In 2012, the High Court heard 61 cases and handed down 52 judgments. That’s a lot of reading to keep up to date! But we’ve tried to make it easier. Here is our pick of the top High Court decisions in the corporate context in 2012 (including its first decision for 2013 – just because it’s such a good one!) in no particular order.

ASIC v Hellicar & Ors [2012] HCA 17; Shafron v ASIC [2012] HCA 18

These two appeal cases related to the board and general counsel of James Hardie Industries Limited. The cases considered the scope of the duties of directors and officers and provide some useful reminders on corporate governance. We discuss both of these decisions, and their implications for corporate governance, in our KWM Alert.

Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16

In a case with broad implications for content-owners and intermediaries, the Court found that internet service providers (“ISPs”) are not liable for copyright infringement undertaken by users of their service. Our summary of the Court’s decision can be found here.

Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30

In the context of a class action against banks for the late payment and dishonour fees they charge, the High Court found that the penalty doctrine can apply to amounts becoming payable other than for a breach of contract. Previous authority had indicated that the penalty rule only applied to amounts payable for breach of contract (ie liquidated damages), and therefore amounts not triggered by breach would not be subject to the penalty doctrine. Many people have been drafting on this basis to avoid the application of the penalty doctrine. The High Court’s approach in this case will require a rethink on the drafting approach in these circumstances. For a full discussion of this case and its impacts see here. For its impact on IT contracts and Service Levels see here.

Google Inc v ACCC [2013] HCA 1

The Court’s first judgment of 2013 was another case relating to the liability of an intermediary for the conduct of its users. The Court found that Google was not liable for publishing misleading and deceptive advertisements of its customers. Our discussion of this case can be found here.

JT International SA v Commonwealth; British American Tobacco Australasia Ltd v Commonwealth [2012] HCA 43

Two cigarette companies, JT International SA and British American Tobacco Australasia Ltd, challenged the validity of the just-introduced Tobacco Plain Packaging Act 2011 (Cth) (“TPPA”), which mandated ‘plain’ or non-descript packaging for cigarettes. This prevented cigarette companies from incorporating their intellectual property, such as trademarks and copyright, into their cigarette packaging.

The two companies claimed that the TPPA was an invalid law. They argued that there had been an acquisition of their property without compensation contrary to section 51(xxxi) of the Constitution, which requires any acquisition by the Commonwealth to be on “just terms”.

Although the Court found that the intellectual property of the cigarette companies did constitute property for the purposes of section 51(xxxi), it held that there had not been an acquisition by the Commonwealth. Although the TPPA effectively deprived cigarette companies of the use and value of their property, the Commonwealth had not acquired any sort of interest in that property. Thus, the Court found that the TPPA was a valid law.

Williams v Commonwealth of Australia [2012] HCA 23

This case involved the scope of the executive power of the Commonwealth under section 61 of the Constitution, relating to payments made to schools under the National School Chaplaincy Program. Our discussion of this case and its implications can be found here.

Forrest v ASIC; Fortescue Metals Group Ltd v ASIC [2012] HCA 39

This case was an appeal against a decision of the Full Court of the Federal Court, relating to a number of ASX announcements made by Fortescue Metals Group (FMG) in relation to its Pilbara Iron Ore and Infrastructure Project. The substance of those ASX announcements was that FMG had entered into a “binding contract” with three Chinese companies for the building and financing of part of that project. However, the contract in question was effectively a ‘framework’ agreement: it did not include any details regarding fees, scope of services or timing, and only obliged the parties to negotiate full contractual terms.

ASIC alleged that FMG had engaged in misleading and deceptive conduct in relation to a financial product (under section 1041H of the Corporations Act 2001 (Cth)), and had also breached its continuous disclosure obligations for a listed entity (under section 674 of the Corporations Act 2001 (Cth)). Further, ASIC alleged that because FMG had engaged in these acts, Andrew Forrest as then CEO of FMG, had breached his section 180 director’s duty to act with care and diligence.

Much of this case turned on the meaning of the term “binding contract”. The Court concluded that the ASX announcements were not misleading and deceptive when considered from the perspective of the intended audience - investors. The Court found that investors would understand the announcements as meaning that the parties had entered into agreements, and that the parties intended those agreements to be binding. The Court rejected ASIC's proposition that the statements were only correct if the contract with the Chinese companies could be enforced in an Australian court – this was a lawyer’s interpretation of “binding contract” but that was the wrong interpretation.

The FMG announcements were therefore not misleading and deceptive, no breach of its disclosure obligations had occurred, and accordingly, Forrest had not failed in his director’s duties.

Betfair Pty Ltd v Racing New South Wales [2012] HCA 12; Sportsbet Pty Ltd v New South Wales [2012] HCA 13

These two cases, both relating to wagering services, were heard concurrently. Both Betfair and Sportsbet operated wagering service businesses, which required access to NSW race field information. Use of such information required a wagering operator to comply with the provisions of the Racing Administration Act 1998 (NSW) (“RAA”), including the payment of a licence fee (being 1.5% of wagering revenue) for use of the race field information.

Betfair (a company with its head office in Victoria and operations in Tasmania and elsewhere) claimed that the RAA infringed the “free trade” provision (section 92) of the Constitution. Betfair’s argument was that the RAA discriminated against them, because they operated a low cost business, and the 1.5% licence fee was substantially more onerous for Betfair to pay than its NSW-based competitors.

The Court rejected Betfair’s argument that the RAA was discriminatory against interstate (as opposed to intrastate) wagering operators. The Court found that if an Act is on its face neutral, Betfair would need to show that the practical effect of the law was both discriminatory and protectionist in nature. The impact of the licence fee was more keenly felt by Betfair, but only because of the business model Betfair had adopted. Just because an Act affects one business more adversely than another does not mean the Act is discriminatory; the question is whether or not the Act adversely affects interstate trade, not how it affects any individual business.

Sportsbet, based in the Northern Territory, raised similar arguments in relation to the RAA, although this case involved section 49 of the Northern Territory (Self-Government) Act 1978 (Cth), which replicates section 92 of the Constitution. Sportsbet was unsuccessful for substantially the same reasons as Betfair.

Strong v Woolworths Ltd [2012] HCA 5

This case is noteworthy for the Court’s discussion of the onus of proof in civil cases. In this case, lack of evidence of causation was not fatal to the plaintiff’s claim, because the Court found that, on the balance of probabilities, it was more likely than not that the defendant’s negligence had caused the plaintiff’s loss.

This was an appeal from the NSW Court of Appeal. Ms Strong suffered serious spinal injuries following her fall outside a Big W store, caused by a greasy potato chip. The central issue was whether or not Woolworths’ negligence had caused the accident, by Woolworths’ failure to implement an appropriate system for detecting and removing spillages that could cause such accidents. On appeal, negligence was accepted; the question was whether Woolworths’ failure to regularly inspect the area had been the cause of the plaintiff’s injury.

Critically, there was no evidence as to how long the chip had actually been on the ground before the accident occurred. Woolworths suggested, and the Court of Appeal had agreed, that it was more likely that the chip fell around lunch time, shortly before the fall occurred. However, the High Court concluded that there was no evidence that the chip was more likely to have been dropped at lunch time, and on the balance of probabilities, they found that it was more likely that the chip had been dropped in the longer period between 8am and 12:00pm, than in the 30 minutes immediately before the fall.

On this basis, the High Court concluded that Woolworths’ negligence had, on the balance of probabilities, caused the plaintiff’s fall.

International Litigation Partners Pte Ltd v Chameleon Mining NL (Receivers and Managers Appointed) [2012] HCA 45

The Court had to decide whether or not litigation funding agreements were “financial products” for the purposes of the Corporations Act 2001 (Cth). We discuss this case and its implications for litigation funders in our Q4 2012 edition of Class Action.