity. In Brownton, for example, the commercial interest that a defendant who had settled with the plaintiff had in recouping, if only partially, against another defendant who had refused to settle, was held sufficient to sustain an assignment of the plaintiff’s rights against that defendant to the other defendant who had settled. The assignee’s interest in recoupment was not a legally enforceable interest; yet, clearly, it was a genuine commercial interest which was in existence at the time of the assignment. Another example is found in Victoria Insurance Co v King which concerned an assignment by an insured to an underwriter of causes of action against a tortfeasor in circumstances where the insured did not have a right of subrogation. The underwriter clearly had a commercial interest in recouping payment made under the policy. Griffith CJ (with whom Chubb and Real JJ concurred) was in no doubt that the assignment was valid. (footnotes omitted)
Those observations in WorkCover Queensland were applied in Dover v Lewkovitz.32
For the reasons given below, we are not persuaded that for the purposes of the second category referred to in [126] above, a pre‑existing commercial interest is a necessary criterion, without which the assignment of the cause of action would necessarily fail. That is, while a commercial interest sufficient to support the assignment of a cause of action must be ‘separate or distinct’ from the interest in the assignment, it need not necessarily be ‘pre-existing’. A separate or distinct interest has no necessary temporal requirement.
First, the need for a pre‑existing commercial interest does not appear to have been established by the High Court in Equuscorp, and, as Vango/Dampier accepted, the judgment of French CJ, Crennan and Kiefel JJ is contrary to its proposition.33Equuscorp concerned tax‑driven arrangements in which members of the public were invited to invest in blueberry farming schemes. Under these arrangements, a company (Rural) would advance money to lenders. Rural was a member of a group of companies controlled by the promoters of the scheme. Equuscorp had obtained, in 1991, charges over Rural to secure certain loan funds provided to the promoters. The farming enterprise collapsed. After the collapse, Equuscorp, in 1997, took an assignment of the loan agreements from the receivers and managers of Rural and sued the investors under the loan agreements. The loan agreements were held to be unenforceable for illegality, having been made contrary to the requirements of the law regulating the issue of prescribed interests. Equuscorp also claimed, in the alternative, for restitution of the advances made under the loan agreements as money had and received.34 There were issues as to whether (1) the claims in restitution was assignable by Rural to Equuscorp, and (2) if so, whether the instrument of assignment, properly construed, assigned to Equuscorp the claims in restitution. Each member of the High Court held that as a matter of principle, the claims in restitution were assignable. French CJ, Crennan and Kiefel JJ held that Equuscorp had a legitimate commercial interest in acquiring the restitutionary rights upon the assignment of the purported contractual rights. Their Honours said:35
A restitutionary claim for money had and received under an unenforceable loan agreement is inescapably linked to the performance of that agreement. If assigned along with contractual rights, albeit their existence is contestable, it is not assigned as a bare cause of action. Neither policy nor logic stands against its assignability in such a case. The assignment of the purported contractual rights for value indicates a legitimate commercial interest on the part of the assignee in acquiring the restitutionary rights should the contract be found to be unenforceable. Equuscorp fell into the category of a party with a genuine commercial interest in the restitutionary rights. Notwithstanding the difficulties that may attend the claims having regard to particular circumstances and defences which might affect their vindication, the better view is that adopted by the Court of Appeal, namely, that the restitutionary claims were assignable. The question that next arises is whether they were assigned. (emphasis added)
As can be seen from this passage, the commercial interest found by their Honours to sustain the efficacy of the assignment was contemporaneous with the assignment itself.
In Equuscorp, Gummow and Bell JJ36 and Heydon J37 also held that the claims for money had and received were assignable, but found that the charge granted to Equuscorp by Rural over its assets in 1991 provided a sufficient commercial interest. Heydon J, however, also noted that the respondents had not explained why the assignment deed in 1997 was not itself sufficient to assign the causes of action for money had and received insofar as the loan instrument (in cl 4(i)) also included a charge by the investor/borrower in favour of Rural.38 His Honour however did not pursue the point, as it was one ‘rather under‑analysed on both sides’.39
Secondly, the point has been left open by the New South Wales Court of Appeal in Bakewell.40 Further, the point was not under consideration in Dover, where, relevantly, the only question was whether the relevant commercial interest could exist in the absence of a pre‑existing enforceable right against the assignor.41
Thirdly, as Ipp JA explained in Project 28,42 the interest ‘must be distinct from the benefit that the person supporting the action seeks to derive from the litigation. … It must be something beyond a mere personal interest in profiting from the outcome of the proceedings’. Also, in National Mutual Property Services, Lindgren J observed that, in this context, the expression commercial interest:43
refers to a commercial interest which exists already or by reason of other matters, and which receives ancillary support from the assignment. (emphasis added.)
That passage was cited with evident approval in Rialto,44 where Gleeson JA (with whom Bell CJ & Macfarlan JA agreed) also emphasised the words we have italicised.
To similar effect, in TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3),45 Finkelstein J referred to the ‘inescapable’ logic of Lord Roskill’s view in Trendtex, and said:
This is especially so when … the cause of action is connected with, or relates to, rights or interests owned, or that will fall into the ownership, of the assignee. (emphasis added)
Consistently with these authorities, what is required, in our respectful view, is that the interest be distinct from the assignment itself, not that it necessarily predate it. A pre‑existing commercial interest will typically be evidence of an interest distinct or separate from the interest acquired under the assignment itself. As we would respectfully understand the observations of their Honours in WorkCover Queensland, the need for a distinct or separate interest was supplied by the existence of a pre‑existing commercial interest in recouping the payments to the deceased worker, which arose upon payment of the compensation. Insofar as WorkCover Queensland may have appeared to indicate Trendtex required the interest predate the assignment, that proposition does not, with respect, seem to follow from Trendtex (see [12746] above).72
The evidentiary significance of a pre‑existing commercial interest does not, in our view, make such an interest a strict legal criterion conditioning the validity of the assignment. If, for example, the only asset of a subsidiary of a holding company was a cause of action in contract which it was pursuing against a defendant, and the holding company sold the shares in the subsidiary to a third party who also took an assignment of the subsidiary’s cause of action, it is difficult to see why the sufficiency of the assignee’s commercial interest would depend upon whether the transaction was structured in stages under which the sale of shares occurred first, followed by the assignment of the cause of action.
Fourthly, in the case of Giles, the House of Lords considered the position of a car rental company which provided replacement hire vehicles to motorists who had been involved in a motor vehicle accident, where the terms of the rental provided for the car rental company to sue the defendant in the motorist’s name, and to recover its hire charges from the judgment. The car rental company had no pre‑existing commercial interest in connection with the motorist’s cause of action prior to entering into the car rental agreement on the terms which allowed it to maintain an action against the defendant. It was held that the car rental agreement was not champertous. Lord Mustill (Lords Keith of Kinkel, Ackner, Jauncey of Tullichettle & Lowry agreeing) said:47
There is no ‘wanton and officious intermeddling’ in the dispute between the motorist and the defendant. The [car rental] company does not meddle at all, but allows the motorist to get on with the claim, and merely awaits a favourable result. True, the [car rental] company makes a profit, but this comes from the hiring, not from the litigation. For my part, I think it quite plain, without the need to go into any details of the law, that this transaction is neither champertous nor invasive of any requirement of public policy.
Fifthly, nothing in the policy justification for the rule – namely the avoiding of trafficking in litigation – imports the requirement that the relevant commercial interest must always predate the assignment. In effect, senior counsel for the respondents accepted that this is so.48 Each case will depend upon its own facts and circumstances,49 and the transaction must be considered as a whole, in assessing whether the assignment involves ‘wanton and officious intermeddling with the disputes of others in which the [assignee] has no interest whatever …’.50
12 Magic Menu (267); see, generally, the review of the development of the law of maintenance and champerty by Gummow, Hayne and Crennan JJ in Campbells Cash [66] ‑ [82]; Gladstone Ports [53] ‑ [54].
On 12 April 2023 the High Court delivered its judgment in Kingdom of Spain v Infrastructure Services Luxembourg S.A.R.L & Anor (ISL) [2023] HCA 11 when it unanimously dismissed an appeal from the Full Court of the Federal Court of Australia relating to the interpretation of the Convention on the Settlement of Investments Disputes between States and Nationals of Other States (1965) (ICSID).
The underlying dispute between the parties involved an investment that ISL had made in solar power in Spain based upon the existence of a Spanish subsidy program, which Spain later withdrew. ISL claimed this was a breach of the Energy Charter Treaty 1994 (ECT) between the Kingdom of Spain and the contracting parties.
The ECT contained an arbitration agreement by which Spain had agreed to arbitration with investing parties under the ICSID. Australia and Spain are both parties to the ICSID, which provides a mechanism for the conduct of international arbitrations and provides recognition and enforcement of awards in signatory states.
An arbitration of the dispute took place in 2018 – with ISL being awarded €101m. ISL then commenced enforcement proceedings in Federal Court of Australia to have the arbitration award recognised as if it were a judgment of the Court pursuant to the International Arbitration Act 1974 (Cth).
The High Court held that, inter alia:
(a) Spain was the subject of a binding ICSID award, with Spain’s agreement to Articles 53, 54 and 55 of the ICSID amounting to a waiver of foreign State immunity from the jurisdiction of Australian Courts to recognise and enforce, but not to execute, that award;
(b) the international law principle that a waiver of immunity under s.10 of the International Arbitration Act 1974 (Cth) must be “express” should not be understood as denying the ordinary and natural role of implications in elucidating the meaning of expressed words, and concluded that the orders made by the courts below were properly characterised as orders for recognition and enforcement.
With respect to the “express” nature of the waiver the High Court said:
A similar requirement for a waiver of immunity in a treaty to be “express” can be seen in numerous treaties of widespread operation. Article 32(2) of the Vienna Convention on Diplomatic Relations (1961)provides that a waiver of immunity from jurisdiction of diplomatic agents “must always be express”.Article 2 of the European Convention on State Immunity (1972)1 relevantly provides that a Contracting State cannot claim immunity from the jurisdiction of a court of another Contracting State if it has undertaken to submit to the jurisdiction of that court by “international agreement” or “an express term contained in a contract in writing”. In the Explanatory Report to the latter Convention2, the drafters observe that Art 2, as a whole, “concerns cases in which a Contracting State has expressly undertaken to submit to the jurisdiction of a foreign court”.
This principle of international law was reflected in Lord Millett’s and Lord Goff of Chieveley’s judgments in R v Bow Street Magistrate; Ex parte Pinochet [No 3]3. In that case, their Lordships considered a provision concerning waiver of immunity by agreement, similarly worded to s 10(2) of the Foreign States Immunities Act4. Lord Goff accepted that a waiver of immunity could occur by implication from conduct outside the terms of a treaty, such as by taking steps in proceedings concerning the merits of the case5. However, Lord Goff said that in the interpretation of a treaty, “consent by a state party to the exercise of jurisdiction against it must … be express”6. One source relied upon by Lord Goff for this reasoning was the 1991 Report of the International Law Commission which said that customary international law and international usage required waiver of immunity to be “expressed … in no uncertain terms”7. Similarly, Lord Millett said that it was not in dispute that “where [State immunity] is waived by treaty or convention the waiver must be express”.
[5][1999] UKHL 17; [2000] 1 AC 147 at 215, citing Oppenheim’s International Law, 9th ed (1992), vol 1 at 351‑355. Consistently with this, see Crawford, Brownlie’s Principles of Public International Law,9th ed (2019) at 486.
[7] United Nations General Assembly, Report of the International Law Commission on the work of its forty‑third session (1991) at 53.
In Czernuszka v King [2023] EWHC 380 (23 February 2023) – a decision of Martin Spencer J of the King’s Bench Division – his Honour, in a case involving catastrophic injury suffered by a woman rugby player, engaged in consideration of the content of the standard of care owed by one player to another. Was breach founded on a need to prove reckless conduct on the part of the defendant, or did the ordinary standard of care apply? His Honour found the latter but acknowledged that a lesser standard of care obtains only in more informal sporting activity. On the facts, his Honour found for the plaintiff.
A summary of the facts from the headnote is useful to set out (the plaintiff being referred to as “the claimant”):
The claimant was a member of a rugby team as part of which she participated in her first competitive league match at the “developmental” or starter level for those learning the sport. Many team members on both sides were novice players. The opposing team included the defendant who attempted to dominate the play and use her weight and greater experience (as well as her language) to intimidate the claimant’s team. As the game went on the defendant became increasingly frustrated as her tactics appeared not to be succeeding. Towards the end of the match, the defendant tackled the claimant but was winded by her own tackle. Shortly thereafter, a ruck formed after which the claimant, acting as scrum half, bent down to pick up the ball. Before the ball was in the claimant’s possession the defendant launched herself at the claimant, while the latter was bending over in a highly vulnerable position, and landed on her with full weight in a belly flop position, directly on top of the claimant’s neck and back with her hands on the claimant’s legs. The claimant suffered an injury to her spine which left her paraplegic and wheelchair-dependent for the rest of her life. She brought a claim against the defendant for damages in negligence, alleging breach of duty of care by failing to exercise such a degree of care as was appropriate in all the circumstances. The defendant resisted the claim, contending, inter alia, that in a sporting context liability could be established only if a defendant was shown to have been reckless or to have demonstrated a very high degree of carelessness. The court ordered that liability be tried as a preliminary issue
His Honour wrote:
[1] On 8 October 2017, the claimant, aged 28 and a mother of two, in her first competitive game of rugby, suffered an injury to her spine which has left her paraplegic and wheelchair-dependent for the rest of her life. By this claim, she claims damages in negligence against the defendant, who carried out the tackle which caused this injury. Unfortunately, injuries sustained in the course of games of rugby, and other sports such as association football, are not uncommon, these being contact sports played at speed where players can differ in height, stature and weight. In general, injuries, even serious injuries, are an accepted risk of the sport and do not sound in damages. However, sport is not exempt from, or immune to, the law of negligence. As will be seen (see paras 35–45 below), the courts have deemed actionable injuries sustained where the conduct of the opposing player fell below the standard of care appropriate and to be expected in all the circumstances. Sometimes, by reason of the particular circumstances, the bar for that standard will be set high requiring recklessness or a very high degree of carelessness: see, for example, Blake v Galloway [2004] EWCA Civ 814; [2004] 1 WLR 2844 discussed at paras 44 and 45 below. The main issues in this case are whether, for the defendant to be found liable, it is necessary for the court to find that she was reckless or exhibited a very high degree of carelessness given the particular circumstances of this case and whether, depending on the court’s findings in relation to the first issue, the tackle executed by the defendant which caused the claimant’s injury met this test so as to render the defendant liable to the claimant in damages.
[16] The movement which ends with the injury to the claimant starts with a scrum which takes place at 66:50 minutes into the recording, midway between the halfway line and the Sirens’ 10 metre line. The ball comes out to the Sirens number 13 who makes a break over the halfway line and the Bracknell 10 metre line where she is tackled (67:08). The ball comes to the Sirens no 6 who makes a further break over the Bracknell 20 metre line and is tackled halfway between the 20 metre line and the try line (67:25). From the ruck which forms, the ball is recycled on the Sirens side and fed to the claimant who runs towards the Bracknell try line and is tackled about 15 metres short by a Bracknell player other than the defendant. The ball is fed to the Sirens no 14 who is immediately tackled by the defendant: at the same time the claimant is getting to her feet (67:35). A ruck forms from the tackle to no 14. The defendant has got to her feet from tackling the no 14. The ball rests between the legs of the Sirens no 16, but she is not bound to the ruck and the ball is arguably out. The Bracknell coach, Mr Rosi, shouts from the side line “ball’s out”. The claimant has come round to the back of the ruck and, acting as scrum half, bends down to pick up the ball from between the legs of no 16. At the same time as the claimant is bending down, the defendant is coming round the side of what was the ruck with eyes only on the claimant, she does not wait for the claimant to pick up the ball, which remains at all times on the ground and never in the claimant’s possession. Bent over to pick up the ball, the claimant is in a highly vulnerable position. The defendant does not compete for the ball, as she would arguably have been entitled to do, but instead goes straight for the claimant, as shown in this still:
The defendant then puts her whole bodyweight forward and down on the claimant’s back, parcelling up the claimant by grasping her thighs just above the knees. The ball is left behind in the same position on the ground:
The claimant is driven down onto her bottom with her body still bent forward and the full weight of the defendant lands on top of her, with her head, neck and spine all put at risk:
The claimant immediately sustains a T11/12 fracture dislocation with a T10 ASIA B spinal cord injury: this injury is T12 motor complete leaving the claimant paralysed from the waist downwards and a full-time wheelchair user.
…
Edward Morrison
[21] Mr Morrison is a former full-time Professional referee, employed by the Rugby Football Union. He was appointed by World Rugby to over 40 Major Tier 1 International matches, between the period 1990–2001. He was one of only three referees in England to be offered full time status in 1998, having previously trained and worked as an engineer. He has refereed at all levels of the game including Underage Rugby, Men’s and Women’s Rugby at amateur level. He was appointed by World Rugby to referee at the 1991, 1995 and 1999 Rugby World Cup Finals Tournaments and he refereed the World Cup Grand Final between South Africa and New Zealand in 1995. He refereed the Women’s World Rugby Grand Final in Amsterdam between New Zealand and USA in 1998. Upon retiring from active refereeing in 2002, he continued to be employed by the RFU as a Referee Development Officer. In 2007 he was appointed as the Elite Referee Manager, a position he held until 2013. He has attended numerous disciplinary hearings either as a witness, or in an advisory capacity, when players were either cited or sent from the field in cases appertaining to Foul Play incidents.
…
[26] Having carried out an analysis of the game as a whole, Mr Morrison expressed the opinion that, whilst at no stage did he find any reason to question the claimant’s actions in terms of complying with the law of the game, in contrast, up to the time of the claimant’s injury,
“it is evident that there were a number of incidents of D breaching the law of the game, and in some cases, these actions constituted foul play. I have highlighted earlier in this report, the incidents where I believe D did not show due regard to the Spirit or the Laws of the game and was in breach of her duty of care towards her opponents.
“D was clearly one of the most experienced players on the field, which is noted from her own witness statement confirming that she has played the sport for ten years and is apparent from her decision-making throughout the video footage of the match. She was also captain of Bracknell Ladies and clearly the main decision-maker throughout the game. She also took all kicks from penalties awarded against her opponents. On viewing the footage of the game it became apparent to me all the players in the Bracknell side look to the D for leadership. It is my expert opinion that up to the incident in question, D’s conduct did not meet an acceptable standard required of a responsible rugby player.”
[27] In relation to the injuring tackle itself, Mr Morrison, in his report, expressed the view that, at the time that the claimant was bending down to pick up the ball, the ball was still in the ruck and the defendant was therefore offside. He stated:
“The C’s hands are on the ball, ready to be lifted but she is yet to gain possession and the ball remains in the ruck. The C is in the most vulnerable position possible, bent down at the waist with her head and neck exposed. If the D had not been offside and had been further away from C, C would have been able to lift the ball, and raise her head and neck up as she stood up holding the ball, leaving her in a much less vulnerable position, removing the ball from the ruck and leaving her open to a lawful tackle. Instead, the D was dangerously close to the C and despite witnessing C in this vulnerable position, D chose to perform a hard and heavy tackle, directly on top of C’s neck and back. …
“My overall assessment of the play of D in the context of the standard of the reasonable rugby player leads me to conclude that this action was a reckless disregard for the C’s safety and, in any event, fell below the standard of a reasonable rugby player. My reasons are detailed below.
“(1) The action of performing a belly flop with full weight down on top of C whilst having her hands on C’s legs (or at least having her hands on them) had the effect of pushing C’s head towards her legs in dangerous manner. Any reasonable rugby player would have been known that this act of applying force in this way risked causing a serious injury to her spine (or other serious injury), particularly given her weight.
“(2) C’s legs were out in front of her and so by D placing her hands round, or at least on, C’s legs and forcing her full weight on her spine, then C would have had no possibility of avoiding that pressure upon her spine.
“It is ultimately a matter for the court to determine whether this was a negligent or reckless act and why she should have acted in this manner. Particularly as there was no attempt to gain possession of the ball, or push C off the ball, but simply to forcefully flop onto C with her full weight, onto C’s back was inherently dangerous. As someone who has been involved in rugby for almost 60 years, as a player, coach, referee or administrator, I have never witnessed such a reckless incident.
“These actions are not those of a responsible rugby player. In my opinion, it was a reckless and dangerous act and fell below an acceptable standard of fair play.”
…
[36]In Condon v Basi[1985] 1 WLR 866, where Wooldridge’s case was not cited, the Court of Appeal had to address the standard of care owed by one player to another on the field of play. This arose out of a game of football played in the Leamington local league when the defendant so tackled the claimant as to break his leg. Sir John Donaldson MR observed that there appeared to be no authority as to what is the standard of care which governs the conduct of players in competitive ports generally or in a competitive sport where the rules and general background contemplate that there will be physical contact between the players, in particular. In a judgment with which the other members of the court agreed, the Master of the Rolls, having cited the judgments of Barwick CJ and Kitto J in the Australian case of Rootes v Shelton [1968] ALR 33, said, at p 868:
“I have cited from those two judgments because they show two different approaches which, as I see it, produce precisely the same result. One is to take a more generalised duty of care and to modify it on the basis that the participants in the sport or pastime impliedly consent to taking risks which otherwise would be a breach of the duty of care. That seems to be the approach of Barwick CJ The other is exemplified by the judgment of Kitto J, where he is saying, in effect, that there is a general standard of care, namely the Lord Atkin approach in Donoghue v Stevenson [1932] UKHL 100; [1932] AC 562 that you are under a duty to take all reasonable care taking account of the circumstances in which you are placed, which, in a game of football, are quite different from those which affect you when you are going for a walk in the countryside.
“For my part I would prefer the approach of Kitto J, but I do not think it makes the slightest difference in the end if it is found by the tribunal of fact that the defendant failed to exercise that degree of care which was appropriate in all the circumstances, or that he acted in a way to which the plaintiff cannot be expected to have consented. In either event, there is liability.” (Emphasis added.)
[37]The passage in the judgment of Kitto J which the Court of Appeal approved reads as follows:
“In a case such as the present, it must always be a question of fact, what exoneration from a duty of care otherwise incumbent upon the defendant was implied by the act of the plaintiff in joining in the activity. Unless the activity partakes of the nature of a war or of something else in which all is notoriously fair [presumably alluding to the maxim ‘all is fair in love and war’], the conclusion to be reached must necessarily depend, according to the concepts of the common law, upon the reasonableness, in relation to the special circumstances, of the conduct which caused the plaintiffs injury. That does not necessarily mean the compliance of that conduct with the rules, conventions or customs (if there are any) by which the correctness of conduct for the purpose of the carrying on of the activity as an organized affair is judged; for the tribunal of fact may think that in the situation in which the plaintiff’s injury was caused a participant might do what the defendant did and still not be acting unreasonably, even though he infringed the ‘rules of the game’. Non-compliance with such rules, conventions or customs (where they exist) is necessarily one consideration to be attended to upon the question of reasonableness; but it is only one, and it may be of much or little or even no weight in the circumstances.” (Emphasis added.)
[38]In Condon’s case, the court observed that the standard of care was objective, but objective in a different set of circumstances; thus there will be a higher degree of care required of a player in a first division football match than of a player in a local league match. The court also noted how the judge at first instance had found that the defendant had made a tackle “in a reckless and dangerous manner not with malicious intent towards the plaintiff but in an ‘excitable manner without thought of the consequences’” and how the judge had described the defendant to have been guilty of “serious and dangerous foul play which showed a reckless disregard of the plaintiff’s safety and which fell far below the standards which might reasonably be expected in anyone pursuing the game”. That conclusion by the trial judge was one which could not be faulted on its facts: on the law it could not be said that the defendant was not negligent.
[39]In Caldwell v Maguire [2001] EWCA Civ 1054; [2002] PIQR P6, the appellant, Peter Caldwell, a professional jockey, was seriously injured in a two-mile novice hurdle race at Hexham. His claim against two other riders, Adrian Maguire and Mick Fitzgerald, was dismissed by Holland J. His appeal to the Court of Appeal failed.
[40]In the course of his judgment at first instance, Holland J referred to the case of Smoldon v Whitworth [1996] EWCA Civ 1225; [1997] ELR 249. In that case the claimant sued another player and a referee at a rugby match in which he was badly injured when the scrum collapsed. The claim against the player was dismissed, but the referee was found liable and appealed. Lord Bingham CJ, giving the judgment of the court, recorded that the defendant had invited the judge to say that nothing short of reckless disregard for the claimant’s safety would suffice to establish a breach of the duty which the referee admittedly owed to the player. The judge, however, had adopted the test proposed by the claimant derived from Condon that the duty was to exercise such degree of care as was appropriate in all the circumstances. The court said that the judge was right to accept the plaintiff’s approach. This supports Mr Weir’s submissions as to the appropriate test to be applied in the present case.
[41]Tuckey LJ, in Caldwell, emphasised that Holland J had not said that, in order to succeed, a claimant has to establish recklessness, saying:
“That approach was specifically rejected by this court in Smoldon. As in Smoldon, there will be no liability for errors of judgment, oversights or lapses of which any participant might be guilty in the context of a fast-moving contest. Something more serious is required. I do not think it is helpful to say any more than this in setting the standard of care to be expected in cases of this kind.”
[42]Judge LJ, in his judgment in Caldwell, whilst agreeing with Tuckey LJ, emphasised two particular points: first, it is clear from the authorities that a finding that a jockey has ridden his horse in breach of the rules of racing does not decide the issue of liability in negligence. Second, in the context of sporting contests he considered it right to emphasise the distinction to be drawn between conduct which is properly to be characterised as negligent, and thus sounding in damages, and errors of judgment, oversights or lapses of attention of which any reasonable jockey may be guilty in the hurly burly of a race.
[43]Those are both points which are highly pertinent in the context of the present case. Ms King would not be liable simply because she had effected a tackle which was illegal, or even dangerous, within the Laws of Rugby: the fact that the tackle is illegal for the purposes of the Laws of Rugby is simply one of the factors to be taken into account in deciding whether the defendant’s conduct was negligent because she had failed to exercise such degree of care as was appropriate in all the circumstances. As to the second point, as I have mentioned (see above at para 34), the defendant’s case was not that this was an error of judgment and it remains to be considered whether, in the light of the concessions made by Mr Spreadbury, a defence can be mounted on that basis given that the defendant’s principal defence is no longer viable.
[44]Finally, I turn to the decision of the Court of Appeal in Blake v Galloway[2004] 1 WLR 2844, which concerned horseplay between 15-year-old boys who were throwing twigs and pieces of bark chipping at each other. The claimant picked up a piece of bark chipping and threw it at the defendant, who then picked it up and threw it back. Unfortunately, it struck the claimant in the right eye, causing a significant injury. The judge at first instance found the defendant liable, but Court of Appeal allowed the defendant’s appeal. The judgment of the court was given by Dyson LJ (as he then was). Having referred to the authorities including Wooldridge, Condon and Caldwell, Dyson LJ first defined the characteristics of the game in which the parties were participating as:
“informal play which was being conducted in accordance with certain tacitly agreed understandings or conventions … [namely] that the objects that were being thrown were restricted to twigs, pieces of bark or other similar relatively harmless material that happened to be lying around on the ground; they were being thrown in the general direction of the participants in a somewhat random fashion and not being aimed at any particular parts of their bodies; and they were being thrown in a good-natured way, without any intention of causing harm. The nature of the object and the force with which they were being thrown were such that the risk of injury (almost certainly limited to injury to the face) was very small. There was no expectation that skill or judgment would be exercised, any more than there would be by participants in a snowballing fight.”
In those circumstances, and given those characteristics of the game, the court held that there is a breach of the duty of care owed by participant A to participant B “only where A’s conduct amounts to recklessness or a very high degree of carelessness”. The court found that the defendant’s actions did not reach this high standard and that what had happened was “an unfortunate accident, and no more”.
[45]For the claimant, Mr Weir KC submitted that the court should not follow and adopt the approach of the Court of Appeal in Blake’s case but should prefer the test derived from Condon, namely that a defendant has a duty “to exercise such degree of care as was appropriate in all the circumstances”. However, I do not see that there is necessarily a conflict between the Condon test and the decision and reasoning in Blake’s case: my understanding of the judgment of Dyson LJ is that, in the particular circumstances of that case, involving as it did horseplay and the various other characteristics set out above, only if the defendant were to be found to have been reckless or to have shown a very high degree of carelessness could he be found liable. I do not understand Dyson LJ to have been laying down such a test for every case, nor to have dissented from the proposition that the overarching test for liability is whether the defendant failed to exercise such degree of care as was appropriate in all the circumstances. All he was saying was that, in those circumstances (horseplay with all the characteristics he describes), the appropriate degree of care is not satisfied, and the defendant is not liable, unless he could be shown to have been reckless or guilty of a very high degree of carelessness.
[46] For the claimant, Mr Weir KC relied, unsurprisingly, on the concessions made by Mr Spreadbury that the tackle executed by the defendant was dangerous by reference to the mechanics of the tackle and he submitted that, in this context, the distinction between a tackle being dangerous and the defendant being legally negligent is “paper thin”.
[47] In Blake v Galloway, Dyson LJ had set out what were the relevant characteristics of the game in which the participants were engaging for the purposes of assessing liability and what was the appropriate degree of care (see para 44 above) and therefore, at the court’s invitation, Mr Weir set out what he submitted were the relevant characteristics or circumstances by which the appropriate degree of care should be assessed in the present case. These were, he submitted:
(i) The characteristics of the defendant: she was big and heavy (weighing over 16 stone), a dominant tackler who was able to use her size and weight to drive other players back and down into the ground and she was the captain of the team, the player to whom the other members of the team looked up and who set the tone—she had previously played at a much higher level;
(ii) The level of the game and the (in)experience of many of the players: both sides were fielding novice players who were learning the game and for whom this was their first competitive game in what was only a developmental league, and who had only played a handful of games before: this applied to the claimant.
[48] Mr Weir submitted that the court should make findings concerning the defendant’s conduct both generally and in the two matches against the Sirens, and take those findings into account in assessing the injuring tackle. He commended to the court the evidence called on behalf of the claimant, and in particular the evidence of the claimant and Miss Leicester. He submitted that the court should find that the Bracknell players in general, and the defendant in particular, engaged in “trash talk” with a lot of swearing on the pitch and calling the Sirens players cunts, and that the defendant was overly aggressive, whacking Ms Cook on the head in the first game, causing a broken arm in that match and driving Miss Leicester into the ground (Incident 5) in the second match. He submitted that the defendant made a “call to arms” that the Bracknell players should “fucking smash the no 7”, that she adopted intimidatory tactics and became frustrated and angry when these were ineffective, culminating in her humiliating experience when she was winded in the course of tackling the claimant, leading to her saying: “that fucking no 7, I’m going to break her.”
…
[58] I find that the injury occurred against the following background and in the following circumstances:
(i) Although this was a league match, the nature of the league being developmental meant that the players were still learning the game and it should have been played in that spirit: the players had a duty to be mindful of each other and to play with the understanding that enjoyment and learning were the main objectives, not winning;
(ii) However, even in the “friendly” match between the sides on 8 May 2017, Bracknell played the game in an inappropriately aggressive and intimidatory manner, using “trash talk” (swearing a lot, including using abusive language directed at the opposing players), with the Bracknell players taking their lead from the defendant, and this carried through into the game on 8 October 2017;
(iii) The inappropriate approach of the defendant in the first match led to a Sirens player (Keeley) breaking her arm, Claire Cook sustaining a head injury and Sarah-Jane Garside getting punched;
(iv) In the match on 8 October 2017, as Miss Leicester said, the two sides were playing very different games: the Bracknell players, generally much bigger, relied on their size and their aggression whereas Sirens relied on their speed. As the game slipped away from Bracknell, the Bracknell players upped their rough tactics, which included the defendant driving Miss Leicester to the ground well after the ball had gone, in an “off the ball” incident: I agree with Mr Morrison’s assessment of this incident as set out in para 11 above;
(v) The defendant, despite attempting to dominate the play and use her weight and greater experience (as well as her language) to intimidate the Sirens players, became increasingly frustrated as the game went on and her tactics were seen not to be succeeding;
(vi) This culminated in the incident at 63:02 minutes into the video recording (and therefore towards the end of this 60 minute match) when, after tackling the claimant, the defendant succeeded in winding herself: whilst the defendant was being treated, the Sirens players were celebrating. They may well have been celebrating the fact that they had played so well and the match was effectively won (the score was 14–0) but it could have been interpreted by the Bracknell players as celebrating the injury to their captain and her ultimate humiliation in sustaining an injury from her own tackle;
(vii) I have no doubt that the defendant did, as the claimant said, utter the words: “That fucking number 7, I’m going to break her.” Thereafter, she was looking for an opportunity to get her revenge on the claimant: the red mist had metaphorically descended over the defendant’s eyes;
(viii) That opportunity came about three minutes later when, after a ruck, the claimant took up the position of acting scrum-half, and bent down to pick up the ball: the defendant, with eyes only for the claimant, not the ball, and before the ball was in the claimant’s possession, launched herself at the claimant who was obviously bent over in a highly vulnerable position, unsuspecting and unprepared to protect herself against what was about to occur;
(ix) The defendant, without any regard for the well-being or safety of the claimant and intent only on exacting revenge, executed the “tackle” in a manner which is not recognised in rugby: she drove the claimant backwards and, importantly, downwards using her full weight and strength to crush the claimant in a manoeuvre which was obviously dangerous and liable to cause injury: it is no mitigation for what the defendant did that she was going forwards, as Mr Brown submitted: the force and momentum were equally downwards, as Mr Morrison said;
(x) I do not find that the defendant intended to injure the claimant, indeed that is not alleged against her: I do find, though, that the “tackle” was executed with reckless disregard for the claimant’s safety in a manner which was liable to cause injury and that the defendant was so angry by this time that she closed her eyes to the risk to which she was subjecting the claimant, a risk of injury which was clear and obvious;
(xi) In particular, there was no error of judgment in the tackle: I find that the defendant did exactly what she set out to do, and whether or not the claimant had possession of the ball was irrelevant so far as she was concerned: at that moment she was not attempting to play within the Laws of the game, but to exact retribution on the claimant;
(xii) Consistently with the above, despite the claimant lying prostrate and obviously injured, the defendant walked way towards her own goal line, apparently unconcerned for the claimant and what she had done: nothing could have been further from the spirit of the game, as described and advocated by Mr Morrison in his evidence.
[59] I agree with, and adopt, Mr Morrison’s description of the tackle set out at para 27 above, and in particular his assessment that this was a “reckless and dangerous act and fell below an acceptable standard of fair play”. I also adopt and rely on the concessions made by Mr Spreadbury as elicited by Mr Weir KC in cross-examination, as set out at para 33 above.
[60] So far as the legal test is concerned, I endorse Mr Weir KC’s basic proposition that, within the law of negligence, the test is whether the defendant failed to exercise such degree of care as was appropriate in all the circumstances: this was the test endorsed in Condon v Basi[1985] 1 WLR 866 where the Court of Appeal adopted the formulation and approach of Kitto J in Rootes v Shelton. In particular, I do not consider that the Court of Appeal, in Blake v Galloway did, or intended to, lay down any rule or principle that, in the sporting context, the conduct complained of must be reckless or demonstrate a very high degree of carelessness in order for liability to be established. That was the standard applied in that particular case, and in the particular circumstances of that injury arising out of horseplay with the factors described by Dyson LJ and set out at para 44 above. Indeed, a requirement to establish recklessness was expressly rejected and disapproved by the Court of Appeal in Smoldon v Whitworth. However, if I am wrong about that, it doesn’t make any difference in this case because, on my findings, the defendant was indeed reckless and so satisfies this higher, more stringent, test in any event.
[61] In relation to the particular circumstances of the present case, which underpin the (legal) standard expected of the defendant in this match, I agree with and adopt the characteristics advocated by Mr Weir KC and set out in para 47 above relating to both the defendant and the level of this game. Furthermore, I agree with and adopt the features relied on by Mr Weir and set out at para 49 above, save in one respect: I do not think that the defendant was offside. However, at this level and against this opposition, the defendant should have modified her conduct because it was or should have been apparent that the claimant was treating the situation as though there was still a ruck and had adopted a stance consistent with that, namely the stance of a scrum-half bending down to pick up the ball from the scrum which made her vulnerable as she was stationary, bent over and not suspecting that tackle was coming: so much was, or should have been, obvious to the defendant.
[62] I therefore find that in this very unusual and exceptional context, the defendant executing a manoeuvre which was not within the experience of Mr Morrison and virtually outside the experience of Mr Spreadbury, the defendant is liable to the claimant for the injuries which the claimant sustained, and there shall be judgment for the claimant.
(emphasis added)
It is submitted his Honour’s legal analysis – and the outcome – reflects the position in Australia: Johnston v Frazer (1990) 21 NSWLR 89 at 93-94. As Chesterman J observed in Pollard v Trude [2008] QSC 119 (at [18]):
The law which imposes a general duty of care on those whose activities might cause harm to others applies to participants in sporting activities, although the application of the law and the imposition of the duty is affected by the circumstances of the activity. No separate or different duty of care applies to those who take part in sporting or recreational pursuits. The test for the duty and its breach is what would the reasonable man in the particular situation have foreseen and done. See Johnston v Frazer(1990) 21 NSW LR 89 at 94. If there are hazards associated with a particular activity which are inherent in it participants will be taken to have consented to the risk of the harm from those inherent dangers. See Rootes v Shelton (1967) 116 CLR 383.
In Quickcell Technology Products Pty Ltd v Bell (No 2) [2023] QDC 52 the court addressed the circumstances in which orders for costs would be made against a public officer upon an unsuccessful regulatory prosecution. His Honour Judge Horneman-Wren SC, DCJ, in a fairly wide ranging decision, makes a number of salutary comments in respect of costs to be awarded against prosecution where it is unsuccessful, finding that appropriate where the expert evidence adduced in the prosecution case “was formed on inappropriate, inadequate and unscientific bases”. In addition, His Honour characterises the fees charged by junior counsel below in the Magistrates Court, in 2017, as “eye watering”.
His Honour wrote:
[1] The appellant, Quickcell, having succeeded on the appeal seeks costs in respect of both the appeal and the original proceeding in the Magistrates Court.
[2] When successful at first instance, the respondent sought and obtained an order allowing an amount for costs higher than the amounts prescribed under the JusticesRegulation 2014.1 He had, successfully, argued that a higher amount was just and reasonable having regard to the special difficulty, complexity, or importance of the case. On that basis, he was awarded costs in the sum of $189,941.49.
[3] Separately to its appeal against conviction, Quickcell appealed the costs order on the basis that the matter was not of such difficulty, complexity, or importance as to warrant an award of costs above scale. On the appeal, counsel for Quickcell conceded that its contention in that regard applied as much to its case as it did to the respondent’s case. That is, that there was nothing about the difficulty, complexity or importance of the case which would warrant it receiving an order of costs above scale for the proceeding below in the event that it was successful on the appeal.
[4] Notwithstanding his submissions at first instance to the contrary which resulted in such a larger order of costs in his favour, the respondent now endorses the view that the exceptional qualities which resulted in such a favourable costs order do not exist.
[5] Notwithstanding its concession that the proceeding lacked the complexity, difficulty or importance which might found an award of costs above scale, in an affidavit filed on behalf of Quickcell, a solicitor deposes to the overall costs of the original and appellate proceeding having exceeded $500,000.00. In light of the concession, those actual costs are of no relevance. However, the evidence of them having been adduced some observations may be made about them.
[6] $133,299.55 is deposed to as having been paid to junior counsel in respect of the proceeding below. It can be accepted, as the reasons on the appeal decision reflect, that the proceeding in the magistrate court occupied 12 days over a very long period of time interrupted with the kinds of adjournments unavoidable in the jurisdiction which is the busy Magistrate’s Court. Notwithstanding that, the eyewatering figure for counsel’s fees must be viewed in the context that, as explained at paragraphs [179]-[200] of the appeal judgment, counsel at first instance, having not objected to the admission of exhibit 4.73 (an objection which, if taken, for reasons explained would have been unsuccessful) sought to argue all sorts of reasons as to why the court could not act upon the evidence contained within that document. The submissions were repeated on the appeal. The submissions were, for reasons explained entirely incorrect.
[7] However, for reasons explained in the appeal judgment, exhibit 4.73 was, of itself, when properly understood, sufficient to establish reasonable doubt as to the prosecution case such that Quickcell should be acquitted.
[8] Quickcell’s solicitors’ affidavit deposes to the same junior counsel having been paid $37,600.00 in respect of the appeal. As I have said, the same arguments concerning exhibit 4.73 were advanced by counsel on appeal – this time with a leader. Still the evidentiary value of exhibit 4.73 was missed. Still its relevance was disputed. From this it can be observed that junior counsel charged fees in excess of $180,000.00 and, quick literally, missed the single point most favourable to Quickcell. Furthermore, the appellant’s grounds of appeal and written submissions raised and advanced issue, such as a constructive failure, on the part of the magistrate to exercise jurisdiction which were entirely misconceived as a matter of legal principle and which were duly abandoned when this was exposed by the court in the course of hearing the appeal.
[9] The respondent is a public officer.2 Before the court may order the respondent to paycosts, the court must first be satisfied that it is proper that the order for costs shouldbe made.3 The appellant’s written submissions, prepared by the same junior counsel,acknowledge that.4 The appellant’s further submission,5 that the court, by operation ofs 158(1), must also be satisfied “that it is just and reasonable to make such anorder” is incorrect. It misstates s 158(1) and its effect. S 158(1) provides:
“158 Costs on dismissal
(1) When justices instead of convicting or making an orderdismiss the complaint, they may by their order ofdismissal order that the complainant shall pay to thedefendant such costs as to them seem just andreasonable.”
[10] The words “just and reasonable” qualify the extent of the costs which the court ispermitted to order the complainant to pay. They do not qualify the circumstances inwhich the power may be exercised. The appellant’s submissions directed towardsestablishing “that it is just and reasonable to make an order for costs”6 are misplaced.
[11] The appellant’s submission that “s 158A(2) of the Justices Act identifies the mattersthe court must take into account in deciding whether is it proper that the order forcosts should be made”7 is also incorrect as it misconstrues the legislative provision.
[12] S 158A(2) requires the court, in deciding whether it is proper to make the order forcosts, to take into account all relevant circumstances. It then provides a non-exhaustivelist of examples of circumstances which may be taken into account if relevant in a particular case.
[13] Of the circumstances set out in s 158A(2), the appellant submits that subsection (2)(d)is of particular relevance. That circumstance is “whether the order was made ontechnical grounds and not on a finding that there was insufficient evidence to convictor make an order against a defendant”. The appellant submits, correctly, that thedismissal of the complaint on the appeal was made on the evidence and not technicalgrounds, the court having identified a number of issues of failure of proof in theprosecution case.
[14] The respondent submits that the court would not be satisfied that it is proper that anorder for costs should be made. By reference to matters set out in s 158A(2) hesubmits, particularly, that the proceedings were brought and continued in good faithafter a Workplace Health and Safety Queensland investigation into a dangerous eventdetermined that the appellant owed health and safety duty pursuant to s 23 of the WorkHealth and Safety Act 2011 and had contravened s 32 of that Act.8
[15] Furthermore, the respondent submits that the investigation into the event wasconducted in an appropriate manner.9 To that end, he submits “given the technicalnature of the issues relevant to the alleged breach, expert opinion was sought at anearly stage from an experienced professional with relevant qualifications to determinethe cause of the incident”.
[16] As to the submission that the investigation determined that the appellant contraveneds 32 of the Act, it should be said that it was not the purpose of the investigation todetermine that there had been a contravention; that was the matter to be determinedby the court. However, taken with the further submission as to the early engagementof a professional “to determine the cause of the incident”, it serves to highlight thatthe whole prosecution came to centre around and rest upon the opinion of ProfessorDux that the cause of the incident was that the failed panel was manufactured toothinly. For reasons explained in the appeal judgment, that opinion of Professor Duxwas formed on inappropriate, inadequate, and unscientific bases. Properly analysed,together with all the evidence even the prosecution case, it could not support theprosecution. In my view, that alone satisfies me that is it proper that a costs ordershould be made against the respondent even though a public officer.
[17] The respondent further submits that the manner in which the defendant conducted its defence served to prolong the proceedings.10 To that end, it submits that no assistance was provided to narrow the trial issues and that significant time was spent crossexamining witnesses about uncontested matters or issues not the subject of the charge. The respondent does not expand upon those submissions or illustrate them by reference to particular parts of the record. To the extent that this criticism may be valid, which is difficult to determine in the abstract, it is to be considered in light of the conduct of the prosecution. For reasons set out in the appeal judgment there was a lack of particularity which bedevilled the prosecution.11 That lack of particularity and the change in focus by counsel for the prosecution caused considerable court time to be consumed. For those reasons, I would not conclude the appellant’s conduct of the case was such as to alter my opinion that it is proper that a costs order should be made.
[18] The appellant’s submissions as to particular scale items for professional costs under Sch 2, Pt 2 of the Justices Regulation 2014 are uncontroversial save for the number of item 3 court attendances, although it seems uncontentious that there were 10 mentions and one pre-trial hearing. Beyond those professional costs, it also seeks $82,483.55 for disbursements. Of that sum, $23,872.72 is sought for “disbursements other than witnesses attending”. That figure comprises:
(a) $21,331.55 for transcript fees;
(b) $1,322.00 for outsourced photocopying fees;
(c) $114.02 for a copy of the relevant Australian Standards; and
(d) $1,105.15 for colour copying, travel to Ipswich for court appearances, company search fees and courier fees.
[19] Disbursements, other than to witnesses for attending are allowable under Sch 2, Pt 3, Item 5 of the Regulation. The relevant allowable disbursements are court fees and other fees and payments (other than allowances to witnesses to attend proceedings) including allowances to interpreters, and travelling, accommodation and other expenses of a lawyer acting as advocate, may be allowed to the extent that it had been reasonably incurred and are paid or payable”.
[20] In my opinion, the case simply could not have been conducted by the parties without access to the transcript. This is particularly so given the disjointed nature of the hearing with lengthy periods of adjournment between blocks of hearing days. I consider the claim for the costs of transcript just and reasonable.
[21] The claim for “outsourced photocopying fees” is not supported by any explanation or quantification. It is simply a bare dollar amount. I cannot conclude it is just and reasonable. Nor would I consider the claim for the costs of a copy of the relevant Australia Standard just and reasonable. It amounts to claiming the cost of obtaining the applicable law.
[22] While the further claim for colour copying, travel to Ipswich for court appearances, company search fees and courier fees is unparticularised, the amount of $1,105.15 appears just and reasonable. I would allow that amount.
[23] The appellant also claims $57,136.83 for expert witness expenses paid to structural engineer Michael Fordyce and $1,474.00 for witness expenses paid to Osborn Lane Consulting.
[24] “Disbursements as allowance to witness for attending- defendant’s witnesses” are allowable under Sch 2, Pt 3, Item 6. It provides:
“An allowance paid, payable or that will be paid by the defendant to a witness to attend a proceeding may be allowed up to an amount equal to the amount of any comparable prosecution witness allowance that would be payable to the witness if the witness were a prosecution witness attending court to give evidence in a criminal proceeding.”
[25] Any allowance which may be the subject of the costs order is that paid to a witness to attend a proceeding to give evidence. The costs claimed for these witnesses is again unexplained and unquantified beyond a bare dollar amount.
[26] I could not conclude that $57,136.83 was just and reasonable as an allowance paid to Mr Fordyce to attend the proceeding to give evidence. Some allowance would seem reasonable. Based upon that paid to Osborn Lane Consulting, which I do consider just and reasonable, I would allow the sum of $1,500.00 as an allowance to Mr Fordyce.
[27] On that basis, I would allow the following costs for the Magistrates Court proceeding:
(a) 10 mentions at $250.00 = $2,500.00
(b) 1 pretrial hearing at $250.00 = $250.00
(c) First day of trial = $1,500.00
(d) 11 subsequent days at $875.00 = $9,625.00
(e) Appearance on sentence hearing = $250.00
(f) Appearance on sentence decision = $250.00
(g) Transcript fees = $21,331.55
(h) Witness expenses Mr Fordyce = $1,500.00
(i) Witness expenses Osborn Lane Consulting = $1,474.00
Total = $39,785.70
[28] The costs of the appeal are less controversial. Sch 2, Pt 1, Item 4 of the JusticesRegulation provides that for an appeal under the Act, the amount up to which costs may be allowed for legal professional work is the amount under Pt 2, increased by 20 percent.
[29] There was one pre-appeal appearance. Costs for it should be allowed at $300.00. The appellant’s submissions claim $312.50, however, that is an increase of 25 percent of $250.00 not 20 percent.
[30] Costs for the appeal hearing should be allowed at $1,800.00.
[31] The appellant also claims for transcript fees in an amount of $1,232.66. Unlike for the hearing, there was no necessity for the appeal transcript to conduct the appeal proceedings. It was only available after its conclusion. The claim for those fees is not just reasonable.
[32] The costs of the appeal will be allowed in the sum of $2,100.00.
(emphasis added)
S 158B(2) Justices Act 1886.
S 158A(1) Justices Act 1886 as defined in s 4 of the Justices Act 1886.
S 158A(1) Justices Act 1886.
At paragraph 4(b).
At paragraph 4(a).
Paragraph 5.
Paragraph 6.
S 158A(2)(a).
S 158A(2)(c).
S 158A(2)(h).
Appeal judgment at [29].
In the Law Debenture Trust Corporation Plc v Ukraine [2023] UKSC 11; [2023] WLR(D) 127, SC(E) (Lord Reed PSC, Lord Hodge DPSC, Lord Lloyd-Jones, Lord Kitchin JJSC, Lord Carnwath) the debenture holders sued Ukraine for moneys owing under certain debenture notes. Ukraine defended the claim, inter alia, on the basis that it had no inherent capacity to enter the transaction, only harbouring such powers as its constitution and laws provided. The UK Supreme Court concluded that Ukraine did not garner legal personality by the law of Ukraine – including its constitution and other local laws which allegedly impacted upon its ability to enter transactions such as that sued upon – but rather by domestic recognition under international law. The court wrote that “a recognised foreign state does not lack capacity to make and perform a contract governed by a system of municipal law, irrespective of the provisions of its own domestic constitution and laws.”
Four members of the Supreme Court of the United Kingdom wrote:
1. The Law Debenture Trust Corporation plc (“the Trustee”), a company incorporated in England and Wales, is the trustee of Notes with a nominal value of US$ 3 billion, maturing on 21 December 2015, and carrying interest at 5% per annum through maturity (“the Notes”). The Notes were issued by Ukraine represented by its Minister of Finance, acting upon the instructions of the Cabinet of Ministers of Ukraine (“the CMU”), and constituted by a trust deed dated 24 December 2013, to which the parties were the Trustee and Ukraine (“the Trust Deed”). The Trust Deed is governed by the law of England and Wales, with the courts of England and Wales having exclusive jurisdiction (subject to the Trustee’s right of election to arbitrate, which has not been exercised). The sole subscriber of the Notes was the Russian Federation. Although the Notes were tradeable, the Russian Federation has retained the Notes since their issue.
2. Ukraine’s pleaded case is that the Notes are voidable (and have been avoided) for duress. Ukraine contends that the Russian Federation applied massive unlawful and illegitimate economic and political pressure, including threats to its territorial integrity and threats of the use of unlawful force, to Ukraine in 2013 to deter the administration led by President Yanukovych from signing an Association Agreement with the European Union (“the Association Agreement”) and to induce acceptance of the Russian Federation’s financial support instead, in the form of the Notes. Following the decision by Ukraine not to sign the Association Agreement, protests in Ukraine grew and ultimately President Yanukovych fled, reportedly on 21 February 2014. Shortly afterwards, the Russian Federation invaded Crimea and purported to annex it. Ukraine maintains that the Russian Federation has since supported separatist elements in eastern Ukraine and has interfered militarily and succeeded in destabilising and causing huge destruction across eastern Ukraine. The court has not been asked to consider events subsequent to the hearing of this appeal, which was concluded prior to Russia’s invasion of Ukraine in February 2022.
3. The Trustee does not accept Ukraine’s pleaded case in this regard. The Trustee maintains that in any event, even if Ukraine’s account of what has occurred were accurate, it would be irrelevant to a debt obligation governed by English law, such as that which is the subject of the present appeal.
4. Ukraine also maintains that it lacked capacity to enter into the Trust Deed and issue the Notes, and that the Trust Deed was signed and the Notes were issued by the Minister of Finance in the absence of actual authority under Ukrainian law to do so. It contends that:
(1) Ukrainian law imposed a limit, in the Budget Law of 2013, in relation to Ukraine’s external borrowing during 2013 and the issue of the Notes caused that limit to be exceeded.
(2) An expert opinion required for the CMU to deliberate validly was not provided to the Ministers of the CMU at the time when the borrowing was approved in the course of a meeting on 18 December 2013.
(3) The CMU invalidly delegated consideration of some material terms of the Notes to the Minister of Finance.
The Trustee does not challenge those factual allegations for the purposes of the summary judgment application which is the subject of the present appeal.
…
16. Ukraine submits that it had no capacity to issue the notes because of flagrant breaches of fundamental requirements of Ukrainian constitutional law governing the manner in which the government may bind Ukraine to contractual relations, which rendered the ensuing transaction a nullity as a matter of Ukrainian law. It submits that a state does not have unlimited capacity to contract in breach of its own constitutional law and that, if a state is denied a defence of lack of capacity under its constitutional law, the outcome of a claim may be determined solely by the venue in which the litigation is heard. It submits that such an approach would reflect an outdated conception of the nature of a state when entering into a commercial contract under municipal law and would impose that conception on all states irrespective of their constitutional arrangements. Furthermore, it would involve an absence of comity or respect to states that choose to limit the power of those holding office in the state from time to time. In Ukraine’s submission the rule of law requires that powers are exercised by a state only insofar as they fall within the scope of its constitution.
17. Ukraine’s capacity defence is based on two strands of Ukrainian law which, it maintains, constrained its contractual capacity. First, it was prohibited from borrowing more from external sources than the limits specified in the then-current Ukrainian Budget Law of 2013. It maintains that the purported bond issue exceeded the mandatory borrowing limit specified in the Budget Law of 2013. Secondly, it submits that Ukraine’s Constitution imposes additional restrictions on the means by which Ukraine may agree to borrow money. The CMU only has power to approve borrowing in accordance with certain constitutional and administrative law principles and rules of conduct, including its own Procedural Rules. Relying on the evidence of its expert, Professor Butler, it submits that there were breaches of those requirements in at least two respects. In breach of mandatory requirements, the CMU was not provided with an obligatory expert opinion regarding the draft Decree. In addition, the CMU was not aware of and did not consider all the material terms of the proposed borrowing as was legally required. For the purposes of summary judgment, the Trustee did not dispute Ukraine’s case that, as a matter of Ukrainian law, these would be breaches which would deprive Ukraine of contractual capacity with the result that the contractual arrangements were a nullity.
(1) Personality and capacity of states in international law
18. Ukraine is a sovereign state and as such it is a subject of international law and possesses legal personality in international law. Sir Robert Jennings and Sir Arthur Watts explain (Oppenheim’s International Law, 9th Ed (1992, reprinted 2011), at pp 119-120) that states are the typical international persons in the sense that it is the rights, duties and powers normally possessed by states which are together regarded as constituting “international personality of the fullest kind” (p. 120). A condition for the existence of a sovereign state is that there must be a sovereign government.
“Sovereignty is supreme authority, which on the international plane means not legal authority over all other states but rather legal authority which is not in law dependent on any other earthly authority. Sovereignty in the strict and narrowest sense of the term implies, therefore, independence all round, within and without the borders of the country.” (at p 122)
19. A subject of international law is a legal person in that it is capable of possessing rights and duties in international law. However, personality must be distinguished from capacity. The fact that an entity is clothed with personality in international law does not, of itself, say anything about which capacities it possesses. Professor D P O’Connell explains that if an entity is recognised as having the capacity which it claims to have “it means that a series of acts performed by the entity in question in the field of international affairs are allowed to be legal acts, and the entity is admitted to have the capacity to perform them. Capacity implies personality, but always it is capacity to do those particular acts. Therefore ‘personality’ as a term is only shorthand for the proposition that an entity is endowed by international law with legal capacity.” (O’Connell, International Law, 2nd ed (1970), 81, original emphasis).
A sovereign state, by contrast with certain other subjects of international law, enjoys the fullest capacity afforded by international law. In the Reparations for Injuries Suffered in the Service of the United Nations case [1949] ICJ Rep 174 at p 178, the International Court of Justice (“ICJ”) concluded that the United Nations is an international person capable of possessing international rights and duties and that it has capacity to maintain its rights by bringing international claims. Contrasting the capacities of the United Nations with those of a state, the ICJ observed:
“It must be acknowledged that its Members, by entrusting certain functions to it, with the attendant duties and responsibilities, have clothed it with the competence required to enable those functions to be effectively discharged. … Whereas a State possesses the totality of international rights and duties recognised by international law, the rights and duties of an entity such as the Organisation must depend upon its purposes and functions as specified or implied in its constituent documents and developed in practice.” (at pp 179, 180, emphasis added)
(2) Personality and capacity of states in English law
20. While international law governs questions as to the personality and capacity of states on the international plane, it says nothing concerning the personality or capacity of states to act on the domestic plane. In the United Kingdom it has been established since the nineteenth century that questions of the personality and capacity of a foreign state to act within the municipal law of the United Kingdom depend on the attitude of the executive. If a body politic claiming to be a state is not recognised as such by His Majesty’s Government, courts in this jurisdiction regard it as non-existent and deny efficacy to its institutions, law and activities (subject to possible exceptions in matters of a purely private nature). It does not exist as a legal person before the municipal courts. (See F.A Mann, “The Judicial Recognition of an Unrecognised State”, (1987) 36 ICLQ 348; Shaw, International Law, 9th ed (2021), pp 398-409.) By contrast, where the entity is recognised as a state by the executive, it is regarded as having the status of a legal person for the purposes of domestic law in this jurisdiction.
21. Dr Geoffrey Marston, in his magisterial survey of the development of the law on this subject, The Personality of the Foreign State in English Law (1997) 56 CLJ 374, explains that “it is executive recognition which creates capacity for a foreign State to act at the plane of English law” (at p 405). He explains that, whereas previously most states were monarchies which permitted a sovereign monarch to be recognised as having personality, it was the emergence of non-monarchical bodies politic in early nineteenth century litigation which was the factual trigger for the English courts’ acknowledgment of foreign states as legal persons (p 415).
22. The issue was resolved in 1867 by the decision of the Court of Appeal in Chancery in United States of America v Wagner (1867) LR 2 Ch App 582. The United States of America sought to sue in its own name for an account and for recovery of movable property in this jurisdiction. The defendants filed a demurrer maintaining that the plaintiff ought to be represented by either the President or some other individual member of the government. The Court of Appeal in Chancery overruled the defendants’ demurrer, emphasising that by its terms the court was bound to take judicial notice of the existence and title of the United States of America as a sovereign power. Lord Chelmsford LC said (at p 587):
“In a monarchy all the public rights and interests of the nation are vested in, and represented by, the monarch. In a republic they are the property of the state. When a foreign monarch sues in the Courts of this country it is not as the representative of his nation, but as the individual possessor of the rights which are the subject of the suit. Why should a republic be precluded from asserting in its own name, similar rights vested in it?”
Turner LJ said (at p 591):
“The right of a foreign state which has been recognised by Her Majesty, whether it be a monarchy or a republic, to sue in the Courts of this country for public property belonging to the state, has not been, and cannot be, denied.
Lord Cairns LJ said (at pp 593-594):
“The sovereign, in a monarchical form of government, may, as between himself and his subjects, be a trustee for the latter, more or less limited in his powers over the property which he seeks to recover. But in the Courts of Her Majesty, as in diplomatic intercourse with the government of Her Majesty, it is the sovereign, and not the state, or the subjects of the sovereign, that is recognised. From him, and as representing him individually, and not his state or kingdom, is an ambassador received. In him individually, and not in a representative capacity, is the public property assumed by all other states, and by the Courts of other states, to be vested. In a republic, on the other hand, the sovereign power, and with it the public property, is held to remain and to reside in the state itself, and not in any officer of the state. It is from the state that an ambassador is accredited, and it is with the state that the diplomatic intercourse is conducted.”
23. Dr Marston observes that all three judges seem to have considered that, leaving aside the demurrer, a recognised non-monarchical state was a legal person at the plane of English law. He notes that United States of America v Wagner did not expressly determine that a state was a legal person in the eyes of English courts, but merely that, assuming that it was, it could sue in the name in which it was acknowledged by the United Kingdom executive. Nevertheless, the proposition that a recognised state, or at least a recognised non-monarchical state, was a legal person was thereafter unchallenged, and foreign republics regularly appeared in litigation (Marston at p 404). In the result, therefore:
“The courts left to the executive the tasks of determining both the criteria of statehood and whether such criteria were fulfilled. Where the executive had decided to recognise a foreign body politic as a State the courts regarded it thereafter as a legal person, notwithstanding that in Page-Wood V-C’s words, [in Prioleau v United States of America and Andrew Johnson (1866) LR 2 Eq 659, 665] it was ‘not a physical but a metaphysical entity’. Executive recognition was therefore not only an acknowledgement of the foreign State’s international legal personality but was constitutive of its domestic personality.” (Marston, at pp 415-416)
24. A foreign state recognised as such by His Majesty’s Government does not, however, thereby become a creature of domestic law in the United Kingdom. It is not a domestic corporation but is simply recognised by domestic law as having legal personality. Similarly, an international organisation which is given the capacities of a body corporate in the United Kingdom pursuant to the International Organisations Act 1968 is not a domestic corporation. It is simply recognised by domestic law in this jurisdiction as having legal personality. Dr Marston, referring to a debt incurred on the domestic plane by a foreign recognised state, observes:
“In English law it seems that you are owed money by an international legal person which, in that capacity, is invisible in the eyes of English courts. On executive recognition, however, it becomes visible but its essence is still international. It gains the status of a legal person at the plane of English law but it does not become an English legal person.” (at pp 416-417. See also p 410.)
Referring to the observation of Lord Templeman in Arab Monetary Fund v Hashim (No 3) [1991] 2 AC 114, 165 that “the English courts can only identify and allow actions by individuals, sovereign states and corporate bodies”, he concludes therefore (at p 417) that the position of a recognised foreign state is sui generis.
25. At first instance in the present case, Blair J observed (at para 113) that legal personality as a matter of English law flows from recognition and that capacity flows from legal personality. The first proposition is undoubtedly correct. However, the second proposition, which was endorsed by the Court of Appeal (at para 65), is in our view potentially misleading. As explained above, it is not possible to derive capacity to perform specific acts from personality alone. In fact, the converse is the case: it is the capacity to perform legal acts which necessarily requires the acknowledgement of personality in the legal system concerned. This certainly reflects the approach of the English courts to such issues. See, for example, JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418 (“the Tin Council case”) where Lord Oliver of Aylmerton considered (at p 504 G-H) that the status of a legal personality of the International Tin Council (“ITC”), separate from its members, was a necessary corollary of the unlimited capacities which were conferred by an Order in Council. Nevertheless, English law acknowledges not only the personality of a foreign sovereign state, which has been recognised as such, but also its full capacity. As a result, municipal law in this jurisdiction reaches the same result as international law. As the Court of Appeal observed in the present case (at para 73), were it otherwise there would be a strong case for re-examining the position in English law.
26. The decision of the House of Lords in the Tin Council case is illuminating in this regard. The creditors of the ITC sought to establish that the states which had established it were legally responsible for its debts as a matter of English law. Article 5 of the Order in Council provided that the ITC “shall have the legal capacities of a body corporate”. One argument advanced in support of the view that the Order in Council had not conferred separate legal personality on the ITC was that the legislature was seeking to do no more by the Order in Council than to establish a framework under which the member states could trade in partnership under the collective name of the ITC. In particular, it was submitted, this was done by conferring on the unincorporated members in association certain capacities so as to enable them to function in the name of the ITC, with the result that it was not necessary to confer on the ITC a separate legal personality. Rejecting this submission, Lord Oliver, with whom Lord Keith of Kinkel, Lord Brandon of Oakbrook and Lord Griffiths agreed, observed:
“But there are a number of difficulties in the way of the suggestion that article 5 did no more than confer capacities on the members. In the first place, the members were sovereign states recognised in English law and having already capacities as such, so that an Order in Council which conferred on them capacities (for instance, to contract, to hold property or to engage in litigation) served no useful purpose.” (at p 503 C-D)
(See also the observations of Kerr LJ in the Court of Appeal in that case at [1989] Ch 72, p 147 E-H.) The passage from the speech of Lord Oliver makes clear that the capacities of a sovereign state recognised as such in English law include the power to contract, and that to confer the legal capacities of a body corporate upon a sovereign state would be a redundancy. Moreover, as Mr Howard KC points out on behalf of the Trustee, Lord Oliver observed elsewhere in his speech that the capacities conferred on international organisations by Article 5 of the Order in Council were “the widest capacities available to any artificial legal persona” (at p 502 B) and “the fullest possible legal capacities, including the capacity to contract in its own right” that can be conferred on a body (at p 504 G). If, therefore, it would not have served any purpose to confer these fullest possible legal capacities on the ITC’s member states, that can only be because they already enjoyed these capacities, including the capacity to enter into contracts. In our view, this reasoning is compelling. Moreover, it forms part of the ratio decidendi of theTin Council case and the Supreme Court has not been invited to depart from it.
27. Ukraine seeks to draw an analogy for present purposes between the status in English law of a foreign state and that of a foreign public body or corporation. Ukraine submits that the capacity of Ukraine to enter into a contract under municipal law should be determined by the application, directly or by analogy, of Dicey Rule 187 (Dicey, Morris and Collins on the Conflict of Laws, Vol. II, 16th ed (2022), Rule 187 p 1611, para 30R-020) which provides:
“(1) The capacity of a corporation to enter into any legal transaction is governed both by the constitution of the corporation and by the law of the country which governs the transaction in question.
(2) All matters concerning the constitution of a corporation are governed by the law of the place of incorporation.”
28. Ukraine submits, first, that the same reasons justify the application of Rule 187 to states as to foreign governmental entities and corporations. It submits that the justification for looking to the constitutional documents of a corporation is that the corporation exists as such only by virtue of its own constitution and it is those documents which set the scope and limits of its powers. In the same way, it is submitted, under Ukrainian law Ukraine has no inherent capacity and it has only such powers as its Constitution and laws provide. Secondly, it is said that there is support for this analogy as a matter of authority. Thirdly, Ukraine submits that the principle underlying the recognition of foreign states as having legal personality before English courts is the comity of nations. However, treating Ukraine as possessing a capacity that it does not have under its own constitution is said to deprive Ukraine of constitutional safeguards.
29. The most fundamental objection to this submission on behalf of Ukraine is that the subordinate entities with which Ukraine seeks to draw an analogy are each created by a foreign system of national law. In Banque Internationale de Commerce de Petrograd v Goukassow [1923] 2 KB 682 Scrutton LJ observed with regard to foreign corporations (at p 691):
“So in the case of artificial persons, the existence of such a person depends on the law of the country under whose law it is incorporated, recognized in other countries by international comity, though its incorporation is not in accordance with their law.”
Courts in the United Kingdom recognise, as a matter of comity, the power of other sovereign states to create and exercise authority over entities subject to their jurisdiction. Similarly, in Lazard Bros & Co v Midland Bank Ltd [1933] AC 289, Lord Wright explained (at p 297):
“English courts have long since recognized as juristic persons corporations established by foreign law in virtue of the fact of their creation and continuance under and by that law. Such recognition is said to be by the comity of nations. Thus in Henriques v Dutch West India Co, the Dutch company were permitted to sue in the King’s Bench on evidence being given ‘of the proper instruments whereby by the law of Holland they were effectually created a corporation there’. But as the creation depends on the act of the foreign state which created them, the annulment of the act of creation by the same power will involve the dissolution and non-existence of the corporation in the eyes of English law. The will of the sovereign authority which created it can also destroy it. English law will equally recognize the one, as the other, fact.”
In the same way, foreign local government bodies are creations of the law of the state in question and are therefore subject to that law of their creation. (See, generally, Haugesund Kommune v Depfa ACS Bank [2010] EWCA Civ 579; [2012] QB 549 per Aikens LJ at para 48.) Moreover, the entity which was recognised in Bumper Development Corpn v Comr of Police of the Metropolis [1991] 1 WLR 1362 was created by the law of Tamil Nadu, the internal law of the state concerned. It is natural that in each case the law which has created the entity should be relevant to a determination of its capacity. By contrast, a foreign state does not derive its personality or its capacity from the sovereign power of a state to create legal persons. Ukraine itself is not created by the law of Ukraine but by international law and is treated as a legal person in municipal law within the United Kingdom by virtue of its recognition as such by the executive. There is, therefore, no reason why the capacity of a sovereign state should be defined by its internal law in the manner suggested by Ukraine.
30. We are unable to find any support for Ukraine’s submission in the authorities on which it relies. The fact that in King of Spain v Hullett (1833) 7 Bli NS 359, 388; 5 ER 808, 818, the Lord Chancellor referred to the King of Spain suing as a “foreign corporation sole” does not advance Ukraine’s case. Nor does the fact that in Prioleau v United States (1866) LR 2 Eq 659, 663, United States of America v Wagner at pp 588, 592, 594 and Republic of Peru v Weguelin (1875) LR 20 Eq 140, 141-142 a foreign state may have been compared to a corporation for the purposes of discovery. Indeed, in United States of America v Wagner the Lord Chancellor (at 588) expressly waived “the consideration of the correctness of the analogy which was supposed to exist between a corporation and a sovereign state”.
31. Ukraine also relies on the recent decision of Marcus Smith J in High Comr for Pakistan in the United Kingdom v Prince Muffakham Jah [2019] EWHC 2551 (Ch); [2020] Ch 421, where the judge addressed the question which law governed the actual authority of the Nizam of Hyderabad in 1948. The judge considered that the Nizam was a personal and absolute ruler of Hyderabad and that no distinction was to be drawn between his personal capacity and his capacity as a ruler. He concluded that whether the question was framed as one of personal capacity, the delegation of authority by a principal to an agent or the authority of a ruler of a state, the same law was indicated: the law of the state where the principal was domiciled or resident or the law of the state the ruler ruled over (at paras 182-183). In our view, however, this does not cast any light on the present issue. In his private capacity, the Nizam was a subject of the law of the state. In his corporate capacity, he seems to have been acting as a governmental entity. No consideration seems to have been given to whether the Nizam was himself the personification of the state. In any event, whatever may have been the historical position in relation to absolute rulers, very different considerations now apply in the case of a sovereign state such as Ukraine.
32. We are, therefore, entirely persuaded that the analogy which Ukraine seeks to draw between a foreign state and a foreign corporation is a false analogy. A foreign state is not a creature of its own domestic law. In our view Dr Marston is correct in his analysis and his conclusion that a foreign state is for present purposes sui generis.
33. Furthermore, we are unable to accept that the recognition by courts in this jurisdiction of the fullest possible capacity of a foreign state could possibly amount to an infringement of principles of international comity. On the contrary, it seems to us that such recognition is a reflection of the sovereignty and independence of sovereign states and fully accords with and promotes the principle of comity.
34. We conclude, therefore, that a foreign state which is recognised as such by the executive in the United Kingdom is considered, for the purposes of municipal law within the United Kingdom, to be a legal person with full capacity. In particular, a recognised foreign state does not lack capacity to make and perform a contract governed by a system of municipal law, irrespective of the provisions of its own domestic constitution and laws. In the present case, it is not arguable that Ukraine lacked the capacity to issue the Notes in the eyes of English law. We turn, therefore, to the distinct question whether the state entities purporting to exercise that power on behalf of Ukraine had the authority to do so.
(emphasis added)
Declaratory relief is not granted just for the asking. The learned authors of ‘On Equity’ say that:1
“It is clear that before there can be a declaratory action, there must be a controversy of a justiciable nature.”
The utility of seeking declaratory relief needs to be kept squarely in mind.
In Manthey Redmond (Aust) Pty Ltd (in liq) & Ors v Manthey & Ors, Jackson J said:2
[34] By s 10(2) of the Civil Proceedings Act 2011 (Qld):
“The court may hear an application for a declaratory order only and may make a declaratory order without granting any relief as a result of making the order.”
[35] Section 19(2) is the modern manifestation of the reforms begun in the 19th century3 to make clear the power of the court to grant purely declaratory relief. Nevertheless, discretionary principles inform the exercise of the power, including that a court will decline to grant a declaration which lacks utility or has insufficient practical purpose.4
[36] Where no substantive relief will follow from the grant of a declaration, and the declaration will be inutile to resolve or quell any other controversy between the parties, the court may not grant the declaratory relief sought, as a matter of discretion. The difficulty in the present case is to identify what “real interest”5 the plaintiff has in the relief sought.
[37] Perhaps the leading statement of principle on this point is contained in the plurality reasons in Ainsworth v Criminal Justice Commission6, as follows:
“It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which ‘it is neither possible nor desirable to fetter … by laying down rules as to the manner of its exercise’. However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have a ‘real interest’ and relief will not be granted if the question is ‘purely hypothetical’, if relief is “claimed in relation to circumstances that [have] not occurred and might never happen’ or if ‘the court’s declaration will produce no foreseeable consequences for the parties’”.7
[38] Another useful discussion appears in Commonwealth v BIS Cleanaway Ltd8where Hodgson J said:
“There would in my opinion be no practical consequences of the making of declarations of the kind sought, except such consequences as they may have in relation to a breach, claim or expense of the kind I have mentioned. And even if the claimant were to allege any such breach, claim or expense, this would almost certainly raise specific question as to the interpretation of the licence, as to what, if there had been a novation, or were the precise terms and effect of the novation (for example in relation to activities which had been undertaken prior to the novation) and what (if there had been termination of the licence or some other event effecting its operation as from any particular time) was the effect of the termination, of that affectation, as to any application the licence had into the future from that time. Issues such as these would be issues that would be best dealt with together with determination of issues raised in connection with the orders actually sought in the proceedings, rather than separately from them in a piecemeal way.
The determination of the issues such as these, separately from determination of issues relating to the declarations sought, will be very likely to raise serious problems of a kind that can be raised when separate determinations of interrelated questions are sought. It is for those reasons particularly, in addition to the theoretical and very general and unspecific nature of the declarations, that I consider that it could not be an appropriate exercise of discretion in this case to grant the declarations sought.”
[39] Questions of these kinds arise about some of the paragraphs of the relief sought by the plaintiffs by counterclaim.
This extract was recently referred to by Ryan J in Cameron v Cameron & others.9
1 By Young, Croft and Smith, 2009, at [16.770], page 1077.
2 [2017] QSC 145 at [34] – [39].
3 In particular for present purposes the Chancery Procedure Act of 1852 (UK), s 50 and the provisions which adopted it, such as the Equity Act 1867 (Qld), s 73, which was relocated to the Supreme Court Act 1995 (Qld), s 128.
4 See Dharmananda and Papamatheos, Perspectives on Declaratory Relief, Sydney, The Federation Press, 2011, pp 48-49, 69-70, 142, 145, 149, 159; Zamir and Woolf, The Declaratory Judgment, 4 ed, London, Sweet & Maxwell, 2011, pp 168-174 [4-99]-[4-109]; and Young, Declaratory Orders, 2 ed, Sydney, Butterworths, 1975, pp 60-61, [703]-[704].
5 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 438.
6 (1992) 175 CLR 564.
7 (1992) 175 CLR 564, 581-582.
8 [2008] NSWCA 170, [8]-[10].
9 [2023] QSC 61 (24 March 2023) at [155].
In Testart v Testart (No 2) [2023] FCA 209, the applicant was the ex-spouse of the respondent (a barrister). The applicant sued the defendant for compensation for alleged contravention of ss 45 and 323 of the Fair Work Act 2009 (Cth) on account of alleged failure to pay wages to her for a period of 7 years from 2009 to 2016 on account of work she undertook in and about his practice. The amounts involved – including wages, superannuation and annual leave loading – amounted to close to $450,000. The respondent applied – substantially successfully, but only upon a limitation plea – for summary dismissal of the applicant’s proceeding. It was found the prior finalisation of their Family Court property settlement litigation, of itself, did not preclude the claim.
O’Callaghan J wrote:
[1] This is an interlocutory application brought by the respondent, Mr Pierre Testart, by which he seeks summary dismissal of the proceeding brought against him by his former wife (Ms Lisa Testart) under the Fair Work Act 2009 (Cth).
…
[6] Ms Testart commenced working for Mr Testart, who is a barrister, on 1 July 2009, and continued to do so until June 2017. The parties married in 2010 after a period of co-habitation and separated on a final basis in May 2019.
[7] Ms Testart deposed that on 30 June 2009, Mr Testart made her a written offer of employment as his personal assistant. That offer included a proposal to “pay an annual salary of $79,000, payable weekly in advance, together with superannuation at the appropriate statutory rates”. The terms of the offer included references to “the normal terms and conditions of employees in the legal secretarial industry”, “rights you otherwise have under Commonwealth legislation”, “normal industry sick leave entitlements” and “4 weeks’ holiday annually”.
[8] The evidence also included a letter dated 17 September 2009, signed by Mr Testart, in which he confirmed the employment of the applicant as his personal assistant from 1 July 2009. This letter provided, among other things, that the “position is permanent, and full time … [and that Ms Testart] is employed at a yearly salary of $80,000, plus statutory superannuation”.
[9] Following their separation, Ms Testart commenced a family law proceeding in June 2019 in the then — Federal Circuit Court of Australia, seeking interim and final property and spousal maintenance orders, which included seeking the alteration of property interests under s 79 of the Family Law Act (Family Law Proceeding).
…
[12] The application for spousal maintenance was dismissed in October 2019 and the remainder of the Family Law Proceeding was finalised by consent on 6 August 2020. A divorce order was granted on 21 October 2020 and it took effect on 22 November 2020.
[13] The final orders made by Judge Kirton on 6 August 2020 relevantly provided that “[t]here be final orders, by consent, in terms of the Minute of Consent Orders signed by the parties and dated 6 August 2020”. That minute was relevantly in these terms:
BY CONSENT IT IS ORDERED THAT:
l. All previous Orders be and are hereby discharged.
2. That upon settlement of the sale of the property at … (“the Yallourn North property”) the balance of settlement monies be paid to the Wife into an account nominated by her.
3. Save as otherwise provided herein, the Wife retain, to the exclusion of the Husband, for her sole use and benefit:—
(a) Her personal savings;
(b) Her vehicles;
(c) Her personal belongings and effects; and
(d) Any superannuation entitlement she may have.
4. The Wife be solely liable for any debts in her name or for which she is personally liable, including but not limited to any credit card liabilities.
5. Save as otherwise provided herein, the Husband retain, to the exclusion of the Wife, for his sole use and benefit:—
(a) His personal savings;
(b) His vehicles;
(c) His personal belongings and effects; and
(d) Any superannuation entitlement he may have.
6. The Husband be solely liable for any debts in his name or for which he is personally liable, including but not limited to any credit card liabilities or any liabilities to the Australian Taxation Office arising from his work as a barrister.
7. Unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these Orders:
(a) Each party otherwise be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;
(b) Each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;
(c) Money standing to the credit of either party in any bank, building society or investment account shall be the sole property of the owner named thereunder;
(d) All insurance policies shall be the sole property of the owner named thereunder;
(e) Each party shall be solely liable for and indemnify the other in respect of their individual debts; and
(f) Any joint tenancy of the parties in any property real or personal is hereby severed.
8. All applications be otherwise dismissed and there be no Order as to costs.
THE COURT NOTES THAT:
Pursuant to Section 81 of the Family Law Act 1975, the parties intend that these Orders shall, as far as practicable, finalise their financial and other relationships and sever their financial ties.
The Husband’s lawyers may provide a copy of these Orders to Gadens Lawyers, who act on behalf of the mortgagee in possession, for the purposes of Gadens being able to make the payment to the Wife pursuant to these Orders.
The parties have finalised their property matter on a final basis in accordance with the terms of these Final Orders …
THIS PROCEEDING
[14] Ms Testart commenced this proceeding by way of originating application and accompanying affidavit filed 11 November 2021 (Fair Work Proceeding). She alleges, among other things, that Mr Testart contravened ss 45 and 323 of the Fair Work Act by failing to pay wages to her between 2009 and 2016, and that he contravened s 45 of the Fair Work Act by failing to pay her annual leave entitlements pursuant to the Legal Services Award 2010 and by failing to make superannuation contributions on her behalf.
…
[18] By the terms of her 9 November 2021 affidavit, Ms Testart claims compensation under s 545 of a total amount of $434,683.88, alleged to comprise: $334,453 (unpaid wages); $54,890.05 (unpaid superannuation); $37,736.88 (unpaid annual leave); and $6,603.95 (unpaid annual leave loading). The failure to pay each amount is alleged to have constituted a contravention of s 45 of the Fair Work Act. The failure to pay the wages is also said to be a contravention of s 323 of the Fair Work Act.
…
[20] The grounds for the making of those orders were contained in counsel’s written submissions. The first ground was that this court lacks jurisdiction to hear the Fair Work Proceeding because it is a “matrimonial cause” within the meaning of s 4(1) of the Family Law Act 1975 (Cth).
[21] Judgment was also sought on three other grounds:
Ms Testart is prevented from bringing her claims in the Fair Work Proceeding by reason of an Anshun estoppel;
the claims in the Fair Work Proceeding are largely time-barred; and
the Fair Work Proceeding is vexatious and/or an abuse of process.
[22] The affidavits relied on by Mr Testart also included voluminous evidence going to the last of those grounds.
…
GROUND ONE: MATRIMONIAL CAUSE
The Relevant Legislation
[25] I turn first to Mr Testart’s contention that the Fair Work Proceeding is a “matrimonial cause” within the meaning of s 4(1)(ca) of the Family Law Act, and thus within the exclusive jurisdiction of the Federal Circuit and Family Court of Australia.
…
Basis of the proceeding: arises out of the marital relationship?
[42] Section 4(1)(ca)(i) of the Family Law Act is concerned with “proceedings … arising out of the marital relationship”. It is not sufficient to establish that the subject of the proceedings arose out of the marital relationship. It is the proceedings that must have so arisen. Bate v Priestley (1989) 97 FLR 310 at 327 (Hope AJA).
…
[52] In In the Marriage of Murkin(1980) 5 Fam LR 782 , Nygh J had to decide whether the Family Court had jurisdiction to grant an injunction under s 114(1) to restrain the former husband from disposing of the superannuation benefit to which he would become entitled in the future, and no later than June 1983. Relevantly, his Honour held at 786:
I accept the definition offered by Demack J in In the Marriage of Mills … namely: “The event must be one which raises issues of law that are within the body of law defining marital relationships.” I take that as meaning that the claim must be one which a spouse brings as a spouse and which is not a claim arising out of the general law of tort, contracts or property which happens to be between spouses. In this case, if the wife has any claim against the superannuation funds it can only arise because of s 79 of the Family Law Act. We are therefore dealing with proceedings arising out of the marital relationship and not arising out of the general law of contract, tort or property.
(emphasis added)
…
[73] In my view, the Fair Work Proceeding does not arise out of the marital relationship between Mr Testart and Ms Testart.
[74] It seems to me quite clear that the Fair Work Proceeding arises out of, or is alleged to arise out of, Ms Testart’s employment relationship with Mr Testart. The claims made do not arise out of the marital relationship which led to the Family Law Proceeding and to the consent orders made ending it. As Mahoney JA said in Bate v Priestley at 325 , “the claim of A arising from B arising from C … may be traced back to the Creation without philosophical error. In deciding whether, for the particular purpose before it, A is to be seen as arising from C, the test applied by the court is not philosophical but functional”. And it is in that functional sense that the Fair Work Proceeding does not arise out of the marital relationship.
[75] It is, rather, the alleged failure to comply with the employment contract alleged by Ms Testart, a copy of which she produced in her affidavit in support of her Fair Work Act claims and the essential terms of which are summarised above at [7], that gives rise to the Fair Work Proceeding.
[76] As the cases to which I refer above indicate, the mere fact that the employment contract happened to be between parties to a marriage, or even that the contract itself may have arisen during a marital relationship (which itself is questionable here, because the alleged contract of employment preceded the parties’ marriage by some six months), does not involve by the application of a functional test, a conclusion that the Fair Work Proceeding arose out of that relationship.
…
[87] Mr Testart’s counsel asserted that the Fair Work Proceeding is related to the Family Law Proceeding “because there is a direct relationship between the principal relief and the ‘property’ sought in this proceeding, namely monies in respect of [the applicant’s] contribution to the legal practice”.
[88] I do not agree.
[89] First, there is no evidence to support such a proposition.
[90] Secondly, and in any event, adopting the language used by Gibbs CJ in Perlman v Perlman in the passage extracted above, the Fair Work Proceeding is “not consequential on or incidental to” the Family Law Proceeding, or the orders made by Judge Kirton.
[91] Thirdly, there seems to me to be no reason to deny Ms Testart the right of access to the Fair Work jurisdiction in this court in circumstances where the Fair Work Proceeding arises out of alleged failures to perform contractual terms and contraventions of the Fair Work Act.
[92] For the foregoing reasons, and those set out at [35]–[40] above, I reject Mr Testart’s contention that the Fair Work Proceeding brought against him by his ex-wife is a matrimonial cause within the meaning of s 4(1)(ca) of the Family Law Act.
GROUND TWO: ESTOPPEL
[93] Mr Testart submitted that Ms Testart ought to be precluded from pursuing her Fair Work Proceeding by operation of an Anshun estoppel.
…
[103] The crux of Mr Testart’s submission is that Ms Testart “could have asserted” her entitlements under ss 45 and 323 of the Fair Work Act in her Family Law Proceeding pursuant to s 79 of the Family Law Act, and could have sought to quantify them, and that because “the subject matter” of the Fair Work Proceeding, which was said to be “payment for labour undertaken in a legal practice” was “intimately connected to the subject matter of the Family Law Proceeding”, she should have done so.
[104] I was not taken to any authority in support of such a contention, but it cannot be right.
[105] First, it runs headlong into the proposition that it is a fundamental error in the operation of the principle of Anshun estoppel to hold that because a matter could have been raised in the first proceeding, it should have been raised so as to bar later proceedings based on that matter (see Champerslife Pty Ltd v Manojlovski , referred to at [101] above).
[106] Secondly, and more fundamentally, it cannot be right because, as I have explained at [35]–[40] above, claims for compensation for breach of the civil remedy provisions under the Fair Work Act are not “property” within the meaning of s 79 of the Family Law Act, so they form no part of what is colloquially referred to as the “pool” of assets of the parties to a marriage. It follows that, contrary to Mr Testart’s submission, Ms Testart could not have asserted her alleged Fair Work Act entitlements for compensation for contraventions under ss 45 and 323 in her s 79 application.
[107] I should add before turning to the limitation ground, that it was also submitted on Mr Testart’s behalf that because there are final orders from the Family Law Proceeding, it is “inherently prejudicial … for [Mr Testart] to be pursued for a claim of almost half a million dollars” and that for Ms Testart to press her statutory claim after the conclusion of the earlier Family Law Proceeding is “oppressive and it’s prejudicial and inherently unfair … and this is exactly the sort of circumstance that Anshun is designed to address”.
[108] It was not explained to me why that might be so and no answer was advanced to meet the point made in Champerslife Pty Ltd v Manojlovski . And I was not taken to any evidence about the point. In those circumstances, I do not accept the submission.
…
GROUND THREE: LIMITATION PERIOD
[111] Mr Testart submitted that by operation of s 544 of the Fair Work Act, Ms Testart’s claims are time-barred in respect of contraventions alleged to have occurred before 11 November 2015, and that her claim can only be pursued in respect of the claims made for the period 11 November 2015 to 23 October 2016.
[112] Section 544 provides as follows:
544 Time limit on applications
A person may apply for an order under this Division in relation to a contravention of one of the following only if the application is made within 6 years after the day on which the contravention occurred:
(a) a civil remedy provision; …
[113] Further, s 545(5) provides that “[a] court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced”.
…
[119] Ms Testart deposed that she was paid 32 separate amounts of $1019.86, commencing on 24 October 2016 and ending on 26 May 2017, and that those sums “are the only wage payments I can confidently assert were paid to me by [Mr Testart]”.
[120] At the hearing on 9 December 2022, Ms Sweet agreed (at my request) to submit a note after the conclusion of the hearing providing a breakdown of the claims said to be time-barred and the quantum of those that are not.
…
[122] Courts have long cautioned against deciding limitation questions in the abstract or absent a full hearing. As Mason CJ, Dawson, Gaudron and McHugh JJ said in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 :
We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration [s 82 of the Trade Practices Act 1974 (Cth)] should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.
[123] However, as Master Sanderson said in Lovell v Western Australian Police Union of Workers[2004] WASC 19 at [23] , “[i]t is clear that their Honours [in Wardley] were concerned that at an interlocutory stage it might be possible to determine what damage has been sustained by a plaintiff and the circumstances in which that damage was sustained” and that “[d]espite the High Court’s warning there have been a number of cases in which Courts have thought it appropriate to determine questions of limitation at an interlocutory stage”.
[124] In Jobbins v Capel Court Corp Ltd (1989) 25 FCR 226 at 231 , the Full Court (Davies, Burchett and Hill JJ) said “where it is clear that an applicant cannot succeed upon the case pleaded because [a limitation provision] will be a complete answer to the claim, the court should not merely defer the inevitable. As the action must fail, the court should not hesitate to say so …”
[125] Along similar lines, in Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108 at 118 [28] another Full Court (Wilcox, French and Drummond JJ) said that “the decision to hear and determine the limitation point separately was within the reasonable discretion of the judge seised of the management of the case. The question was one whose resolution did not depend upon contested matters of fact, nor even upon contentious characterisation of undisputed fact”.
[126] And as O’Bryan J said in Reilly v Australia and New Zealand Banking Group Ltd (No 2)[2020] FCA 1502 at [21] , the need to apply the caution addressed in the passage from Wardley quoted above need not necessarily apply “where the nature and incidence of the alleged loss and damage is clear and the application of the limitation period turns upon a question of law”.
[127] In my view, this is a case, at least in respect of the claims for unpaid wages, unpaid annual leave and annual leave loading, where the nature and incidence of the alleged loss and damage is clear and the application of the limitation period may be determined on the face of Ms Testart’s claim.
[128] On the face of her claim, she seeks compensation under the Fair Work Act in respect of unpaid wages, unpaid annual leave and annual leave loading “for the years ending 30 June 2010, 2011, 2012, 2013, 2014, 2015, 2016, and 2017”.
[129] In my view, all such claims relating to contraventions said to have taken place prior to 11 November 2015, being the date which is 6 years prior to the day on which Ms Testart brought the Fair Work Proceeding, are time-barred by operation of ss 544 and 545(5).
[130] Ms Testart submitted, to the contrary, that her claims are not time-barred because “each contravention arose at the time the wage was not paid, and therefore ought to be treated as cumulative, and continuing to exist until each breach is resolved by the payment to [her] of each outstanding wage due on a weekly basis”, citing R v Industrial Appeals Court[1965] VR 615 at 623 (Smith J). See also Jones v Lorne Saw Mills Pty Ltd [1923] VLR 58 (Cussen J); Bridge v Lindrum [1957] AR (NSW) 356 at 360 (McKeon J); and Brammer v Deery Hotels Pty Ltd (1974) 22 FLR 276 at 278 –79 (Joske J, with whom Spicer CJ and Smithers J agreed). (Although her contention, in terms, referred only to unpaid wages, I take it to extend to her claims for unpaid annual leave and annual leave loading).
[131] But the case Ms Testart cited, and the others I have mentioned above which are along the same lines, concern courses of conduct in contravention of a statute, not claims for compensation.
[309] [The applicant] referred to a number of cases which dealt with contraventions of statutory provisions involving courses of conduct which commenced outside a particular limitation period and continued into it. Each proceeding was held to be maintainable. However, such considerations are of no significance for the limitation period applicable to [the applicant’s] claims for compensation because the cases he referred to concerned courses of conduct in contravention of a statute, not claims for money. Proceedings for contravention of a statute, even proceedings seeking a civil penalty, are different from proceedings for damages, proceedings for payment of a debt or proceedings for monetary compensation based on statute. The latter class of matters requires the existence of a cause of action in the form of a set of facts whose existence, if proved, entitles the employee to obtain from the court a remedy against his or her employer. In the case of wages said to be owed, the necessary facts giving rise to a cause of action in relation to each non-payment or underpayment are in place each time wages are not paid or are underpaid. The determination of those matters does not depend on and is not determined by the existence of a continuing statutory breach.
[310] Consequently, each non-payment or underpayment alleged by [the applicant] gave rise to a separate cause of action and, in the case of the underpayments alleged to have occurred before 28 October 2004, causes of action which accrued more than six years before the commencement of this proceeding and which are thus out of time.
(emphasis added)
[133] In any event, the Fair Work Act makes it clear that where an applicant seeks compensation (as opposed to the imposition of a penalty) for underpayments — that is, “compensation for loss that [they have] suffered because of the contravention” of a civil remedy provision within the meaning of s 545(2)(b) of the Fair Work Act — s 545(5) provides that the court “must not make an order under [that] section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced”. (emphasis added). As Perram J said in Lang v ACN 078 899 591 Pty Ltd t/as Kohinoor Indian Centre[2009] FCA 987 at [30] (in reference to the analogous s 178(7) of the Workplace Relations Act 1996 (Cth)), that provision “continues to render unrecoverable those payments which are due from a time more than six years before the commencement of the proceedings”.
[134] It follows that to the extent that Ms Testart seeks compensation under the Fair Work Act in respect of unpaid wages, unpaid annual leave and annual leave loading for the period prior to 11 November 2015, those claims must be dismissed.
[135] Ms Testart’s claim for superannuation entitlements falls into a different category because it is the subject of some on-going dispute with the Australian Taxation Office, the particulars of which were not made clear (at least to me). So whether and to what extent the claim with respect to superannuation entitlements is time-barred (or has any merit) are not issues that I am asked to resolve, as Mr Testart’s counsel seems to have accepted in her note set out above.
CONCLUSION
[136] For the foregoing reasons, I will order that all claims made by Ms Testart relating to Fair Work Act contraventions in respect of unpaid wages, unpaid annual leave and annual leave loading for the period prior to 11 November 2015 be dismissed. Mr Testart’s interlocutory application will otherwise be dismissed. I will reserve the question of costs.
(emphasis added)
In the recent case of Canavan v Shred-X Pty Ltd & Anor [2023] QDC 37 the pleading of facts in a statement of claim or a reply was brought into focus.
The case involved the plaintiff’s termination of employment and the initial matter raised in the statement of claim for determination was an allegation that a reasonable notice of termination should be implied as a term of the employment contract. The employment contract also provided for an express termination period.
The defendants argued that in circumstances where the employment contract expressly so provided, that a term as to the notice period for termination cannot be implied.[1]
The plaintiff argued a number of grounds in response including that there is question of construction whether the parties intended the express provision of the contract relating to termination to be comprehensive, and that reference to the minimum notice period in the Fair Work Act 2009 (Cth) does not necessarily exclude a term of reasonable notice.
Somewhat unusually, the hearing of this case took place only 10 days after the filing of the defence and before the last day as provided by the UCPR for the filing of a reply. As Judge Byrne KC pointed out, “the argument was heard before the pleadings had closed.”[2]
A reply was subsequently filed by the plaintiff on the last day allowed under the UCPR for one to be filed.[3] The reply asserted that certain conversations between the plaintiff and the second defendant (the general manager of the first defendant) “during which the plaintiff was assured of many more years of employment than in fact eventuated. It is asserted that the plaintiff expressed reluctance to take up employment with the first defendant unless, in effect, he was assured of that extended period of employment.”[4]
Further written submissions were accepted after the reply was filed.[5] At the hearing the plaintiff advised that “matters relevant to the availability of an implied term of reasonable notice would be contained in the reply.”[6] His Honour asked if the hearing should be adjourned after the last day for the filing of the reply and whilst the plaintiff did not oppose that course, the defendants did and the application was not so adjourned[7].
After the reply was filed the defendants’ solicitors contacted his Honour’s Associate “indicating that the parties were prepared to make submissions as to whether the reply should be considered in the application and, if so, the effect it had on the outcome”.[8]
The defendants contended that the reply should not be taken into account in the application as it was not read at the time of the hearing and the plaintiff did not apply to adjourn the hearing in order to allow it to be considered.[9]
Judge Byrne KC accepted that some of the matters raised in the reply should have been pleaded in the statement of claim,[10] and said as follows:[11]
“While there have been instances where the Reply has been considered as part of the scope of the matters in contest, each of the examples put before me by the plaintiff has been in a different context. In Orchid Avenue Pty Ltd v Parniczky & Anor8 Burns J was considering the availability of granting judgment in default of the defendant’s appearance at trial pursuant to r. 476 of the UCPR. Whereas in Morrison v Australian Postal Corporation, 9 McGill DCJ, sitting on appeal from the Magistrates Court, was considering a complaint about the sufficiency of the pleadings to sustain the judgment under appeal in circumstances where there had not been any application below to strike out the pleading in the SOC. His Honour found that the pleading of matters in the Reply that should have been in the SOC was an irregularity rather than rendering the proceeding invalid. He did not endorse the practice and specifically referred to the availability of a power to strike out the offending pleading.”
Judge Byrne KC said further that as the pleadings presently stood there was no requirement for the defendants to respond to the reply, which was undesirable.[12]
Although litigation can be fast-moving and material facts may come to light after the filing of initial pleadings, this decision highlights the importance of consideration to be given by a plaintiff as to whether matters should rightly be pleaded in a statement of claim (or an amended statement of claim) or, possibly – a reply. That will not only ensure that the necessary facts are put in issue, but will also hopefully avoid potential strikeout applications. The course adopted in any case is obviously fact sensitive.
[1] Byrne v Australian Airlines Ltd (1995) 185 CLR 410.
