Illusory consideration and uncertain terms – arguments of last resort?

Kirralee Young has had a success in a shareholder dispute in the Court of Appeal regarding illusory consideration and uncertainty in respect to the interpretation of a shareholders agreement. 

The decision relates to a dispute between the parties relating to the meaning and operation of certain funding provisions in a shareholders agreement. The agreement regulated their rights as equal shareholders in a company. In broad terms, one shareholder provided the intellectual property and expertise for the business and the plaintiff was required to provide funding. Despite the agreement being in place for over 12 months, one shareholder contended that the agreement was void and uncertain because the funding provisions were illusory and uncertain in the sense that they did not impose a definitive obligation on the other party to provide such funding. i.e there was an unfettered discretion.

It cannot be doubted that promises with no substance, or that are ‘illusory’, are not good consideration. For example, A cannot promise to buy B’s goods in return for ‘whatever A feels like paying’. This type of consideration is discretionary and without substance and is therefore not good consideration.  Nor can it be doubted that a promise is not illusory because the promisor has some discretion in how its obligations are to be performed. It is only necessary that there be an obligation that the promise be performed and that the discretion is contained within the defined parameters. 

The question in this case was whether the discretion was completely unfettered. The plaintiff argued that it did not have a completely unfettered discretion as to the provision of funding because it was required to act in good faith under the agreement and pursuant to duties arising at common law and in equity.  The defendant argued these duties were not fetters on the discretion because they could not be specifically enforced.

The Court of Appeal found in favour of the plaintiff that the consideration was not illusory consideration nor were the provisions uncertain and ultimately that the shareholders agreement was valid. They further found that good faith obligations can act as a fetter and that they did not need to be specifically enforceable. It was enough that those obligations could sound in damages only.

Further details of the case can be found here .

78th International Law Association Biennial Conference

6 St James Hall is very pleased to be a supporter of the 78th International Law Association Biennial Conference, to be held in Sydney from 19-24 August 2018.  

Dr Christopher Ward SC, as President of the host branch of the International Law Association, heads the conference organization and will address the Conference, and barrister Sandrine Alexandre-Hughes will also speak on private international law.  

The Conference is a major international event, and will be opened by the Foreign Minister, the Hon Julie Bishop MP, and will also be addressed by the Chief Justices of the High Court, Federal Court, Family Court and New South Wales Supreme Court, as well as the Right Honorable Lord Mance of the United Kingdom Supreme Court.

For any inquiries or registrations, please see the Conference website, www.ila2018.org.au, or contact Dr Ward SC directly at cward@stjames.net.au

HCCH 125 – Ways Forward: Challenges and Opportunities in an Increasingly Connected World

Dr Christopher Ward SC recently spoke in Hong Kong at a major international conference conducted by the Hague Conference on Private International Law. The full conference proceedings is available on the HCCH 125 website. Dr Ward’s session is also available on YouTube

Sessions discussed all major topics of private international law and commercial law, including the recognition of judgments, choice of law, and the current work of the Hague Conference. 

The barristers of 6 St James’ Hall have a depth of experience in major private international law matters.  Recent and current significant cases include multinational employment disputes, cross border pharmaceutical and manufacturing disputes, foreign law disputes in aviation matters including the freight cartel class action and the establishment of foreign subsidiaries for listed Australian airlines.

Jennifer Mee on Best Lawyers list for 2019

Best Lawyers has recognised Jennifer Mee of 6 St James Hall Chambers in their 2019 list for her well-established work in energy law.

"I am honoured to have again been selected for inclusion in Best Lawyers in Australia, Energy Law, for 2019. Thank you to everyone who supported me for this."

Jennifer has been practising as a lawyer for over 20 years, over 15 of which have been as a Partner at national and global law firms. She is now practising as a barrister at 6 St James Hall Chambers in a wide range of practice areas.

Shareholder dispute regarding new Bunnings kitchen bench top roll out

Kirralee Young succeeds in a shareholder dispute regarding new Bunnings kitchen benchtop product roll out

The decision relates to a dispute between the plaintiff and the first defendant relating to the meaning and operation of certain provisions in a shareholders agreement. The agreement regulated their rights as equal shareholders in a company that carries on the business of developing, designing, manufacturing and marketing kitchen bench tops. In broad terms, the first defendant provided the intellectual property and expertise for the business and the plaintiff provided its funding. The shareholders have now fallen out over the company’s trading and financial position and the plaintiff is unwilling to provide further funding.

Among their respective arguments is the first defendant’s contention that the shareholders’ agreement is void and ineffective because the provisions relating to the plaintiff’s funding obligation either impose an illusory obligation or they are uncertain. These questions raised issues of general application in the law of contract.

His Honour found in favour of the plaintiff that the consideration was not illusory consideration despite the fact that certain conditions were required to be satisfied before the shareholder was required to provide funding and ultimately that the shareholders agreement was valid.

Further details of the case can be found here

Dr Stephen Tully speaks at 2018 ADLA Conference

Dr Stephen Tully has made a presentation about recent developments in international criminal law and practice as relevant to Australian legal practitioners. Organised by Nyman Gibson Miralis, the Australian Defence Lawyers Alliance (ADLA) Conference for 2018 was held in Sydney on 23 March and topics included advocacy, Commonwealth sentencing, mental health and the media. Stephen’s presentation is available here. 

Pro Bono Judicial Review Training

On 23 January 2018 Dr Stephen Tully, together with Nicholas Poynder of Frederick Jordan Chambers, Laura Free of Victoria Legal Aid, David Burke of Lander and Rogers Lawyers and Nadine Darling from the Refugee Advice & Casework Service (RACS), conducted a workshop on the judicial review of fast track decision-making by the Immigration Assessment Authority. Attended by some 27 solicitors and barristers, the workshop was the final step in an online programme established in Victoria and now made available in NSW. The training complements a current initiative of RACS - Justice for Refugees, or J4R – which engages barristers to advise on refugee matters and undertake judicial review applications before the Federal Circuit Court of Australia.

Dr Christopher Ward SC wins in landmark fraud and trade practices case

Dr Christopher Ward SC with junior Philip Santucci has successfully represented European businessman Dr Benoy Berry in landmark fraud and Trade Practices litigation against former Reserve Bank of Australia subsidiary Securency (now known as CCL Secure Pty Ltd).  

The Federal Court (Rares J) found that Securency and some of its officers had engaged in a “practiced deception” amounting to a “shabby fraud” as a result of which Dr Berry and his company were deceived into the early termination of an extremely valuable commercial contract involving the sale of polymer banknotes in Nigeria. The judgment, which also describes the conduct of Securency in relation to Nigerian governmental officials, reinforces the serious consequences for Australian companies that engage in deceptive business practices overseas.

The importance of decision notification: Dr Stephen Tully wins in visa cancellation case

Dr Stephen Tully of Chambers and Sally Hunt, Solicitor Director of Supra Legal, successfully overturned a decision of the Administrative Appeals Tribunal which rejected as late a merits review application lodged by their client concerning a decision of a delegate of the Minister for Immigration and Border Protection not to revoke a prior visa cancellation decision.

The Department of Immigration and Border Protection purported to notify the client of this decision in a letter which omitted certain information. The tribunal held that it lacked jurisdiction, and proceedings were commenced before the Federal Court of Australia.

The parties agreed to remit the tribunal’s decision for reconsideration because the client had not been correctly notified of the delegate’s decision as required by the Migration Act 1958 (Cth). 

LFDB v SM [2017] FCAFC 178

The Full Federal Court has strongly supported the mutual recognition of judgment provisions of the Trans-Tasman Proceedings Act. The Full Court upheld the registration of a significant money judgment obtained in New Zealand. The Appellant had been ‘debarred’ by an 'unless order' from participation in the original New Zealand proceedings. The Full Court rejected the argument that the New Zealand proceedings offended Australian public policy and procedural fairness requirements and upheld the underlying principle of reciprocal recognition of judgments from New Zealand.  The Full Court found that New Zealand 'unless orders' were simply a form of peremptory order by which courts were able to control their processes. The Full Court also confirmed the jurisdiction of the Federal Court in relation to the enforcement of New Zealand judgments.

From the Federal Court of Australia:

PRIVATE INTERNATIONAL LAW – appeal from the dismissal by the primary judge of an application under s 72(1) of the Trans-Tasman Proceedings Act 2010 (Cth)to set aside the registration of a judgment of the High Court of New Zealand in relation to proceedings under the Property (Relationships) Act 1976 (NZ) – whether enforcement of judgment would be contrary to public policy in Australia

Dr Christopher Ward SC and Dr Stephen Tully successfully appeared for the respondent.

Steven Cominos wins one of the first successful appeals from a Football Federation of Australia banning order [2017] FIBAC 5

Mr Cominos acted for the appellant in an application to set aside a decision of the Football Federation of Australia (FFA) to ban the appellant from attending A-League and other FFA-sanctioned matches for a period of five years. The Football Independent Banning Advisory Committee (FIBAC), comprising Soulio J (chair), Ian Lloyd QC and Simon Mitchell, decided to set aside the 5 year ban.

Madeleine Bridgett calls for law reform to Australia's organ trafficking laws

Currently in Australia organ trafficking laws which can be found in Division 271 of the Criminal Code 1995 (Commonwealth) do not have extraterritorial effect. This means there are no provisions in Australian law to protect people from organ trafficking and organ tourism which occur overseas by Australians. 

On 23 June 2017 The Human Rights Sub-Committee of the Parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade commenced an Inquiry into Human Organ Trafficking and Organ Transplant Tourism. The inquiry examines how the Australian legal system deters organ trafficking and what more can be done to prevent this offence from occurring both in Australia and internationally.

Madeleine Bridgett, Co-Chair of the Business and Human Rights Committee for the Australian Lawyers For Human Rights (ALHR), and Kerry Weste, Vice-President of the ALHR, made submissions to the Inquiry which can be read here

Madeleine Bridgett was featured in today's Lawyers Weekly.

Michelle McMahon wins landmark case on compensation rights for residential park residents in NSW

After almost four years and eight separate proceedings, the NSW Civil and Administrative Tribunal (NCAT) awarded sums of $260,000 and $240,000 for two women who were being evicted from their residential park due to a redevelopment of the land. In the initial proceedings, NCAT determined their compensation to be $85,000 & $62,000 respectively.

A significant issue in dispute involved the statutory construction of the compensatory regime and the elements to be included for valuation, which took the matter to the Supreme Court and the Court of Appeal. Whilst this issue was being resolved, the relevant legislation was amended to broaden and clarify the compensation scheme. The Residents went back to NCAT and successfully argued that they fell within the transitional arrangements for the new law. This set the scene for a test case on how the new provisions would apply in practice.

In the final proceedings NCAT agreed that compensation should be based on a valuation of the residents dwelling under the "Point Gourde" principle being that the dwellings were to be valued as if the park were to continue in operation, was in reasonable condition and had reasonable amenities.

Michelle McMahon appeared for the residents.

Dr James Stellios presenting at ANU's 40th Anniversary of the Federal Court

From ANU College of Law:

The ANU Centre for Commercial Law and Centre for International and Public Law are proud to announce a conference to mark the 40th anniversary of the establishment of the Federal Court of Australia. Current and former Federal Court Justices, and leading academics and practitioners will consider the Federal Court’s contribution to the development of Australian law.

Dr James Stellios will be co-presenting on the Friday morning with Justice John Griffiths on the Federal Court's contribution to Australian constitutional law. Dr Stellios will also chair a session on  the Saturday, before delivering the closing remarks of the conference.

You can register for the conference here.

 

International Law Developments in Australia

Dr Stephen Tully contributed a report on international legal developments within Australia over the past year for the American Bar Association’s Section of International Law annual publication Year in Review. Their report can be found in (2017) 51 International Legal Developments Year in Review: 2016 at 579-82.

Dr Stephen Tully helps to secure a second chance for refugee applicant

Dr Stephen Tully worked pro bono with Liz Simpson, Ali Mojtahedi and Olivia Todhunter of the Immigration Advice and Rights Centre in FTYC v Minister for Immigration and Border Protection.

In December 2016, the Administrative Appeals Tribunal affirmed a decision to refuse to grant a protection visa to an applicant on character grounds, because she had a substantial criminal record and visa refusal was considered to be the preferable decision. The applicant was arrested upon her arrival into Australia in 2010, was convicted and sentenced, and was being held in immigration detention pending deportation.

However, Australia owed non-refoulement obligations to her under international law and she faced the prospect of indefinite detention. Following a hearing before the Federal Court of Australia in June, the parties agreed to remit this matter to the tribunal for reconsideration.

Truly a team effort by all involved with a fantastic outcome for a very deserving client.

Dr Stephen Tully: 'Extradition: the China Choice'

New article by Dr Stephen Tully for the ANU Asia and the Pacific Policy Society Policy Forum:

Western countries like Australia face particular challenges when seeking to extradite individuals to China. Many countries are party to the Second Optional Protocol to the International Covenant on Civil and Political Rights Aiming at the Abolition of the Death Penalty. Under this treaty, it is unnecessary to prove that individuals “will” be sentenced to death; it is sufficient that there is “real risk” that an individual would face the death penalty. The United Nations (UN) Human Rights Committee requested Australia to protect individuals from removal to China without adequate assurances that they would not be executed. To enforce an individual’s return would constitute violations by Australia of that individual’s human rights.