Case Summaries

Full Court Matters - December 2001

TAME v. MORGAN & ANOR (S83/2001)

Court appealed from: Supreme Court of New South Wales (Court of Appeal)

Date of Judgment: 12 May 2000

Date of grant of special leave: 6 April 2001

On 11 January 1991 the appellant was driving in Richmond when a vehicle driven by Terence Lavender travelling in the opposite direction collided with her. Each driver was conveyed to hospital for treatment. Blood alcohol readings were taken. Mr Lavender was at fault; he was on the wrong side of the road and affected by alcohol (his blood alcohol reading was 0.14).

The appellant instructed a solicitor, Mr Weller. Since Mr Lavender was driving an uninsured vehicle, the appellant sued the Nominal Defendant. The claim was handled by NZI Insurance. NZI made a written admission of liability on 11 June 1991 and ultimately the claim against the Nominal Defendant was settled in August 1994 with a substantial sum being paid to the appellant.

The appellant suffered significant leg and back injuries. There were many attendances for physiotherapy. Around May 1992 there were problems with payment of physiotherapy accounts. During a conversation with the appellant in June 1992, Mr Weller told her that the P4 (the police report of the accident) recorded that she had a blood alcohol reading of 0.14, when in fact it should have recorded that she had a nil reading. The appellant rang the police at Windsor. Constable Morgan told her that her blood alcohol reading was nil and that the information about it on the P4 form was a mistake.

NZI’s solicitor re-confirmed that liability was admitted on 29 July 1992. In early 1993 Mr Weller sought and received from the Police Service a formal assurance that the mistake on the P4 had been rectified, coupled with an apology. However, the appellant continued to think that the delay in meeting the physiotherapy bills was connected with the false information on the P4 form. (In truth the insurer considered the treatment unnecessary.) She became depressed and she was diagnosed with a depressive illness in June 1995. She sued Constable Morgan and the State of New South Wales for the negligent infliction of psychiatric disorder.

The trial judge held that the respondents were liable in negligence for the psychiatric injury suffered by the appellant as a result of her receiving knowledge of the mistake in the P4 report.

The Court of Appeal held unanimously that causes of action for pure psychiatric illnesses are distinct from claims based upon physical injury and that no duty of care is owed to a plaintiff unless a person of normal fortitude would suffer psychiatric injury by the negligent act or omission of the defendant (unless the defendant has knowledge of any particular susceptibility of the plaintiff). The Court found that the injury suffered by the appellant would not have been suffered by a person of normal fortitude and that no duty of care was owed to the appellant as the risk of psychiatric illness which she suffered was not reasonably foreseeable.

The grounds of appeal are:

• Causes of action for pure psychiatric illness are distinct from claims based on physical injury;
• No duty of care is owed to a plaintiff unless a person of normal fortitude would suffer psychiatric injury by the negligent act or omission of the defendant unless the defendant has knowledge of any particular susceptibility of the plaintiff;
• The "eggshell psyche" rule applies after a determination has been made that a person of normal fortitude would suffer some injury;
• The psychiatric injury suffered by the Appellant would not have been suffered by a person of normal fortitude;
• No duty of care was owed to the Appellant as the risk of psychiatric illness which she suffered was not reasonably foreseeable;
• A necessary element in a cause of action for pure psychiatric injury is that it must be occasioned by a shock in the sense of a sudden sensory perception;
• The Appellant did not suffer psychiatric injury by shock;
• The damages suffered by the Appellant were too remote to be recoverable.

ANNETTS AND ANOR v. AUSTRALIAN STATIONS PTY LIMITED (P97/2000)

Court Appealed from: Supreme Court of Western Australia (Full  Court)

Date of Judgment: 21 November 2000

In August 1986, James Annetts, a 16 year old, left home to work for the respondent as a jackeroo at Flora Valley Station in the Kimberley district of Western Australia. In October 1986, he was sent by the respondent to work at Nicholson Station, a very isolated location. James was left there unsupervised and alone with only radio communication to other properties of the respondent. James decided to run away from Nicholson Station but the motor car became bogged and he died in the Gibson Desert on or about 4 December 1986. The applicants are the parents of James Annetts.

On 6 December 1986, the police made a telephone call to Mr Annetts and informed him that James was missing and it was believed he had run away. Mr Annetts collapsed when he was given this news.

In January 1987, Mr and Mrs Annetts went to the Kimberleys to the Hall Creek Police Station where they were shown some of James’ belongings, including a hat covered in blood. It was only on 26 April 1987 that the motor car was found and later that day, James’ remains were found. Mr Annetts returned to Hall Creek and was able to identify James from the photographs of his remains.

The applicants sued the respondent for damages on the basis that the respondent’s negligence caused the death of James and that the same negligence caused each of them to suffer psychiatric injury.

On the application of the respondent, the Supreme Court of Western Australia ordered that a preliminary question be decided. That question was: On the basis of the assumption of the truth of certain of the facts alleged in the pleadings, did the respondent owe Mr and Mrs Annetts a duty of care?

The preliminary question was heard and decided adversely to the applicants.

The Full Court dismissed the appeal. The Court found, inter alia, that it was not reasonably forseeable that the applicants might suffer a sudden sensory perception of a phenomenon so distressing, that a recognisable psychiatric illness would be caused. The Court also found that, in order to establish the necessary degree of proximity to recover damages, the person who has suffered psychiatric injury must directly perceive the distressing phenomenon or its aftermath and on this basis, the applicants failed to establish the necessary degree of proximity.

The application has been referred to a Full Court to be argued as if on appeal.

The question of law said to justify a grant of special leave to appeal is:

• Whether the common law of Australia governing the recovery of damages for the negligent infliction of injury should continue to require different rules to apply, depending upon whether the injury is characterised as physical injury or psychiatric injury.

SGH LIMITED (formerly known as SUNCORP BUILDING SOCIETY LIMITED) v. THE COMMISSIONER OF TAXATION (B19/2001)

Date of Case Stated: 21 March 2001

In 1976, a financial crisis developed which involved seven Queensland building societies incorporated under the Building Societies Act 1886 (Qld). To avoid the impending collapse of these institutions and to provide stability and investor confidence in the building society industry, the State Government created a new building society ("SGIO Building Society") which would be closely linked to Queensland’s existing State Government Insurance Office ("SGIO"). SGIO Building Society took over the assets and liabilities of the seven collapsing societies. For the purposes of the present proceedings, there is no dispute that SGIO and its successor Suncorp Insurance and Finance ("Suncorp") are properly characterised as "The State" for the purposes of Section 114 of the Constitution.

The takeover took place by way of legislative reform. Through the Building Societies Amendment Act 1976 (Qld), power was conferred upon the Registrar of Building Societies to direct the transfer of engagements or property from one building society to another, and a contingency fund to be held by the State was created for the protection of persons who contributed, lent or deposited money with the building societies. Also by legislation the SGIO Building Society was created and incorporated with particular rules and membership structure which vested control of the society in SGIO. It is the status of SGIO Building Society, later known as Suncorp Building Society, of which the applicant is the legal successor, with which these proceedings are concerned.

Between 1976 and 1985, SGIO Building Society continued to operate as a building society pursuant to these arrangements and made contributions to the contingency fund. Upon the repeal of the 1886 statute by the Building Society Act 1985 (Qld) the amount standing to the credit of the contingency fund was transferred to a new fund which was again held by the State. On 5 July 1993, after the Building Societies Fund Act 1993 (Qld) made provision for the disbursement of the contingency fund, the State paid to Suncorp Building Society an amount in excess of $23 million. A further sum in excess of $2 million was made as an ex gratia payment from the State on 28 July 1993.

On 15 March 1995 the Australian Taxation Office assessed tax on these two payments for the year ended 30 June 1994. Objection was made by the applicant on the ground that the applicant was not subject to the imposition of tax by the Commonwealth by reason of s.114 of the Constitution which says as follows:

The Australian Taxation Office disallowed the objection for various reasons including that the applicant was not the "State" within the meaning of s.114 of the Constitution and that the payments made to the applicant were bounties or subsidies assessable under Section 26(g) of the Income Tax Assessment Act 1936 (Cth) and that the tax was not, therefore, a "tax on property" for the purposes of s.114 of the Constitution.

The disallowance of this objection then gave rise to proceedings in the Federal Court and, on 21 March 2001, Justice Callinan ordered that this cause be removed into the High Court pursuant to Section 40 of the Judiciary Act 1903 (Cth) on grounds that questions arose under the Constitution, or involving its interpretation. A case was stated for the consideration of the Full Court.

The questions stated for the consideration of the Full Court are:

• Whether SGH Limited is the "State" for the purposes of s.114 of the Constitution?
• Whether the tax in question is a "tax on property" for the purposes of s 114 of the Constitution?

ATTORNEY-GENERAL FOR THE STATE OF NEW SOUTH WALES v JOHN FAIRFAX PUBLICATIONS PTY LIMITED (S129/2001)

JOHN FAIRFAX PUBLICATIONS PTY LIMITED v ATTORNEY-GENERAL FOR THE STATE OF NEW SOUTH WALES (S124/2001)

Court appealed from: Supreme Court of New South Wales (Court of Appeal)

Date of judgment: 2 August 2000

Date of grant of special leave to appeal: 1 June 2001

On 27 October 1997 the Sydney Morning Herald ("the SMH") ran a front-page article about a man committed for trial on drugs charges. That article, which was accompanied by the accused’s photograph, described him as a heroin distributor, drug dealer and a drug boss. As a result, the Attorney-General for the State of New South Wales ("the Attorney-General") commenced proceedings against the SMH’s publisher, John Fairfax Publications Pty Limited ("Fairfax") for contempt. That application was dismissed, with the trial judge upholding the public interest defence referred to in Ex parte Bread Manufacturers Ltd; Re Truth and Sportsman Limited (1937) 37SR (NSW) 242.

The Attorney-General then submitted 5 questions of law to the Court of Appeal pursuant to s.101A of the Supreme Court Act 1970 (NSW) ("the Act"). The Court of Appeal dealt with those questions, but its judgment does not ground the matters currently before this Court. The current matters arise out of Fairfax’s separate, but related proceedings ("the separate proceedings") commenced in the Court of Appeal on 17 November 1999. Those separate proceedings concerned the effect of s.101A of the Act.

Section 101A of the Act contains the following subsections:

1. must not publish any report of any submission made under subsection (1), and
2. must not publish any report of proceedings under this section so as to disclose the name or identity of the alleged contemnor.

Fairfax sought declarations that ss.101A(7), (8) and (9) were invalid as contravening the implied constitutional freedom of communication on government and political matters. It also submitted that those subsections were incompatible with the exercise by a State court of the Commonwealth’s judicial power. On 2 August 2000 the Court of Appeal held (by majority) that those subsections did not contravene the principles in Kable v The Director of Public Prosecutions (NSW) (1996) 189 CLR 51. It did however find that ss.101A(7), (8)(a) and (9) were invalid because they contravened the implied freedom of political communication affirmed in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. It is from this decision that both the Attorney-General and Fairfax brought separate successful applications for special leave to appeal. Constitutional notices pursuant to section 78B of the Judiciary Act 1903 (Cth.) have been issued in respect of each matter.

The grounds of appeal in S129/2001 (the Attorney-General’s matter) are:

• The majority of the court below erred in finding that proceedings in the Court of Appeal pursuant to s.101A of the Act constituted a government or political matter attracting the protection of the freedom of communication implied by the Constitution.
• The majority of the court below erred in finding that s.107A(7) and (8)(a) were provisions which effectively burdened the implied freedom of communication about government or political matters.
• Even if s.101A(7) and (8)(a) did so burden the implied freedom, the majority of the court below erred in finding that those provisions were not reasonably appropriate and adapted to achieve a legitimate objective, namely, protecting persons who have been acquitted of criminal contempt.

The grounds of appeal in S124/2001 (the Fairfax matter) are:

• The majority of the court below erred in failing to hold that ss.101(A)(8)(b) and (9) of the Act infringed the freedom of communication about government or political matters implied by the Constitution by reason that the sections were not reasonably appropriate and adapted to achieve a legitimate end.
  
• The majority of the court below erred in holding that ss.101A(8)(b) and (9) of the Act were not incompatible with the exercise by that court of the judicial power of the Commonwealth.
  
• The majority of the court below erred in failing to hold that each of ss.101(A)(8)(b) and (9) was incompatible with the implied constitutional freedom of communication and/or the judicial power of the Commonwealth in that, having held that ss.101A(7) and (8)(a) were invalid, the majority failed to take account of the inhibition which ss.101A(8)(b) and (9) placed on reporting proceedings the subject of s.101A, as many such cases may be expected to involve public figures and/or publicly known facts which readily could be connected to any report of such proceedings so as to reveal the identity of the alleged contemnor.

SOLOMONS v. DISTRICT COURT OF NEW SOUTH WALES & ORS (S50/2001)

Court appealed from: New South Wales Court of Appeal

Date of Judgment: 13 July 2000

Date of grant of special leave: 22 June 2001

The issue in this case is whether a person charged in a State Court with an offence under a law of the Commonwealth has the same opportunity as someone charged with a State offence, if acquitted, to obtain a certificate with respect to the costs incurred in the proceedings.

On 22 July 1998 the appellant was charged in the District Court of New South Wales with two counts of being knowingly concerned in the importation of a prohibited import in contravention of s 233B of the Customs Act 1901 (Cth). At the completion of the prosecution case, Keleman DCJ directed an acquittal of the appellant on each count. The jury duly returned verdicts of not guilty on both counts.

The appellant applied to Keleman DCJ for a certificate under s 2 of the Costs in Criminal Cases Act 1967 (NSW) ("the Costs Act"). On 24 July 1998 his Honour refused the application because, in his opinion, he had no power to grant such a certificate in respect of proceedings for the prosecution on indictment of a person charged with a Commonwealth offence. His Honour relied primarily upon the reasoning of the Court in Commissioner of Stamp Duties (NSW) v Owens [No 2] (1953) 88 CLR 168.

On 17 December 1999 the appellant sought to review the decision of the District Court by summons filed in the Court of Appeal with an affidavit to explain the reasons for delay in seeking the relief.

On 31 July 2000 the Court of Appeal delivered judgment dismissing the summons by majority (Mason P and Foster AJA), Sheller JA dissenting. The question on which the members of the Court divided was whether ss 39(2), 68(2) or 79 of the Judiciary Act (Cth) ("the Judiciary Act") or a combination of those provisions rendered the Costs Act applicable to proceedings in relation to federal offences.

The grounds of appeal are:

• The majority in the Court of Appeal (Mason P and Foster AJA, Sheller JA dissenting) erred in holding that the power conferred by s. 2 of the Costs Act in any proceedings relating to any offence:-

(a) was not part of the jurisdiction of the Court with respect to the trial of a person charged with an offence against the laws of the State, so as to not be part of "the like jurisdiction" with respect to persons who are charged with offences against the laws of the Commonwealth, vested in the District Court by s. 68(2) of the Judiciary Act;

(b) was not part of the laws of the State made binding on all Courts exercising federal jurisdiction in that State, in all cases to which they are applicable, by s.79 of the Judiciary Act.

• The majority of the Court further erred in that:-

1. the President erred in concluding that-

(i) power to grant a certificate under the Costs Act was not "with respect to" any part of federal jurisdiction because it did not "form a necessary part of the jurisdiction with repect to trial and conviction on indictment" (Judgment, para 21); and

(ii) even if the District Court were exercising federal jurisdiction, s. 79 would not pick up s. 2 of the Costs Act and apply it to an offence under Commonwealth law because that would purport to change the meaning of the State law. (Judgment, paras 12 and 13).

2. Foster AJA erred in-

   (i) applying the reasoning of the majority of this Court in Gurnett v The Macquarie Stevedoring Company Pty Ltd [No.2] (1956) 95 CLR 106 in relation to the operation of s. 37 of the Judiciary Act, to the operation of s. 68(2); and

   (ii) failing to find that the power conferred on the District Court by the Costs Act was, in the words of Dixon CJ in Gurnett, "consequential upon and intimately bound up with" the disposition of the trial.

FIREBELT PTY LTD v. BRAMBLES AUSTRALIA LIMITED (trading as CLEANAWAY) & ORS (B52/2001)

Court Appealed from: Federal Court of Australia (Full Court)

Date of Judgment: 22 November 2000

Date of grant of special leave: 27 June 2001

On 24 February 1995, the appellant was registered as the patentee in respect of an invention described in the provisional specification as follows: -

In June 1995 the appellant commenced proceedings in the Federal Court of Australia against the first and second respondents alleging that they were infringing the appellant’s petty patent by their use of a side loading refuse vehicle. The first and second respondents each filed their defence, which contained amongst other grounds a denial of any infringement of the petty patent.

On 16 November 1998, the first respondent filed a further amended cross claim, seeking revocation of the petty patent on the basis that it was not a patentable invention within the meaning of s 138(3) of the Act on a number of grounds, including want of inventive step.

The proceedings were heard by Dowsett J in the Federal Court. The preliminary issue before his Honour was the first respondent’s cross claim for revocation of the patent. On 24 December 1998, Dowsett J held amongst other things that the claimed invention lacked an inventive step and did not describe the best method known to the applicant of performing the invention. Orders made by His Honour on 10 June 1999 included revocation of the patent and dismissal of the appellant’s original application.

Dowsett J’s decision was based on evidence of the state of "prior art" and an acceptance of evidence that a loading mechanism incorporating a lid opening device was well known prior to February 1992 and that the solution of a loading mechanism incorporating a lid opening device (said to be the "inventive step") would be obvious by reference to previous experience in the industry.

The appellant appealed to the Full Court against the finding of lack of inventive step and that the specification did not describe the best method of performing the invention. The respondent filed a notice of contention claiming errors on the part of the trial judge in relation to various positive findings made by him in relation to the appellant’s claim. The second and third respondents (the Cooloola Shire Council and the State of Queensland) did not participate in the appeal.

The Full Court of the Federal Court dismissed the appellant’s appeal and as a result, and in accordance with the first respondent’s wishes, did not deal with the issues raised in the notice of contention.

The grounds of appeal are:

• Whether the Full Court of the Federal Court erred in formulating its own ex post facto "notional problem" approach for the purpose of ascertaining whether there was an inventive step in a patent for a combination, under the Patents Act 1990, or whether the Court should have identified upon the evidence a real existing practical problem (or the non-recognition of any problem) in the art at the priority date;

• Whether the Full Court of the Federal Court erred:

1. in failing to apply Minnesota Mining and Manufacturing Co v. Beiersdorf (Australia) Ltd (1980) 144 CLR 253 in the application of s.7 of the Patents Act 1990 in relation to the test for inventive step in the case of a patent for combination; and
2. in assuming common general knowledge at the relevant time rather than requiring that knowledge to be proved by admissible evidence; and
3. in failing to consider the nature of the evidence required to prove common general knowledge; and the requirements of s.7 of the Patents Act 1990, especially sub-sections 7(2) and 7(3), and in failing to require evidence accordingly;

• Whether the Full Court of the Federal Court erred in construing and/or applying s.7 of the Patents Act 1990 in relation to inventive step in a patent for combination so as to permit, as information under sub-section 7(2) to be considered together with common general knowledge, part only of an item of prior act (being part only of a combination); and

• Whether the Full Court of the Federal Court erred in that it did not accurately distinguish between the test for novelty and the test for inventive step when applied to an invention, especially an inventive combination, and failed to apply the appropriate test to determine whether the invention was obvious.