Australian Law: Legal System, Criminal Sentencing, Property Law, Insurance Contracts, Contract Law

This study material covers various aspects of Australian law, including the legal system, criminal sentencing, property law, insurance contracts, and contract law. It discusses the primary and secondary rules of obligation, the role of magistrate and crown courts in criminal cases, the importance of clearly drafted leasing documents, and the significance of consideration in a contract formed in Australia. It also includes important case laws and their implications.

Australian Law

Part A
In the new Constitution developed by the tribe, there are rules that protect members of the
tribe from violent acts from other members of the tribe. According to Herbert Lionel
Adolphus Hart, there are certain circumstances essential for the continued existence of legal
system. These circumstances are as follows:
 the ‘rules of behaviour’ applicable in relation to the ultimate criteria of legality of the
system must be followed;
 ‘rules of recognition’ mentioning the principles of legal authority
 ‘Rules of change’ and arbitration must be followed as general standards of public
regarding authorized conduct by its officers (Payne, 2009).
In the opinion of Hart, the primary rules are to be followed by the citizens as they are legally
obligatory. Also, the law officers have the authority to form new legal rules. If a concept of
legal system is desired which is not based entirely on power, the idea of normative rule is
required based on authority (MIT OpenCourseWare, 2012). However, normative rule
imposing obligation must justify itself tracing to the constitution.
The rules that protect the members of the tribe from such violent acts were developed with
the provisions of strict punishments to the wrong doers and the reason behind development of
such rules in the constitution is to maintain law and order in the tribe. All the authorized
individuals as well as the members of the tribe should follow the rules and regulations
established within the Constitution of the tribe. Such rules would forbid the individuals or
group of people to perform violent acts and would impose obligations on them. The
provisions of punishment on causing injuries to others would deter them from doing so. The
rules would exert coercive power upon individuals or group of people by the imposition of
penalties on non-compliance with various types of duties or obligations (Scott, 2004).

Part B
In UK, all criminal cases are started in a magistrate court, so once a person is held guilty of a
criminal offence, he/she is taken to magistrate court. However, magistrate court handles
summary offenses and either way cases only, such as assault, burglary or drug offences and
most serious offences known as indictable offences are taken to the Crown Court such as
murder, rape and robbery. In some cases, the magistrate court decides custody or bail for the
offender until next hearing. After final verdict, the magistrate court can give punishment of
imprisonment up to 6 months or at least 1 year in case the offender has committed more than
one crime. The court can also charge compensation, community sentence or applicability of
bans. The range of sentences given by Crown Court can include community sentences as well
as imprisonment which can even be life sentences as well (Gov.uk, 2018).
The Magistrate Court can order a term of imprisonment to the accused under the age of 21
years and the accused under the age of 17 years can be detained in a Youth Justice Centre.
The maximum imprisonment imposed by Magistrate Court can be 2 years for single offence
and aggregate total sentence can be 5 years. Criminal sentencing that can be given by the
courts include custodial sentences or imprisonment and non-custodial alternatives such as
orders or bonds (Edney, 2011).
The three parts of Hart’s Concept of Law include the Existence of legal System; the
Existence of Legal System in comparison with the concept of law i.e. Sartorius’s Critique of
Hart; and the rationale for minimum conditions. The laws imposing responsibilities upon the
individuals are known as ‘primary rules of obligation’ (Magistrates’ Court of Victoria, 2018).
The secondary rules are essential for providing reliable account of the- primary rules. It
enables the courts in resolution of disputes related to the imposition of primary rules.
However, the secondary rules comprises of rules of recognition, rules of change, and rules of
adjudication (Scott, 2004).

Part C
The decision of High Court in Gumland Property Holdings Pty Limited v Duffy Bros Fruit
Market (Campbelltown) Pty Limited [2008] is important for property-owners as well as
leaseholders, because the High Court supported the right of the property-owners to get hold
of damages, which include loss of bargain damages, subsequent to the termination for the
violation of essential and established term by the leaseholder (Gumland Property v Duffy
Bros Fruit, 2008).
Facts of Case
The landlord Transit Management Pty Ltd (Transit) had a grocery shop on rent in a shopping
complex. The renter Duffy Bros Fruit Market Pty Ltd (Duffy) took a 15 year lease of that
grocery rental from Transit in 1993. Since 1999, Duffy was having trouble in trade and was
not able to pay rent on time. Duffy and Transit signed a deed which provided that Transit
would make efforts to secure sub-tenancy of building, the liability for payment of sub-
tenancy rental fee remained to be the liability of Duffy, the rent out that was required to be
paid by Duffy as per the lease was decreased. Also, conditions of the lease were approved
and confirmed(High Court of Australia, 2008).It was established under the deed that if further
breaches of lease was not committed by Duffy, he would not have to pay full rent under the
contract of lease. In 2001, a part of the building was sold by Transit to Gumland. However,
the lease was not documented till 2005 (Lethlean, 2008). When the sub-lease expired in 2002,
the sub-tenant did not want to extent the lease for another year and therefore entered into
over-holding period. The sub-tenant started paying 50% if the rent that was required to be
paid under sub-lease because of which, Gumland claimed that Duffy breached lease as well
as deed and issued default notices and demanded payment of arrears. When payment was not
approaching, Gumland terminated the lease in 2003. Gumland sought amount of $2,096,514
along with interest from Duffy.

Issue-Was landlord liable to recover the failure of bargain damages?
Rule
Section 117 of Conveyancing Act 1919 (NSW) (Austlii, 2018)
It was held by Supreme Court that the sub-tenant failed to give the rent, which was itself a
violation of necessary conditions of ‘Lease and Deed’ under Real Property Act 1900 (NSW)
under Clause 4 of the Act. So, Gumland was allowed to recuperate the amount overdue on
lease along with failure of bargain damages.
The ruling of Supreme Court was reversed on appeal when the Court of Appeal said that the
violation of deed was not related to the essential obligation to pay complete rent.
Additionally, Gumland unsustainably ended the lease and was entitled only to recuperate the
amount overdue on lease and not the bargain compensation.
Application
Duffy argued that Gumland had no right to terminate as rental fee was not a necessary
condition of lease, for which it was argued by Duffy that right to take legal action only occurs
when Duffy had not accepted the contract signed between them. The Contract law was also
applied to the case which allows innocent party to end the lease and to recuperate the failure
of bargain damages.
Conclusion
The appeal of Gumland was allowed by the High Court and all the damages sought by them
were awarded. Under Clause 3.2 of the Act, because of stated conditions of lease, Duffy was
legally responsible to pay complete rental fee in 7 days after the rent became due. In addition,
general contract principles applied to lease allows innocent party to end the contract and to
recuperate the failure of bargain damages in case of violation of conditions. So, the failure of
bargain damages was to be recovered by Gumland accordingly.

The case is a convincing example of the necessity of clearly drafted leasing document
providing true intentions of the parties. The parties should be attentive to the conditions as
well as the repercussion, of violation of essential conditions of lease, by any of the party.
Part D
In 2007, Mr and Mrs Newlands entered into a contract with a builder for the construction of
triple -storey housing property up to lock-up stage with plumbing and other interiors yet to be
done. Due to various structure related issues, Newlands sued the constructer in Victorian
Civil and Administrative Tribunal (VCAT) claiming that the property had a fault in basic
structure. In 2010, the VCAT ordered the amount of $400,000 to be awarded to the
Newlands. After some time in 2010, Mr Kalabakas i.e. claimant bought the property from
Newlands on discount based on incomplete construction till lock-up stage and insured it with
Chubb Insurance Company. The policy was renewed in 2011 and the insurance was arranged
through broker of plaintiff by taking specific requirements from the plaintiff over phone. In
2012, fire destroyed the property. The plaintiff claimed insurance company to pay for $1.4
million forth replacement cost. Also, claim for contents and demolition was made under
insurance policy. The claim was declined by the insurer based on fraudulent
misrepresentation and non-disclosure (Probert & Boughton, 2016).
Issue- Was the insurer liable to pay insurance claim to the plaintiff?
Rule-
Insurance Contracts Act 1984 (Cth) (ICA)
Section 21(1) of ICA enforces duty of disclosure on an indemnified regarding every matter in
his/her knowledge and which is essential for the insurer to take decisions regarding
acceptance of the risk and on what terms and conditions.

Section 26 of ICA is related to the misrepresentation where a statement made by a person
associated with the insurance contract was actually false and was made on the belief, the
statement shall not consider as misrepresentation. Also, the statement made by a person
knowing that it is actually false and knowing that the choice of the insurer whether to admit
the risk, depends on the relevancy of the statement (Kalabakas v Chubb Insurance Company
of Australia Ltd [2015] VSC 705 (11 December 2015), 2015).
Section 28(2) of ICA deals with the consequences of non-disclosure or falsification and
allows the insurer to nullify the contract in such circumstances.
Application-
It was claimed by insurer that plaintiff was aware of four relevant requiring disclosures under
Section 21(1) of ICA, which were related to its choice regarding acceptance of the risk and
on what conditions, which were incomplete construction till commencement of initial policy,
property under dispute regarding structural defects, inadequate resolution of structural issues
and lack of valid occupancy certificate (Hodges, 2015). In addition, the insurer agreed that
failing to disclose these issues was considered as fraud according to which, renewal of policy
could be avoided from its inception under Section 28(2) of ICA.
Conclusion
The Court considered the alternative defence of the insurer and held that although the non-
disclosure was not deceptive, the liability of the insurer have been zero. Additionally, court
declared that the insurer would decline to consider the risk without considering
misrepresentations in the quotation sheet by the plaintiff and the court entitled the insurer to
lessen its legal responsibility to zero under Section 28(3) of ICA.
The case suggested that the allegations of fraud must be appropriately pleaded and
underpinned by evidence particularly documentary evidence.

Part E
Facts-Pedro and Lisa were retailers and they used to sell imported French jewellery in
Melbourne, Victoria. When Lisa sold her business to Pedro, she entered into the contract
according to which, she agreed that she would not carry on or be engaged in the sale of
imported French jewellery all over in Australia for a time period of two years from the
initiation of the contract. Only 1 year after selling the business, Lisa established a new retail
business in Cairns, Queensland, selling imported French jewellery.
Issue- Can Pedro enforce the contractual promise against Lisa?
Rule- Australian Contract Law
The Contract Law of Australia is applicable in this case which requires consideration along
with offer and acceptance between the parties to the contract.
The Common Law states that for an agreement to be obligatory, the promise must offer
consideration i.e. sum of certain type, for the promise received by them. The unjustified
promises cannot be usually enforced. However, the only consideration is the cost
predetermined by the promisor, can be used in broader sense (Clarke, 2015). It is not essential
for it to be monetary or even of financial value but it requires some kind of detriment by the
promisee. So, there is significance of consideration in a contract formed in Australia which
can be anything to be called as consideration legally (ACCL, 2016).
All the rules and regulations associated with the contract law of Australia are binding to both
the parties to the contract and breach of contract by anyone of them, would lead the party in
legal trouble.
Application
In this case, Pedro and Lisa entered into a contract when Lisa sold her entire business to
Pedro and agreed that she would not perform or be engaged in the sale of imported French
jewellery all over Australia for a period of two years. The promise by Lisa was a type of

consideration in the contract. One year after the sale of business, Lisa broke her promise and
established a new retail business in Queensland of selling imported French jewellery (Lavan,
2018). She breached the contract as there was one year left in completion of contract and she
established new business with French jewellery itself. It was a contractual promise and it was
the liability of Lisa to bind to it till the completion of the contract (Lavan, 2018).
Conclusion
As Lisa broke the promise of not getting engaged in the import of French jewellery for a time
period of two years after selling the business to Pedro, Pedro can take legal actions against
Lisa. The contractual promise can only be enforced by the court as it was a valid enforceable
contract existing between both the parties (Rule of Law Institute of Australia, 2018). The
court will provide specific amount of compensation to Pedro for the financial loss incurred to
him due to establishment of new retail business by Lisa. So, Pedro can only be provided with
the damages caused due to breach of contract by Lisa, but contractual promise can only be
enforced by the court.
References
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