June 2018


Bias accusation thrown out

by Kate Tilley, Resolve Editor and John Reynolds, KT Journalism

A Victorian panel beating company that unsuccessfully attempted to take a legal fight with AAMI to the High Court now has failed in an attempt to sue its lawyers and prove a judge was biased.

On February 8, Victorian Appeal Court Justices Simon Whelan, Joseph Santamaria and Terrence Forrest rejected Bodycorp Repairers' (BCR) appeal against an order preventing it suing Holding Redlich (HR) for negligence.

BCR director Antonio Murdaca had claimed Victorian Supreme Court Justice Cameron Macauley was biased and denied him natural justice by summarily dismissing BCR's application to sue its former law firm.

The court heard the litigation started back in 2015 when BCR sued AAMI, for which BCR had been a preferred repairer, for continuing to allow panel beaters that had left the BCR franchise from 1998 to 2000 to remain AAMI-preferred repairers. BCR argued that breached AAMI's agreement with it.

In 2016, the Victorian Supreme Court found AAMI had technically breached the agreement with BCR, but the contract was an unreasonable constraint of trade. BCR unsuccessfully appealed against that decision in the Victorian Appeal Court and the High Court refused special leave to appeal.

In 2017, BCR tried to sue HR for negligence in advising on and drafting the agreement, but HR successfully argued the claim was statute barred. On April 27, 2017, Justice Macauley summarily dismissed the application against HR, saying it had little chance of success.

He also dismissed BCR's application to bar HR solicitors and counsel from the case because they held privileged BCR information; refused BCR's request to cross-examine HR's solicitors and counsel; and refused BCR's request to reopen its case after affidavit evidence had been provided.

BCR's appeal argued Justice Macauley was biased; he denied the repairer natural justice; and erred in dismissing the case. In a joint judgement, the Appeal Court judges upheld Justice Macauley's ruling.

They said he had considered the evidence and his judgement "explained clearly why he thought [BCR's] submissions were unpersuasive". They rejected Murdaca's argument BCR was denied natural justice by not being allowed to cross-examine HR's legal staff.

They said the legal representatives had given uncontroversial, uncontested affidavits to Justice Macauley and he was best able to decide if more evidence was necessary.

They said issues BCR sought to raise at a reopened hearing would have had no bearing on Justice Macauley's decision and he was right to reject BCR's cross-examination request  and not reopen the case.

"Refusing a party permission to advance irrelevant submissions is no more a denial of natural justice than refusing a party permission to adduce irrelevant evidence," they said.

The High Court in April 2016 had refused BCR special leave to appeal against the Victorian Supreme and Appeal Court rulings AAMI had breached the agreement but would not be sanctioned because the contract was an unreasonable restraint of trade.

BCR had also asked the High Court to overturn a ruling AAMI employee Barry Martin did not unlawfully encourage franchisees to break their franchise agreements.

BCR claimed franchisees left it because Martin encouraged them to "go alone" by promising AAMI would maintain their preferred supplier status. It said AAMI's and Martin's actions breached an agreement that required the insurer to withdraw preferred repairer status if franchisees left BCR.

On April 28, 2015, Victorian Chief Justice Marilyn Warren and Appeals Court Justices David Beach and Timothy Ginnane had found AAMI did break the agreement to withdraw preferred repairer status. But they agreed with Victorian Supreme Court Justice James Elliott who in September 2013 ruled the breach was not enforceable because of free trade regulations and rejected BCR's claim the franchisees had left because of AAMI's and Martin's inducements.

They accepted Martin had discussed options with franchisees and had confirmed AAMI would maintain their preferred repairer statuses. "But it is a quantum leap to equate [Martin's] representations with an intention to induce [an unlawful] breach of a binding agreement," the judges said.

Bodycorp Repairers Pty Ltd v Holding Redlich [2018], VSCA 17, 08/02/2018
Bodycorp Repairers Pty Ltd v AAMI & Martin [2015], VSCA 73, 28/04/15

Back to top

Resolve is the official publication of the Australian Insurance Law Association and
the New Zealand Insurance Law Association.