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The lease on the land which they farmed in Fiji was due to expire in around 2001. In 1997, local indigenous Fijians who claimed that they owned the land began harassing them. The worst incident, which later resulted in the applicants paying money to the men who harassed them, was reported to the local police who did nothing. Despite those men agreeing to conditions for an extension to the lease, the harassment did not cease. 2 After the applicants came to Australia, they were notified that their land had been leased to someone else. They took no steps to protest or to seek compensation for improvements made by them. Country information stated that farmers whose leases were not renewed could seek compensation and that government assistance in obtaining new land or other employment was available. 3 The applicants expressed fear of further harassment from the men who had previously harassed them at their farm. They also expressed fear of other indigenous Fijians. 4 The Refugee Review Tribunal was not satisfied, on the basis of these matters, that the applicants had a well-founded fear of persecution. The applicants sought judicial review of that decision in the Federal Magistrates Court. Emmett FM dismissed their application ( SZEIV v Minister for Immigration & Anor [2005] FMCA 1702) and the applicants seek to appeal her Honour's decision in this Court. The Tribunal contended that, in ' the unlikely event ' that the harassment continued, they could relocate to another part of the country. The Tribunal said that while the termination of the lease may have been a discriminatory act, it did not constitute serious harm amounting to persecution. 6 The Tribunal cited country information that, despite general levels of violence and crime in Fiji, people of Indian ethnicity are not generally at risk of serious harm amounting to persecution because of racial violence. The Tribunal was not satisfied that the applicants were owed protection obligations under the Refugees Convention as amended by the Refugees Protocol. In the written submissions before the Delegate, the claim was that the male applicant's ' fundamental civil and political rights ' were breached by reason of race, in that the government in Fiji ' preferred the lawful [sic] interests and the illegal conduct of the traditional land holders '. 8 In the application for a protection visa, the loss of land was described and persecution on account of race was specified. There was also reference to the male applicant's active support and membership of the Labour Party. This was related to his being ' victimised by the native land owners for the reclaimanation [sic] of land '. 9 The applicants were represented by counsel before her Honour. That alleged failure was rejected by her Honour, as no such claim had been made to the Tribunal (at [22]). The applicants had indicated that they had not made such a claim for compensation as they had left Fiji. • Denial of natural justice and procedural fairness : The applicants alleged that the questions put to them by the Tribunal did not assist them in pursuing their claim. Her Honour rejected the submission that the Tribunal had an obligation to assist the applicants by the questions it asked ([26]). • Misapplication of the "real chance" test : Her Honour examined the Tribunal's reasons and observed that, '[h] aving found no serious harm and no Convention nexus it is not surprising that the Tribunal concluded [that there was no real chance of persecution in the reasonably foreseeable future for Convention related reasons]' (at [39]). That ground was rejected. • Failure by the Tribunal to consider political activities : Her Honour found that, while a claim of persecution on the basis of the male applicant's political beliefs was raised in the application for a protection visa, the solicitor's written submissions to the Department and to the Tribunal and the claims made orally to the Tribunal, were based on race and not on political opinion or imputed political opinion (at [43] and [51] to [53]). Her Honour considered the transcript of the Tribunal hearing, which was in evidence before her and the concessions made by the applicants' legal representative (at [48] to [50] and [55]). She also noted that no documents or submissions were provided to the Tribunal seeking in any way to address the bare claim, in the protection visa, of persecution by reason of political or imputed political opinion (at [55]). Having regard to the fact that the applicants were legally represented before the Tribunal and that no such claim was made before the Tribunal, the Tribunal was not required to consider the claim (at [57]). No claim was made to the Tribunal for persecution on the grounds of political opinion. Her Honour observed, with reference to NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2004) 144 FCR 1 at [58] , that an unarticulated claim must be raised squarely on the material available to the Tribunal before it has a duty to consider it. Her Honour also relied on Appellant S395/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 ; (2003) 216 CLR 473 at [1] where Gleeson CJ stated that, although the Tribunal proceedings are not adversarial, the decision of the Tribunal must be considered in the light of the basis upon which the application was made. 11 As I have noted, her Honour was referred to and cited in her reasons the transcript of the hearing before the Tribunal. There, the applicants' solicitor stated that the ' the core of [the male applicant's] claim relates to issues, humanitarian issues which are beyond the scope of this Tribunal '. It is apparent from a reading of the transcript that the solicitor was concerned to preserve the applicants' position pending an application under s 417 of the Migration Act 1958 (Cth) ('the Act') and, for that reason, conceded that the applicants could not establish an objective basis for a fear of persecution. Rather, the claim was based on ' issues of law enforcement and general economic circumstances in Fiji '. 12 In considering the Minister's submission that the applicants had abandoned their claim of persecution for reasons of political affiliation, her Honour referred to the transcript where the solicitor stated that the bases of the applicants' claims ' really are a recital of a general fear of crime and breakdown in law and order ' (at [49]). Her Honour noted that the answers to questions accompanying the application for a protection visa referred to victimisation for political activity (at [50]). However, a subsequent letter from the applicants' solicitor to the Department of 13 November 2002 referred to that application and stated that the claims related to the lease of the land. The letter referred to the claims based on race but made no reference to political activity (at [51]). 13 Federal Magistrate Emmett gave detailed consideration to the progress of the claim to persecution on the grounds of political activity or opinion. Her Honour acknowledged that that claim had been made in the application for a protection visa and was referred to by the Delegate in his decision. Other than the bare assertions made in his protection visa application, there was no other evidence, material, or information provided by the First Applicant, or his legal advisor, supporting that claim. Moreover, there is no reference in the transcript of the Tribunal hearing, to any claim by the First Applicant of a fear of persecution by reason of his political opinion or imputed political opinion by any of the First Applicant, the Second Applicant or the legal advisor, all of whom participated in the hearing. Indeed, the Applicants' solicitor's submissions before the Tribunal conceded that the application was likely to fail, by reason of the absence of a Convention nexus. Her Honour concluded that any such claim was abandoned (at [57] to [58]). 15 In any event, the claim to persecution for political opinion was, as put to the Delegate, related to the harassment concerning the applicants' lease. Emmett FM noted at [59] that ' at the heart of the Tribunal's decision was its finding that, while the termination of the [a] pplicants' lease may have been a discriminatory act, it did not constitute serious harm amounting to persecution '. The ground was rejected. 16 Her Honour further found that, as the application for judicial review was filed outside the time required by s 477 of the Act, the application was incompetent (at [63]). First, the applicants filed two applications in this Court; an application for an extension of time to appeal and an application for leave to appeal. It would seem that both documents were filed because, as a result of the Federal Magistrate finding the application incompetent, the applicants were unsure as to whether that decision was final or interlocutory. 18 In any event, leave of the Court is required before a notice of appeal may be filed. The initiating documents were filed one day outside the 21 day time limit prescribed by the Federal Court Rules (O 52 r 5(2); O 52 r 15(1)(a)). That delay was occasioned by the applicants being wrongly informed of the date on which Emmett FM's decision was handed down. 19 Whether a decision is interlocutory or final depends on the legal effect of the judgment ( Re Luck [2003] HCA 70 ; (2003) 203 ALR 1 at [4] ). There is a conflict of authority in this Court as to the position where a Federal Magistrate finds an appeal incompetent for failure to comply with s 477 of the Act yet also makes a decision "on the merits" to dismiss the appeal ( SZGAP v Minister for Immigration & Multicultural & Indigenous Affairs (2005) 227 ALR 683 at [68]-[69]). That conflict does not require resolution here. For the reasons which follow, the proposed grounds of appeal have no prospects of success. It follows that, independently of the applicants' explanation for what is a very short delay, neither leave to file an extension of time nor leave to appeal should be granted. 20 Secondly, the applicants seek leave to raise grounds of appeal not raised before Emmett FM and to adduce fresh evidence on the appeal from her Honour's decision, ' about some aspects of the hearing conducted by the [Tribunal] and some other relevant issues '. That evidence is set out in an affidavit of the male applicant that has been filed in the Court. There is no explanation given as to why the new grounds were not raised before her Honour. 21 In NBDF v Minister for Immigration and Multicultural Affairs [2006] FCA 1355 the appellant had, as here, sought to raise fresh grounds of appeal not relied on before the Federal Magistrates Court. As Branson J pointed out at [22], leave is required to argue on appeal an issue not raised below. There, as here, neither the appellant's written submissions nor his affidavit addressed the basis on which the Court must be satisfied that it is expedient and in the interests of justice for the issue to be raised for the first time on appeal. Her Honour said at [26] that it is not appropriate to grant an appellant leave to raise an issue simply because, as he contended, it would be just to allow him to do so. If the issue upon which an appellant wishes to rely for the first time is without merit, leave should not be granted to raise the issue before this Court. The male applicant said that he had not known what was being said, as the discussions were not interpreted. 23 He also says that his counsel in the hearing before Emmett FM ' has disappointed us by advancing mostly unsustainable arguments with only one exception '. He asserts, with respect to his previous lawyers that ' one has seriously damaged our case while being paid by us and the other has done our case without much competence '. 24 The assertions are serious. The evidence to support the assertions is general and inadmissible. The conclusions contain assumptions that have not been proved. The male applicant is not competent to assess the competence of submissions that had been put on his behalf. I am surprised that the applicants' present solicitor has sought to read the affidavit in that form. The assertions of incompetence or other inadequacy on the part of previous legal advisers have not been established. • Failure to comply with s 424A(1) of the Act. • Making a finding of fact without evidence. • Failure to consider a claim that harassment over the applicants' land was a pretext for extortion for which the applicants were targeted because of race. • Misapplication of the test for relocation. • Breach of s 425 of the Act by discussing matters with the applicants' solicitor ' who was undermining the [applicants'] case ' which were not interpreted for the applicants to respond. • Consideration of a claim different from that put to the Tribunal. It is accepted that the claim to persecution for political opinion was not a claim made to the Tribunal. The applicants submit that the Tribunal is obliged, as part of its review functions and by reason of s 414 of the Act, to consider claims made to the Delegate. 28 The Tribunal is conducting an administrative review, a rehearing of the application for a protection visa. The question is whether the Tribunal is obliged to consider claims made to the Delegate and not made, or abandoned, in the Tribunal. The claim to persecution for political opinion did not arise from the material before the Tribunal and was not raised in response to direct questioning by the Tribunal. There is no dispute that the Tribunal gave the applicants the opportunity to present their claims. 29 The High Court discussed the task of the Tribunal in Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [70] ---[75]. The task of the Tribunal is to review the decisions of the Minister or the Delegate. The Tribunal may affirm, vary or remit the decision, or set it aside and substitute a new decision (s 415(2) of the Act). As pointed out by McHugh, Gummow and Hayne JJ at [73], the duty of the Tribunal is to take account of all relevant considerations, as identified by the Act. 30 The absence of a finding of a relevant fact may amount to jurisdictional error ( NABE at [55]). A failure to make a finding on a substantial, clearly articulated argument relying on established facts can amount to a failure to accord procedural fairness and a constructive failure to exercise jurisdiction ( NABE at [55] citing Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 ; (2003) 197 ALR 389 at [24] and [95]). The task of the Tribunal and the way in which it discharges that function flow from the powers and procedures prescribed for the Tribunal in the conduct of reviews and the use of the word "review" ( NABE at [56]). That includes a requirement to consider all of the claims of the applicants ( NABE at [57] approving Allsop J, with whom Spender J agreed, in Htun v Minister for Immigration and Multicultural Affairs (2001) 194 ALR 244 at [42]). 31 The Tribunal is required to deal with ' the case raised by the material or evidence before it ' ( NABE at [58] citing Chen v Minister for Immigration and Multicultural Affairs [2000] FCA 1901 ; (2000) 106 FCR 157). The Tribunal is not limited to the ' case ' articulated by an applicant if evidence and material which it accepts raise a case not articulated. A claim ' not expressly advanced will attract the review obligation of the Tribunal when it is apparent on the face of the material before the Tribunal ' ( NABE at [58]) (emphasis added). At [59], the Full Court discussed whether the Tribunal is required to consider a claim not expressly raised and observed that there is no general rule that the Tribunal can disregard a claim which arises clearly from materials before it: '[t] he Tribunal is not required to consider a case that is not expressly made or does not arise clearly on the materials before it ' (at [61]). 32 The Court in NABE approved the reference by Selway J in SGBB v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 199 ALR 364 at [17] to the observation by Kirby J in Dranichnikov , at 405, that '[t] he function of the Tribunal, as of the delegate, is to respond to the case that the applicant advances ' and of the Full Court in Dranichnikov v Minister for Immigration and Multicultural Affairs [2000] FCA 1801 at [49] that the Tribunal ' can only deal with the claims actually made '. The Court at [60] also approved the statement of Selway J at [18] that the question ultimately is ' whether the case put by the [applicant] before the tribunal has sufficiently raised the relevant issue that the tribunal should have dealt with it '. 33 If the Tribunal makes an error in misunderstanding or misconstruing a claim advanced by the applicant, that can amount to jurisdictional error because of a failure to consider a claim. The claim must, however, ' emerge clearly from the materials before the Tribunal ' ( NABE at [68]). There was no suggestion that the Tribunal is required to consider a claim not made or abandoned before the Tribunal. 34 A claim made to the Department and referred to in the Delegate's decision would, ordinarily, be before the Tribunal. However, where a claim has been made to the Delegate and not advanced at all before the Tribunal and does not arise from the material before the Tribunal, the Tribunal is entitled to assume that the claim is no longer made. The Tribunal is conducting a review of the Delegate's decision but on the basis of the claims advanced and materials before the Tribunal. If a claim does not so arise and is abandoned, especially where the applicants are legally represented, the Tribunal is entitled to take the view that the applicants do not make that claim or a case based on that claim. 35 The conclusion by Emmett FM that the claim to persecution on the ground of political opinion or imputed political opinion was abandoned and that the Tribunal was not obliged to consider it has not been shown to be in error. This ground is rejected. The male applicant stated in his protection visa application that he was persecuted because of his political opinion. The written submissions to the Department were from the applicants' solicitor, ' clearly stating ' that the claimed reason of persecution was race. Neither the applicant nor his solicitor made the claim based on political opinion at the Tribunal hearing. The information that the applicants say should have been provided pursuant to s 424A(1) is the "information" that the claim to persecution for political opinion was not made to the Tribunal. 37 It is necessary to understand that this was not stated to the Tribunal. There was no such information given. Rather, a claim referred to in the application for a protection visa was not advanced or referred to before the Tribunal. Information in the application for a protection visa which is disclaimed is not information given to the Tribunal. There was no claim to persecution for political opinion made to the Tribunal. The Tribunal cannot be required to provide information of which it was not aware and which had not been relied upon by the applicants or by the Tribunal. 38 The information did not form the reason or part of the reason for affirming the decision under review. 39 Further, to the extent that there was information given to the Tribunal by the applicants or by their solicitor on their behalf, in the presence of the male applicant, it was information not required to be given to the applicants by reason of s 424A(3)(b) of the Act. 40 The second aspect of the adverse information that the applicants submit should have been provided pursuant to s 424A(1) of the Act is as follows. Submissions and concessions were made by the applicants' solicitor as to the absence of a proper basis for the application and that the Tribunal's ' scope ' did not relate to humanitarian issues. These submissions were not interpreted. The solicitor conceded that the applicants were looking for a decision from the Minister under s 417 of the Act for humanitarian reasons rather than refugee status. 41 Even accepting that the solicitor was acting outside his authority, there is no suggestion that the Tribunal was aware of that fact. The solicitor did, apparently, make a concession that the applicants' claims did not fall within the scope of the Convention or meet the "real chance" test. The representations put by the solicitor at the time that the concession was made seemed to be directed to ensuring that no adverse comment was made by the Tribunal as to the applicants' delay in applying for a protection visa. It is not uncommon for a concession to be made for the purpose of securing what may be seen to be a corresponding advantage. From the transcript it would seem that the solicitor was intent on ensuring that no adverse comment on the applicants' credibility was made by the Tribunal. It is not established that the solicitor was not acting in the overall best interests of the applicants or that, if he was, the Tribunal was or ought to have been aware of the fact. There is no reference in the Tribunal decision to the concession or the fact that it was made. It has not been shown to have formed part of the reasons for the decision. There is no basis in the Tribunal's reasons for inferring that the statements of the solicitor were material to the outcome. It is not for the Court to speculate on the effect of the solicitor's statements on the Tribunal or on its reasons for decision. It follows that, even though the solicitor's comments to the Tribunal were not interpreted, the applicants have not established a breach of s 424A(1) of the Act. 42 None of the matters raised or information cited are referred to in the Tribunal's reasons. They do not form the reason or part of the reason for its decision. The Tribunal was not obliged to provide particulars of its reasoning, nor of defects in the applicants' case ( SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214 at [206] , [223]). 43 Section 424A(1) has no application. This ground is without merit. This was not a ground relied upon before the Federal Magistrate where the applicants were legally represented and no good reason is given why it is now being raised for the first time on appeal or why it is in the interests of justice for it to be considered. 44 Leave to rely on this ground should be refused. In the written submissions it is put that ' there was no evidence that there was no suggestion of other reason [sic] for harassment '. 46 This somewhat opaque ground was elucidated in oral submissions. It is said that there was no evidence that the harassment was to make the applicants leave the land. Rather, it is said, the harassment was to extort money, food and jewellery. 47 The applicants submit that the reason for the harassment was that the perpetrators thought that they could threaten the applicants and extort money from them because they were vulnerable because of their race and could not obtain police protection. They also submit that the extortion itself amounts to persecution within s 91R of the Act. 48 That was not the way that the applicants articulated their case before the Tribunal. 49 The applicants' occupation of the land and the renewal of their lease was the focus of their case before the Tribunal. The Tribunal was entitled to make factual findings based upon the evidence before it. 50 The questioning of the applicants in the Tribunal concerned the link between the money and the renewal of the lease over the land. The applicants told the Tribunal of the repeated attempts at extortion and the fact that they gave money and food. The male applicant also told the Tribunal that ' we kept thinking that if we keep making them happy maybe they will give us the land so we fulfilled their demands ' and '[t] hey said that we are the [owners of the land] and if you do this and that, then we will give you the land ' and ' we had just been pleading them for the land and then like I said they had been demanding more and more money and hassling us '. They've got the land. Why do you think these particular people might still harm you, it seems to me unlikely". While the evidence tends to suggest that the extortion was linked to a possible renewal of the lease rather than to make the applicants leave the land, it cannot be said, as put by the applicants, that there is no evidence that linked the extortion to the land. The consequence of the failure to renew the lease was that the applicants would have to leave the land. 53 The applicants had been notified that their land had been leased to someone else, despite the fact that the lease had not expired. The Tribunal referred to this fact and concluded that the harassment was by ' local people ' who wanted them to leave the land. That is a factual finding that was open on the evidence and not subject to review by this Court. 54 The relevant conclusion drawn by the Tribunal was that, accepting that the applicants had been harassed, the harassment was because of their possession of the land. Whether or not the Tribunal accepted that the harassment including the extortion, amounted to persecution, the Tribunal stated that there was no suggestion that they were being harassed other than to make them leave the land. This was in the context of consideration whether, once they had left the land, there was a real chance that the harassment would continue on return to Fiji. 55 There was no jurisdictional error on the part of the Tribunal in coming to the conclusion that the reason for the harassment, which included extortion, was to make the applicants leave the land. Leave to rely on this ground of appeal should be refused. 57 As conceded, this claim was not made. It was not an obvious claim, nor a part of the claim made to the Tribunal. It is antithetical to the claims actually made that the reason for harassment was the land that the applicants occupied. The Tribunal considered the facts relating to the extortion as part of the harassment alleged. There is no link demonstrated between the extortion alleged and a Convention reason, said to be ' vulnerability based on race '. The matters discussed by the applicants during the Tribunal hearing linked the extortion with land ownership. It has not been shown why the extortion of money, food and jewellery amounts to persecution. No basis for the claim being "quite obvious" is advanced. 58 Leave to rely on this ground of appeal should be refused. Particulars are given of factors that, it is said, should have been taken into account. The only reference he made to his parents of relevance is that, when asked if his parents had experienced any difficulties since relocating, he said that people steal from them from time to time. No claim was made or evidence given of their age or that the applicants were subject to a higher level of "targeting" or threat than the male applicant's parents. 61 The applicants were asked what they feared would happen to them if they returned to Fiji. They said that they were still fearful of the men who had harassed them at their farm and for the safety of their daughters who they feared would be assaulted. The Tribunal considered the matters raised and concluded that they were not at risk of serious harm as a result of ethnic violence in Fiji. It also concluded that the men who had harassed them, having achieved their goal of the applicants' departure from the land, were unlikely to follow them to town. That conclusion was a factual finding open to the Tribunal. 62 The Tribunal also took into consideration the employment opportunities available to the applicants who had qualifications as a mechanic and a sweet maker and their ability to find work other than farming. 63 The Tribunal's findings were findings of fact that were open to it on the evidence before it. Leave to rely on this ground of appeal, not raised before the Federal Magistrate, should be refused. The applicants' case as to the alleged failure on the part of the Tribunal to comply with that section was not presented coherently. The particulars assert that their solicitor appeared before the Tribunal in the capacity of a migration agent. In this context, they assert that he ' did not have a right to speak automatically spoke out of turn and interfered and most surprisingly totally undermined the [applicants'] case '. It is said that the Tribunal should have ensured that the applicants understood what was being discussed, should not have ' allowed the solicitor to impose on the Tribunal unduly ', should have advised the applicants of the ' conflict of the role played by the agent ' and not allowed the solicitor to ' say things that were evidentiary in nature and highly prejudicial to the [applicants]'. 65 The applicants' further submit, as a matter of principle unsupported by any specific authority, that the Tribunal is obliged to confirm that an agent has the authority to put submissions to the Tribunal where it ' finds that the agent...may be causing serious damage to the applicants' case '. There has been no such finding in this case. 66 The applicants were represented and present at the hearing before the Tribunal. There is no basis for a suggestion that the Tribunal interfered with or prevented them from presenting their case. Nor can it be said that the conduct of the applicants' solicitor during the hearing rendered the Tribunal's invitation to appear and give evidence pursuant to s 425 of the Act ' a hollow shell or an empty gesture ' ( Minister for Immigration and Multicultural and Indigenous Affairs v SCAR [2003] FCAFC 126 ; (2003) 128 FCR 553 at [33] ; in any event, see Minister for Immigration & Multicultural Affairs v SZFDE [2006] FCAFC 142 at [94] , [134] and [212]). It has not been shown why the Tribunal was under any obligation to inquire into the solicitor (or migration agent)/client relationship in relation to the matters being put to the Tribunal. 67 The Tribunal was entitled to assume that, where an applicant attended the Tribunal hearing with his or her advisor and was present when the advisor spoke with the Tribunal member in the presence of the applicant, that the advisor was authorised by the applicant to speak on his or her behalf. 68 As expanded in oral submissions, a further aspect of the complaint is that the exchanges between the solicitor and the Tribunal were not interpreted. The applicant did not request that the exchanges between the solicitor and the Tribunal be interpreted. It has not been shown that the subject matter of those exchanges or any information given by the solicitor that could be said to be adverse to the applicants' interests was referred to in the Tribunal's decision or material to it. The concessions said to have been made by the solicitor appear nowhere in the Tribunal decision and do not appear to form any part of that decision. 69 This is a ground not argued before Emmett FM. There was insufficient evidence to support the assertions made in the particulars. Such evidence would be required, even if a ground of denial of procedural fairness on such a basis were available. No explanation has been given for the failure to raise this ground before the Federal Magistrate where the applicants were represented by counsel. 70 Leave to raise this new ground of appeal in these circumstances should be refused. The claim made to and considered by the Tribunal made no reference to communal violence. The claim made by the applicants related to their land. That was considered and determined by the Tribunal. 72 Communal violence was considered in the context of a return to Fiji and relocation. The applicants did not point to any apprehended violence specific to themselves. They did not make a claim that they would suffer harassment other than from the men who had previously harassed them or from other indigenous Fijians. The Tribunal considered the likelihood of harassment from the same men. The Tribunal then considered the likelihood of serious harassment to the adult applicants or their daughters on return to Fiji. The Tribunal stated that the evidence before it does not suggest that people of Indian ethnicity are generally at risk of serious harm amounting to persecution because of racial violence. Then, the Tribunal considered the possibility of serious harm because of communal violence and rejected it. 73 It cannot be said that the Tribunal considered the applicants' case to be that they will suffer harm only when there is communal violence. That is a complete misstatement of the Tribunal's findings and reasons. 74 This ground of appeal is rejected. None of these grounds of appeal has prospects of success. The applications should be dismissed with costs. I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | claim made in protection visa application not raised before the refugee review tribunal claim abandoned no error by the tribunal in not considering claim evidence that applicants' previous solicitor and counsel incompetent evidence inadmissible concessions made by applicants' solicitor to the tribunal concessions formed no part of tribunal's reasons tribunal entitled to assume solicitor had authority leave refused migration |
By the decision, which was given on 9 August 2007 at Canberra in an opposition to Australian Patent Application 754689, the delegate refused leave to the applicant as opponent to serve further evidence. Costs were awarded against the applicant. The parties now propose a consent order by which the delegate's decision would be set aside and the matter remitted to the delegate to be dealt with according to law. I have given consideration to whether there is a basis for the contention that the delegate's decision was flawed by error of law. I am satisfied on the joint submission of the parties that it was arguable that the decision was so flawed, that the parties have a common position and that the order proposed is within power and appropriate. The application for the patent was made by Aristocrat Technologies Australia Pty Ltd (Aristocrat) on 8 July 1998 claiming priority from provisional applications filed on 8 July and 9 September 1997. The patent application was advertised as accepted on 21 November 2002. 3 Acres Gaming Inc (Acres) filed a notice of opposition on 21 February 2003. It was given numerous extensions of time to serve evidence in support. The serving of the evidence was apparently completed on 2 March 2005. Aristocrat obtained extensions of time to serve evidence in answer, but on 4 December 2006 advised the Patent Office that it would not be filing any evidence. 4 On 9 February 2007, IGT, a company incorporated under the laws of the State of Nevada in the United States of America, filed a request to amend the notice of opposition to record it as opponent. The relevant intellectual property in gaming technologies had been assigned by Acres to IGT and the opposition thereafter proceeded in the name of IGT. 5 IGT filed an application to serve further evidence on Aristocrat. The application was supported by two statutory declarations by IGT's patent attorney. Aristocrat objected to the application and on 15 May 2007 requested a hearing in relation to the matter of further evidence. The hearing was held on 27 June 2007. A delegate of the Commissioner of Patents, MG Kraefft, refused the application on 9 August 2007. 6 The further evidence comprised about 30 pieces of prior art, including patent and non-patent literature. Additional further evidence was foreshadowed. It would be evidence from industry experts commenting on the additional prior art. Further evidence was also anticipated from a notice which IGT had drafted for the Commissioner of Patents (the Commissioner) to issue to Aristocrat under s 210(c) of the Patents Act 1990 (Cth) (the Act) for the production of documents. The delegate observed that the Commissioner would deal with that notice as appropriate on the basis of the decision as to the leave to rely on additional evidence. It appeared from the draft notice that IGT was principally seeking documents from Aristocrat relating to communications between Aristocrat and the Queensland Treasury Office of Gaming Regulation about the communication protocol and its compliance with that protocol. The opposition had begun four years previously. IGT's application to serve further evidence with consequential further delays could only be justified if it were significantly different from the initial evidence served in support and crucial to advancing the proper determination of the opposition on its merits. A key document referred to was an exhibit to one of the statutory declarations sworn by IGT's patent attorney. The exhibit was designated the 'QCOM document'. Counsel for IGT submitted the QCOM document was materially relevant. He was 'unconvinced that the QCOM document [was] likely to add significantly to IGT's case ...'. 10 As to the remaining documents, the delegate said it was not clear why they were necessary for the purpose outlined by IGT's patent attorney. That purpose was said to be '... to clarify the understanding of terms in the claims and assist in interpretation of claims in this art'. Some were also said to challenge the novelty and inventive step of the claims, depending on their interpretation. The delegate considered the further evidence did not significantly add to evidence already advanced which contained 'substantial commentary on the state of the art, the terminology used and its meaning, and the relevance of prior art. ' As to anticipated evidence from key witnesses in respect of the 30 additional prior art documents, the delegate, being unconvinced that any of those documents were likely to add significantly to the case, saw little point in evidence about them being served from key witnesses. The foreshadowed notice of production concerned QCOM and the compliance of Aristocrat's gaming system with QCOM. As the delegate had found the QCOM document was unlikely to add significantly to IGT's case, extra material arising from the draft notice to produce documents did not add anything further. 11 The delegate noted that the opposition had begun well over four years previously. It was at a stage where the delegate would expect demonstrable significance of further evidence over the evidence in support before further evidence would be allowed. He concluded that the public interest weighed heavily against allowing the application to serve further evidence. The further evidence related to major changes which occurred in the gaming industry around 1997. The delegate had no strong indications that IGT had deliberately delayed the opposition proceedings. It did not clearly explain at the hearing why only independent experts were important in the case. The delegate was prepared to accept IGT's explanations about the difficulties in engaging experts in respect of the further evidence and overall concluded that IGT had not deliberately delayed the proceedings. IGT claims that the delegate '... failed to exercise a discretionary power in accordance with a rule or policy'. Presumably this was intended to refer to the exercise of the discretionary power in accordance with a rule or policy. The delegate is also said to have acted arbitrarily and/or inconsistently in accepting that there was a serious opposition but refusing the application for leave to file further evidence in support where the relevance and significance of the evidence justified the grant of leave. 15 The delegate was also said to have misconstrued and failed to apply requirements for the exercise of the power to produce further evidence. The decision was said to involve an error of law, being a misconstruction of requirements for the exercise of the power conferred by reg 5.10(4). The delegate was also said to have failed to have taken into account that Aristocrat's application for amendment pursuant to s 104 of the Act was extant for about 10 months and the period allowed for it to serve evidence in answer went on for about 21 months. Claims of Wednesbury unreasonableness were also raised. A number of other errors of law were asserted in what was, on any view, a prolix document. 16 Leave to file the substituted application was given by order made on 17 December 2007. At that time the parties foreshadowed a proposed consent order for the disposition of the application and directions were made for such order to be filed by 14 January 2008 together with joint submissions in support of a proposed order. The decision of the Commissioner of Patents, by her delegate MG Kraefft, issued 9 August 2007, refusing the application by IGT to serve further evidence in support of its opposition to the grant of Australian patent application 754689 be quashed or set aside. 2. The application by IGT to serve further evidence in support of its opposition to the grant of Australian patent application 754689 be remitted to the Commissioner of Patents to be determined according to law. 3. Any orders as to costs made to date in these proceedings, including order 8 made on 17 December 2007, be vacated. 4. There be no order as to costs in respect of this application. The parties contended that the decision was one of an administrative character made under an enactment, being reg 5.10 of the Patents Regulations . Reference was made to A Goninan & Co Ltd v Commissioner of Patents [1997] FCA 424 ; (1997) 75 FCR 200 which involved review under the ADJR Act of a decision made pursuant to reg 5.10(2) of the Patents Regulations to allow further time for the filing of evidence. I am satisfied that the Court has jurisdiction and power to make the order sought. That section identifies grounds of review. It does not mandate or prohibit conduct by decision-makers. 20 The 'rule' or 'policy' relied upon by IGT as fettering the delegate's discretion was '... a particular requirement as a pre-condition to the exercise of his power under regulation 5.10(4) --- namely that the Further Evidence be "crucial" or "vital" to the determination of the opposition or alternatively, that it must "add substantially" to IGT's case ...'. In posing that requirement the delegate is said to have foreclosed the balancing exercise which he was required to undertake in exercising his discretion. Aristocrat accepted, for the purpose of the consent orders, that it was open to the Court so to find. The delegate did refer to another delegate decision in Emory University v Biochem Pharma Inc [1999] APO 50 , if the further evidence '.... did not add substantially to the case compared with previous evidence already served then the further evidence could be refused. ' So framed, consideration of the significance and substantiality of the evidence would be perfectly legitimate as a relevant consideration. I emphasise that I do not find that this was the legal effect of the delegate's remark. However, the possibility of error which both parties have accepted, is sufficient to support the consent order which is now sought as being within power and appropriate. I will therefore make the order proposed. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French . | judicial review decision of commissioner of patents refusing leave to adduce further evidence in opposition proceedings proposed consent order to set aside decision whether arguable error of law demonstrated arguable error of law demonstrated proposed order within power and appropriate administrative law |
Her Honour, applying a line of well-established authority, concluded that the allegedly infringing uses by the respondents of the words 'The Hunchback of Notre Dame' in relation to films and related products were not uses of the words 'as a trade mark'. The words used by the respondents in the promotion of the Disney films are use of an established title of the story portrayed. A recognised title of an adaptation or cartoon version of a well-known story is descriptive. The descriptive meaning of these words was established well before the applicant applied for registration of his trade mark. The purpose and nature of each use is to describe the respondents' products accurately. The uses are not for the purposes of indicating a relevant connection in the course of trade or to distinguish the respondents' goods from those of other traders. The uses do not amount to "use(s) as a trade mark" within the meaning of s 120 of the Act. On 23 November 2005, the respondents moved the Court for orders requiring that the Notice of Appeal be amended because it did not comply with O 52 r 13(2)(b) of the Federal Court Rules which requires that the notice state 'briefly, but specifically, the grounds relied upon in support of the appeal'. The respondents also sought an order for security for costs in the amount of $70 000. 3 On 20 December 2005, I ordered that the notice of appeal be struck out because it failed to comply with O 52 r 13(2)(b). Pursuant to leave granted, the appellant subsequently filed a notice of appeal which narrows and limits the grounds of appeal. 4 On 20 December 2005, I adjourned the respondents' application for security for costs to allow that application to be considered in the context of any amended notice of appeal. 5 The appellant is self-represented, impecunious and appears to be unable to meet any order for security for costs. Thus, an order for security is likely to stultify the appeal. However, as was pointed out by the respondents, it does not follow that security for costs should not be ordered. 6 Order 52 r 20 of the Rules provides that no security for costs of an appeal shall be required 'unless the Court or a Judge otherwise directs'. It is accepted by the respondents that the cases establish that they have the onus of satisfying the Court that the appeal is without real merit or substance, and that the prospect of the respondent being left without remedy in respect of a costs order is significant. 7 In the detailed written outline of their submissions, the respondents set out the reasons why both criteria are satisfied in the present case. In my view those submissions should be accepted. It appears that Christodoulou has mistakenly applied the monopoly rights of copyright and patent law to trade marks in that in his opinion, any use of a registered trade mark is use as a trade mark . With respect, this would mean, in Christodoulou's view, as can be clearly seen from his affidavit and notice of appeal, simply using the words "The Hunchback of Notre Dame" in any context at all is "use as a trade mark". As Crennan J said at [71], citing Gummow and Heerey JJ in the Rolling Stones case (Musidor BV) , "the appellant's case appears to be 'an attempt to obtain a monopoly over words used to describe a lawful product'". 11 As to the second criterion, there can be no doubt that there appears to be no real prospect of the respondents recovering any costs if they succeed on the appeal. 12 Having regard to all the circumstances, I have concluded that the present appeal is one in which security for costs should be ordered. However, as the appellant has narrowed and limited his notice of appeal, which essentially raises a question of law, the amount of security that is appropriate in the exercise of my discretion is $10 000. 13 I am also satisfied that the appellant should be ordered to pay the respondents' costs of and incidental to their motion of 23 November 2005. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel J. | whether security for costs should be ordered appeal without merit or substance appellant impecunious amount of security appropriate security for costs |
During the inspection Ms MacPherson completed a pro forma document entitled "Clothing Trades Award 1999 Part 9 (Contractors and Outworkers) --- Inspection Sheet". She wrote on the inspection sheet: "Told to Supply A Sample of Invoices to each maker from 2005 --- current (1 peR (sic) mth) .... Give (sic) until end of business thursday (sic) to provide this information as it was not available & they were not willing to provide the information at the time of inspection. " By letter dated 15 September 2006, signed by Mr Mike Hayes, on behalf of the respondent, Ms MacPherson received " [a] sample of invoices from [the respondent's] makers who make Morrison designed garments..." (Emphasis added). 3 On 2 November 2006 the applicant filed a statement of claim in which it was alleged that the respondent had "given work out" within the meaning of the Clothing Trades Award 1999 but had failed to comply with certain provisions of that Award which related to outworkers, including the obligation to keep work records ("the principal proceeding"). 4 The respondent's participation in the principal proceeding has been intermittent at best. No appearance has been filed by the respondent and no defence has been filed. On occasion, the respondent has been represented by Mr Morrison. However, on numerous occasions the respondent has failed to appear at all. The respondent failed to appear at directions hearings held on 15 June 2007, 20 July 2007 and 28 September 2007 and two Court-ordered mediations scheduled for 7 March 2007 and 29 March 2007. A mediation was eventually held on 29 May 2007 but the matter did not settle. 5 On 20 July 2007 I ordered the applicant to provide the respondent with a request for categories of discoverable documents and the respondent to "give discovery of the documents requested by the Applicant by serving a list of documents to be required to be disclosed and an affidavit verifying the list of documents on or before 24 August 2007. The period specified in the request was 1 January 2005 to 12 September 2006, the date on which Ms MacPherson attended the respondent's premises. 7 The matter was next listed for directions on 28 September 2007. The respondent did not appear and had not complied with my orders of 20 July 2007. Mr Brian Morrison, Director of the Respondent, give discovery of the documents requested by the Applicant (in its Request for Categories of Documents to be Discovered dated 9 August 2007) by serving a list of documents required to be disclosed and an affidavit verifying the list of documents on or before 19 October 2007. 2. That inspection of the discovered documents occur on or before 9 November 2007. See Order 37 Rule 2(3) of the Federal Court Rules. Mr Morrison appeared on behalf of the respondent and on his own behalf. As at 30 November 2007, neither Mr Morrison nor anyone else on behalf of the respondent had served a list of documents (or any supporting affidavit) on the applicant, as required by the Order. 11 I asked Mr Morrison whether he was prepared to comply with the Order and explained that this required him to make a bona fide effort to locate all relevant documents and to make them available for inspection by the applicant. Mr Morrison confirmed that he was and told the Court that he would do so to the best of his ability. I adjourned the motion to 14 December 2007 to give both Mr Morrison and the respondent a further opportunity to comply with the Order. I advised Mr Morrison that, if he had not complied with the Court's order by that date, I would give directions to bring on a trial for contempt of Court. Mr Morrison confirmed that he understood the proposed course of action. 12 On 14 December 2007 Mr Morrison appeared on behalf of the respondent and on his own behalf. Despite the Court's indulgence on 30 November 2007, no list of documents (or supporting affidavit) had since been filed by the respondent. During the hearing, Mr Morrison indicated that he understood that he was in contempt of Court: "I was in contempt, your Honour ...which I deemed to be serious .... and the last thing I wanted is to defy you or the court or not to provide what, if it was able to be provided, material that has been sought. " He stated that he had been "negligent" in not providing an affidavit, but explained he had not done so because the affidavit "would have been almost a blank piece of paper with [his] name on it saying that [he had] searched. Mr Morrison stated that, as there had been hours of searching, there would probably be "hours of recording material, where [he had] searched, what [he] was looking for. I explained that it required Mr Morrison to conduct a renewed search and provide an affidavit explaining what he had done, what he had found, whose assistance he had sought, and what assistance he received. Mr Morrison said that he understood what he was required to do and that he would do it. On or before 6 February 2008, Mr Brian Morrison file and serve an affidavit deposing to: (c) The dates and times on which and places where he has undertaken searches; and (d) The details of any enquiries made by him in order to comply with paragraph 1 of the orders made herein on 28 September 2007. 16 During the course of the hearing on 14 December 2007, Mr Morrison requested that the applicant provide him with a copy of the sample invoices Mr Hayes had sent to Ms MacPherson on 15 September 2006 (see paragraph [2] above) which he suggested would assist him to make further enquiries. On 19 December 2007 the applicant's solicitor sent Mr Morrison copies of the sample invoices. I, Brian Joseph Morrison, Director of Morrison Country Clothing Australia Pty Ltd, the Respondent to this proceeding, provide to you in this affidavit, all material I can locate requested by the Applicant Textile Clothing & Footwear Union of Australia. 2. I advise the two previous Production Managers of Morrison Country Clothing Australia Pty Ltd have left the employment of this company. Their records are not to be found other that (sic) what is provided by way of my Affidavit. 3. I have checked files, searched for records at length in the office occupied by the previous Production Managers, [and] no additional information is available other than what I am supplying. 4. These companies ceased trading sometime ago which partially explains why records are not to be found. 6. I attach herewith and mark with the letters "BJM-1" a copy of all the material I have located. 18 This is the only affidavit that has been filed by Mr Morrison in this proceeding. 19 The notice of motion and statement of charge came on before me on 8 February 2008. Mr Morrison did not appear; nor did anyone appear on behalf of the respondent. I ordered the parties to file and serve any affidavits on which they intended to rely at the contempt hearing and adjourned the hearing to 15 April 2008. At the request of the applicant, the hearing was later fixed for 30 April 2008. 20 The evidence relied on by the applicant was contained in a series of affidavits (together with the exhibits referred to in those affidavits). None of the deponents was cross-examined. 21 The respondent did not file any answering affidavits. Mr Morrison appeared on his own behalf and on behalf of the respondent. At the hearing I explained to Mr Morrison that, as neither he nor the respondent had filed any affidavits, there was no evidence before the Court to support any submissions he may wish to advance. There was no evidence before the Court to suggest that the non-compliance was casual, accidental or unintentional. 25 Alternatively, if the Court was satisfied that Mr Morrison's affidavit did comply with the Order, Mr Morrison and the respondent were in breach of the Order for the period 19 October 2007 to 25 January 2008. He had sworn that he was not able to provide the applicant with any further information and the affidavit set out the enquiries which he had made. 27 After attempting to give evidence from the bar table, Mr Morrison ultimately elected to give oral evidence. An alleged contemnor must be allowed a reasonable opportunity to put before the Court any explanation of his or her evidence and any submissions of fact or law relevant to the charge against him or her or any punishment (see: Coward v Stapleton [1953] HCA 48 ; (1953) 90 CLR 573 ; Doyle v The Commonwealth [1985] HCA 46 ; (1985) 156 CLR 510). Although I considered Mr Morrison had been given a reasonable opportunity to put his case before the Court, I allowed him to give evidence because he indicated that there were matters which had only occurred to him during the course of the hearing. He was not, however, the production manager. He spent eight months of the year out of the office and relied heavily on the team employed by the respondent. • At various times that team comprised Mr Michael Hayes, a part-time internal accountant, who was employed between approximately April 2006 and July 2007; Natalie Simpson, production manager, who was employed between approximately May 2005 and May 2007; and Dianne Maiden, production manager, who was employed between approximately May 2003 and May 2005. • Mr Morrison did not make any enquiries of Mr Hayes, Ms Simpson or Ms Maiden. • Between approximately 1996 and 2005, the records of the respondent were kept in a warehouse located at 31 Wangaratta Street, Richmond. At about Christmas 2005, a lot of the respondent's records were cleared out of 31 Wangaratta Street and were taken to the tip. • Mr Morrison acknowledged that Ms MacPherson said she inspected the respondent's work records in September 2006, after the warehouse at 31 Wangaratta Street had been cleared out, but the only records he could locate were the records he had provided to the applicant. • Mr Morrison was surprised by the applicant's assertion that the documents exhibited to his affidavit were identical to the "sample of invoices" Mr Hayes attached to his letter to Ms MacPherson dated 15 September 2006, a copy of which was provided to the respondent on 19 December 2007. • He had received external legal assistance in preparing the affidavit and assumed that what had been prepared was adequate. • He recalled being present in Court on 14 December 2007, when orders were made requiring him to do certain things in relation to those records, and acknowledged that he had been told, by me, that he should tell the Court on affidavit the dates and times and the places where he had undertaken searches. He thought the fact that he mentioned that he looked in the production manager's offices, "covered [him] for that. " He did not give a date or a time for his searches "but it was obviously --- it would have been on weekends between --- probably over Christmas. • The only person of whom Mr Morrison had made enquiries his wife. She had advised him that "the only place there would be any records is in the production room. • It had not occurred to him to ask Mr Hayes to give evidence. • He acknowledged that he had not set out the time or specific days on which he had searched or the time taken to conduct the searches. There had been no genuine attempt to comply with the Order. Mr Morrison was aware of what he was required to do to comply with the Order because the Court had explained to him, on 14 December 2007, the steps he needed to take to comply with the Order, and he had not taken those steps. The Court identified Mr Morrison, as the sole officer of the company, as the proper person to make the affidavit on behalf of the respondent. It was not necessary for Mr Morrison to be a party to the principal proceeding; the old practice in equity of making the officer of a corporation a party to the proceeding in order to obtain discovery has long since ceased: see Re Alexandra Palace Co (1880) 16 Ch D 58 at 59; Berkeley v Standard Discount Co (1879) 13 Ch D 97 ; Welsbach Incandescent Gas Lighting Co v New Sunlight Incandescent Co [1900] 2 Ch D 1 at 4. 34 Where an order is directed to a company, directors may personally liable be if they fail to take reasonable steps to comply with the order: see Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585 at [41] . In this case, the Order named Mr Morrison as the person who was required to comply with the Order. Mr Morrison was responsible for complying with the Order both on behalf of the respondent and on his own behalf and would be personally liable for any non-compliance. Where, as in this case, in practical terms the acts or omissions of the officer are the acts or omissions of the company, a single act or omission may constitute non-compliance with an order both by the company and the officer. This may also be a relevant consideration in determining appropriate punishments, but will not prevent a finding of contempt by each of the company and the officer for any non-compliance. In accordance with the principles of the criminal law, in proving element (v) it must be proven that the act or omission which constituted the breach of the order was deliberate and voluntary. 38 It was not disputed that the respondent had knowledge of the terms of the Order. On the facts of this case, there can be no doubt that Mr Morrison's mind is the mind of the respondent (see: Hamilton v Whitehead [1988] HCA 65 ; (1988) 166 CLR 121 at 127 referring with approval to Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1 ; [1972] AC 153). I am, therefore, satisfied that the respondent had knowledge of the terms of the Order. ... a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional. A breach of an order will be considered deliberate if it is not found to be casual, accidental or unintentional. The onus remains on the party seeking to prove the contempt to prove that the alleged contemnor's conduct is not casual, accidental or unintentional. 42 There is no evidence before the court which suggests that Mr Morrison's conduct was casual, accidental or unintentional. On the contrary, Mr Morrison was aware that, to comply with the Order, he was required to make reasonable enquiries to determine the existence or non-existence of documents requested by the applicant and set out the details of those enquiries and list the documents which he discovered and explain what had become of documents which had been in the respondent's possession but which could no longer be found. The list was to be verified by affidavit: cf Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585 at [41] . Despite this, the only evidence before the Court of the steps Mr Morrison had taken to comply with the Order was that he had "checked files" and "searched for records at length in the office occupied by the previous Production Managers". His affidavit did not list or describe the documents which were in the respondent's possession, nor did it describe the documents which were no longer in the respondent's possession or state when the respondent parted with the documents and what had become of them, as required by Order 15 r 6 and Form 22 of the Federal Court Rules 1979 (Cth) . Mr Morrison did not contact either of the former production managers, or Mr Hayes, despite being aware of his obligation to make enquiries of people who may have had knowledge of the documents sought by the applicant. 44 I am by no means persuaded that Mr Morrison made a valiant effort, or, indeed, any serious effort, to search for documents. The only documents Mr Morrison has discovered or provided to the applicant are copies of the documents that were sent to him on 19 December 2007. I am unable to accept Mr Morrison's claim that he was surprised that the documents exhibited to his affidavit were identical to those he received from the applicant's solicitors in December 2007. He was well aware of the source of the documents and that he had not discovered any additional documents. He knew that additional documents existed (or had existed) which should have been discovered. I make due allowance for the fact that Mr Morrison did not have legal advice at all relevant times. 45 I am satisfied, beyond reasonable doubt, that Mr Morrison and the respondent wilfully disobeyed the Order, and that the non-compliance was not casual, accidental or unintentional. 47 I will hear the parties as to what, if any, penalties should be imposed. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | order for discovery breach of undertaking whether breach was "casual, accidental or unintentional" liability of respondent company whether director personally liable contempt |
In the principal proceeding, the applicant claims that the respondents have reproduced in a material form, without the licence or authority of the applicant, the whole or a substantial part of the applicant's copyright work consisting of text comprising a document which describes approaches to wealth creation, the virtues of financial freedom and various approaches to engaging with the stock market. The document sets out an overview of the preferred balanced approach to investment, a description of the services offered by the applicant, solutions to achieving financial independence and other matters. The document is designed for electronic use in connection with the applicant's website. The applicant says that the respondents have used that document in connection with the business of the first respondent and in doing so they have made a reproduction or substantial reproduction of the work. In the principal proceeding, the applicant claims an injunction restraining each respondent from further infringing the copyright in the work or authorising an infringement by reproduction or substantial reproduction of the work; an order that each respondent pay damages in an amount to be assessed; an order that the respondents pay damages pursuant to ss 115(2) , 115 (4) and 116 of the Copyright Act 1968 (Cth) ("the Copyright Act "); an order for an inquiry as to the extent of the applicant's loss and damage by reason of the infringement; in the alternative an order that an account be taken of the profits derived by the respondents by reason of the infringement; and orders for directions as to aspects of those claims for relief. The proceeding was listed for directions on 24 February 2009. An appearance was entered by Paul Drabsch, the second respondent, on 23 February 2009. Paul Drabsch is the sole director of and sole shareholder in Intellectual Properties Opportunities Pacific Pty Ltd, the first respondent in the proceeding. Paul Drabsch has appeared on his own behalf on each occasion that the proceeding has come before the Court and on those occasions he has also sought and has been given leave to represent the company. In that sense, both respondents are self-represented litigants. Paul Drabsch prefers the description "the freeman commonly called Paul Michael Drabsch, Principal" and has requested the Court to address him in the course of proceedings as " Principal ". Paul Drabsch does not wish to be addressed as Mr Drabsch. Notwithstanding the style which Paul Drabsch has chosen to adopt to describe himself, the Court with no disrespect to him, has addressed and continues to address him simply as Paul Drabsch. When the matter came before the Court for the first directions hearing on 24 February 2009, I explained the nature of the applicant's claims and the future steps that would need to be put in place to deal with the orderly conduct of the proceeding. An order was made that the first and second respondents file a defence in the proceeding by 10 March 2009 with the applicant to file a reply by 13 March 2009. The matter was listed for further review at 9.30am on 18 March 2009. Paul Drabsch anticipated that he would seek legal advice concerning the issues raised by the applicant's claim although financial limitations on his capacity to do so were a real concern to him. Paul Drabsch accepted that since the company no longer maintained its registered business address at the address nominated to the Australian Securities and Investments Commission ("ASIC"), documents relating to the company could be served upon him personally at his own address which he identified as 8 Nauru Place, Pacific Pines, Queensland, 4211. His nominated address for service is also set out in his notice of appearance filed on 23 February 2009. The matter came before the Court on 18 March 2009 at 9.30am. By then, Paul Drabsch had signed and filed a defence on behalf of the respondents. The defence is in these terms: The respondents conditionally accept[s] the claims mentioned on the agreement as long as each point outlined by the applicant's state[ment] of claim is accompanied by a signed affidavit from the applicant/injured party bearing full commercial liability to the claimant/applicant. That the appropriate evidence is shown that the respondents breached the copyright laws and that the applicant was the actual copyright owner. It seems from the terms of the defence that the respondents accept the claims of the applicant on the condition that each material fact alleged in the statement of claim can be supported by, that is, proven up by, affidavit evidence making out each factual allegation contained in the statement of claim. Secondly, the defence of the respondents puts the applicant to proof of injury, damage or commercial loss, described as "commercial liability", incurred by the applicant. Thirdly, the defence called upon proof of infringement on the part of the respondents and proof of ownership of the copyright subsisting in the work, in the applicant. The defence does not assert a denial of any material fact pleaded in the statement of claim. Nor does the defence assert an affirmative case in answer to the contentions of infringement of copyright. Rather, the respondents by their defence put the applicant to proof whilst, subject to proof, conditionally accepting the applicant's claim. On 18 March 2009, Paul Drabsch appeared on both his own behalf and that of the company. A copy of the defence filed on 12 March 2009 had not been served upon the applicant. A copy was provided to the applicant at the directions hearing. Paul Drabsch advised the Court that he had unsuccessfully made attempts on behalf of the respondents to resolve the matter with the applicant. He contended that the applicant had refused to negotiate a settlement of its claim. Paul Drabsch made oral submissions that, consistent with the defence of the respondents, he, on their behalf, conditionally accepted the applicant's claim so long as the applicant could show evidence of ownership of the copyright and proof of the loss alleged to have been suffered. Paul Drabsch said that he wanted to see in the form of affidavit evidence proof of the applicant's claims to demonstrate the truth of the claims as for present purposes, the claims were simply "claims with no evidence to back it". The applicant submitted on 18 March 2009 that it may well file an application for summary judgment. The proceeding was adjourned to 8 April 2009. Since the respondents were represented by Paul Drabsch and were thus, in effect, self-represented litigants and since Paul Drabsch had made submissions about limitations upon his financial capacity to address the issues, the matter was adjourned to 8 April 2009 in the expectation that substantial filing fees might be avoided for the party that might ultimately bear those costs, by adopting the following course. If the underlying matter of concern to the respondents was simply a question of whether the applicant could file and serve affidavit material which provided an evidential foundation for the contentions in the statement of claim, substantial filing fees would be incurred in allocating a trial date for the determination of that matter. The hearing fees would be $3,135.00 which might ultimately be borne by the self-represented parties if the Court ultimately entered judgment for the applicant and made an order in its favour for costs. If however the matter was listed for further directions coupled with an order that the applicant file and serve any affidavits on which it proposed to rely in respect of any relief to be sought in the proceeding generally or at the directions hearing on 8 April 2009 in terms of either interlocutory relief or other relief, the respondents would then have an informed basis for understanding whether the affidavit evidence satisfied them as to the contentions made in the statement of claim. Accordingly, orders were made on 18 March 2009 that the applicant file and serve any affidavits upon which it proposed to rely in respect of any relevant relief by 27 March 2009; the respondents were to file and serve any affidavits upon which they proposed to rely, by 3 April 2009 and the matter was listed for directions at 9.30am on 8 April 2009. The costs of the directions hearing were reserved. On 8 April 2009, Paul Drabsch appeared on his own behalf and that of the company. He described the company as insolvent. The applicant sought to rely upon affidavits which, in the applicant's submission, provided proof of those matters pleaded in the statement of claim and in particular, proof of the matters the respondents had sought to have established, responsive to the condition the respondents had incorporated in their defence. The first affidavit of the applicant was an affidavit of Jonathan Mark King, a director of the applicant, sworn on 27 March 2009 and filed on 30 March 2009. That affidavit had been sent to Paul Drabsch on 30 March 2009 and Paul Drabsch confirmed at the directions hearing on 8 April 2009 his receipt of that affidavit on or about that date. It is a Spirax bound affidavit with 24 annexures. The second affidavit was one sought to be filed by leave on 8 April 2009 and read in support of relief the applicant intended to seek on 8 April 2009. The affidavit is that of Emily Louise Middleton Barrett sworn 7 April 2009. It was served upon Paul Drabsch on Tuesday, 7 April 2009 at 11.00am. Served with that document was a copy of a notice of motion the applicant proposed to rely upon, with leave, to formally support an application for judgment pursuant to s 31A of the Federal Court Act in reliance upon the affidavit material previously mentioned. Since the matters in issue seemed to be formal proof by affidavit of each of the matters asserted in the statement of claim so as to demonstrate an evidential foundation for the contentions not otherwise put in issue, the applicant elected to seek judgment pursuant to s 31A(1)(b) on the footing that, in the light of the affidavit material, the respondents had no reasonable prospects of successfully defending the proceeding. Thus, Paul Drabsch was not in a position to respond to the affidavit of Ms Barrett or deal with an application for final judgment in the proceeding. In addition, Paul Drabsch made submissions that although he had received the affidavit of Ms Barrett, aspects of the document were difficult to read. Accordingly, the applicant was directed to file and serve a notice of motion in terms of the notice of motion delivered to Paul Drabsch on 7 April 2009, returnable at 10.15am on 20 April 2009, so as to formally bring an application for summary judgment under s 31A of the Federal Court Act before the Court for hearing at that time. The applicant was directed to serve a further copy of the affidavit of Ms Barrett on Paul Drabsch so as to ensure that a clear and readable copy of that material was available to him. The applicant was also ordered to file and serve any further material upon which it proposed to rely in support of the notice of motion, together with a further copy of the notice of motion and a further copy of Ms Barrett's affidavit, all of which were to be served upon Paul Drabsch in accordance with the Federal Court Rules , having regard to the return date of 20 April 2009 at 10.15am for the hearing of the motion. The proceeding was adjourned to 10.15am on Monday, 20 April 2009 on the footing that the proposed notice of motion would be dealt with at that time. Paul Drabsch had raised objection on 8 April 2009 to the receipt of Ms Barrett's affidavit and contended that the applicant's reliance upon that affidavit was procedurally unfair to the respondents. The Court made it plain that the matter was to be stood over to 10.15am on 20 April 2009 so as to ensure that the notice of motion together with all material to be relied upon by the applicant in support of the orders sought by the notice of motion, would be available to Paul Drabsch in accordance with the Federal Court Rules . Further, all objections of the respondents to any or all of the applicant's material would be preserved and heard and determined on 20 April 2009 on the hearing of the motion. Since Paul Drabsch was not represented by a lawyer, the Court explained to him that the application to be dealt with on 20 April 2009 would be an application for final judgment in the proceeding. The applicant filed its notice of motion on 15 April 2009. The affidavit of Ms Barrett was also filed on 15 April 2009. Copies of that material were sent prior to filing, enclosed with a letter from the applicant's lawyers to Paul Drabsch on 8 April 2009, the day of the earlier directions hearing at which the hearing date of 20 April 2009 was allocated. The documents that were enclosed were in the same terms as the material sent to Paul Drabsch on 7 April 2009 and that filed on 15 April 2009. The application came before the Court for hearing at 10.15am on 20 April 2009 as foreshadowed at the directions hearing on 8 April 2009. At the hearing of the notice of motion on 20 April 2009, Paul Drabsch advised the Court that the copy of the notice of motion and the further copy of the affidavit of Ms Barrett enclosed with the letter had been received by him on 14 April 2009. The applicant says that it follows that the respondents were provided with the notice of motion and Ms Barrett's affidavit on 7 April 2009 and further copies of that material in precisely the same terms, by 14 April 2009. The respondents had been provided with the affidavit of Mr King on or about 30 March 2009. The notice of motion was heard on 20 April 2009. Paul Drabsch appeared on his own behalf and on behalf of the first respondent. The applicant is and was at all material times a duly incorporated company. Mr King is a director of the company. From 30 August 2004, Mr King was an employee of the applicant and in that capacity and in the course of that employment, he was the author of a number of works consisting of descriptive text. Those works are literary works for the purposes of the Copyright Act . Each work is annexed to Mr King's affidavit at annexures "JMK4" to "JMK16". Annexure "JMK17" consists of a document showing the electronic document properties for each of those documents. Each of the documents authored by Mr King were brought together in a consolidated document drawing upon various parts of the earlier documents. The consolidated document is annexure "JMK18". That document is the work in which copyright is said to subsist as an original literary work of authorship of Mr King. That document is the source of the applicant's copyright and is described as the "Copyright Material" and is annexed as a schedule to the application filed on 29 January 2009 and the statement of claim also filed on that date. The applicant published the work on its website. The applicant's website for the product described by the document was first published in Australia in or about July 2007. The final consolidated document, "JMK18", was published in September 2007 and remained in that form from September 2007 to 9 February 2009. Each of the documents described at annexures "JMK4" to "JMK16" were used to create the work upon which the applicant relies. Mr King was at the date of authorship of each work "JMK4" to "JMK16" and "JMK18", a resident of Australia. Accordingly, Mr King's affidavit establishes that the work attached to the application as a schedule and the subject of the statement of claim is an original literary work of authorship of a qualified person, Mr King, reduced to a material form at the dates deposed to by Mr King and first published on the date deposed to by him, in which copyright subsists. The owner of the copyright is the applicant: ss 10(1) , 22 , 29 , 31 , 32 and 36 of the Copyright Act . Mr King says that on or about 21 November 2008 he logged on to a website ipopacific.com.au established by the first respondent. At "JMK19", Mr King annexes colour printouts of a series of screens which appear at that website under the heading "IPO Pacific". The screen printouts describe the company; set out an explanation about what the company does; describe its services; and identify solutions to the problems persons confront in engaging with the stock market and other matters. On 17 December 2008, Mr King caused a further examination to be made of the website and printouts of a series of screens arising out of that examination are set out at annexure "JMK21". At annexure "JMK22", Mr King sets out a side by side comparison in two columns of the text adopted by the applicant comprising its work the subject of the proceedings and the text adopted by the first respondent in its document. The text in the applicant's document is grouped under a series of headings described as "Prosperity Group", "About Us", "Company Profile", "Overview", "Solutions" and "Privacy Policy". The first respondent's document is grouped under the headings "IPO Pacific", "Company", "Services", "Solutions", "Privacy Policy" and "Terms and Conditions". The comparison at "JMK22" identifies in black text, the text forming part of the first respondent's material which is in precisely the same terms as the material contained in the applicant's document. The text which is either an addition or a variation to the applicant's text is set out in red ink. Material contained in the applicant's text which is not present in any of the respondent's screen text is also set out in red. It is clear from the comparison of the text contained in the two columns that a substantial part of the applicant's text has been reproduced in the text adopted by the first respondent. The contextual description of the environment within which investment decisions are made is virtually identical in both. Similarly, the description of the determination of each company to achieve the goal of bringing information to investors is identical in both. Sections of the descriptions under the headings "About Us" and "Company Profile" in the applicant's material are the same as the material under the heading "Company" in the first respondent's material. The "Overview" of the applicant's services is reproduced almost identically under the heading "Services" in the first respondent's material. Similarly, the material appearing under the heading "Solutions" in the first respondent's material is virtually identical to the text under the heading "Solutions" in the applicant's material although there is additional material under the heading in the applicant's material. The "Privacy Policy" text in each case is the same. On 2 December 2008, Mr King caused a letter to be sent to the first respondent asserting a reproduction by the first respondent of the applicant's script. The applicant requested the first respondent to remove all information that directly copied the applicant's material or linked the respondent's website to the applicant's website, within seven days failing which action would be commenced. On 18 December 2008, Mr King instructed the applicant's solicitors to write to the first respondent setting out a similar complaint and asserting infringement of copyright, conduct constituting passing off and conduct in contravention of the Trade Practices Act 1974 (Cth). The letter sought a series of undertakings which in large part are consistent with the relief ultimately claimed in the application. On 28 January 2009, Mr King instructed the applicant's lawyers to write a further letter to the first respondent drawing attention to the letter of 17 December 2008 to which there had been no response. The letter of 28 January 2009 advised the first respondent that the applicant proposed to instigate proceedings in the Federal Court of Australia. The letter enclosed an application and statement of claim which the applicant intended to file and serve. Those documents set out the orders the applicant would seek. The applicant called for a resolution of the matter by 4.00pm that day. On 29 January 2009, the application and statement of claim were filed. The affidavit of Emily Barrett establishes these things at [28] to [31]. On 17 December 2008, Ms Barrett conducted a search of a website under the description "Whois Lookup" to determine registered details relating to the operation of the ipopacific website. The search revealed that the site is registered under the "Eligibility Name" of Intellectual Properties Opportunities Pacific Pty Ltd of the same ACN number as the first respondent. The registrant for the website is Paul Drabsch and the website was last modified on 16 May 2008. Ms Barrett conducted a company search of the first respondent which shows that Paul Drabsch was on 11 February 2009 the sole shareholder and director of the first respondent. Paul Drabsch has been a director since 23 April 2008. The company was registered on 23 April 2008. On 2 March 2009, Ms Barrett received a telephone call from Paul Drabsch in which he advised Ms Barrett that "the script on the web page has now been removed". Ms Barrett deposes that she then checked the first respondent's website and confirmed that the script the subject of the applicant's complaint had been removed from the website. Ms Barrett annexes to her affidavit an historical company search of the first respondent conducted on 26 March 2009 (annexure "J") which confirms that the company commenced on 23 April 2008; its principal place of business from 19 September 2008 was Riverside Centre, Level 18, 123 Eagle Street, Brisbane; Paul Michael Drabsch was appointed a director on 23 April 2008 as sole director; and the sole shareholder in the company is Paul Michael Drabsch of 8 Nauru Place, Pacific Pines, Queensland, 4211. The affidavits of Mr King and Ms Barrett demonstrate that the first respondent operated at all material times the website upon which the respondent displayed the material said to infringe the applicant's copyright in the work in suit. The material establishes that Paul Drabsch was the registrant for the website and that in the face of letters of complaint Paul Drabsch caused steps to be taken to remove the material complained of by the applicant from the first respondent's website. The defence filed by the respondents puts the applicant to proof. The defence does not assert that either of the respondents was an independent author of an original non-infringing work in the form of the text ultimately removed by Paul Drabsch from the website. The evidence establishes that the respondents have caused the applicant's work to be reproduced in a material form by bringing into existence a document placed on the first respondent's website that is a reproduction of a substantial part of the applicant's work for the purposes of ss 14 and 31 of the Copyright Act and thus an infringement of the applicant's copyright for the purposes of s 36 of the Copyright Act . The evidence demonstrates that the first respondent conducts the website on which the infringing material appeared. Its infringing conduct is the reproduction of a substantial part of the applicant's work in a material form. Paul Drabsch is the registrant for the website. The infringing conduct of Paul Drabsch is either the act of reproduction of the applicant's work on behalf of the company as its prime mover or alternatively, the authorisation as sole director of and sole shareholder in the company operating the website, of the company's conduct. That affidavit was filed in response to the orders made on 18 March 2009. Paul Drabsch asserts these things. Principal demands the matter in question be brought to immediate dismissal on the basis that the conditions of the acceptance of the applicant's claim have not been adequately met. After revising the proof of claim provided by applicant, Principal finds no admissible evidence proving a link with respondent 1 or 2 with the alleged copyright infringing material nor do respondent 1 or 2 lay claim to any ownership of control over any information or website unless evidence can prove otherwise. Principal has not seen any proof that the first or second respondent own or control any website much less the one alleged with copyright infringement nor does he believe any exists. Principal believes neither first nor second respondent has made any verbal or written correspondence with applicant and truly believes it is impossible for any communication to be made by non living things. Principal believes after reading statement of claim and proof of claim that the conditions of acceptance have not been adequately met. Apart from those matters, Paul Drabsch in his affidavit sought leave to appear on behalf of the first respondent. He also said at para 5 that he had been attempting to reach a remedy in the matter. He said that the applicant was not seeking to reach a resolution with him. He said that on three occasions he tried to remedy the claims of the applicant with an out of Court settlement and no settlement proposal had been presented to him. As to the claim that the affidavit material did not establish a factual foundation for the claims of the applicant, the affidavit of Paul Drabsch was filed before service upon him of the affidavit of Ms Barrett which was served on 7 April 2009 and re-served on 14 April 2009. The substantial point made by Paul Drabsch in his affidavit is that the affidavit of Mr King did not establish a link between either respondent or the ownership by the first respondent of the website upon which the offending material was published namely the ipopacific website. That point is made particularly at paras 3 and 6 of the affidavit. At para 3, the point is put on the footing that the applicant has failed to adduce admissible evidence proving a link between the offending website and the first or second respondents. Secondly, the assertion is made that the first or second respondents did not lay any claim to ownership or control of any information "unless evidence can prove otherwise". At para 6, the point is put on an affirmative basis by which Paul Drabsch asserts that he has not seen any proof of ownership or control of any website in either respondent "much less the one alleged with copyright infringement". He then asserts that "nor does he believe any exists". It is not clear whether Paul Drabsch says that he does not believe that any evidence exists of proof of a link between either respondent and the offending website or whether he believes that there is no such link. In any event, the evidence of Ms Barrett establishes the link; the control of the company by Paul Drabsch; and the control of the offending website by Paul Drabsch. Nothing could be more plain. Moreover, the evidence of Ms Barrett establishes the steps taken by Paul Drabsch to remove the relevant text from the first respondent's website. Paul Drabsch says that the applicant ought not to be able to rely upon the affidavit of Ms Barrett because it was served on 7 April 2009, the day before the directions hearing on 8 April 2009 and was not ultimately filed until 15 April 2009. Plainly enough, it would be entirely inappropriate to consider any application under s 31A of the Federal Court Act in part reliant upon an affidavit filed the day before the hearing of the application. The application by notice of motion foreshadowed by the applicant was brought on for hearing on 20 April 2009 by which time Paul Drabsch had had an opportunity to consider the factual matters asserted in Ms Barrett's affidavit and particularly the evidence demonstrating a link between the respondents and the offending website. No affidavit was filed by Paul Drabsch seeking to contradict any aspect of Ms Barrett's affidavit on this point. Nor was any oral submission made that the first respondent did not operate or had not operated at the material time, the relevant website. Moreover, Paul Drabsch took steps to remove the offending text from the first respondent's website. The affidavit of Paul Drabsch filed on 6 April 2009 does address the question of whether the applicant sought to engage in negotiations with a view to resolving its claims. The affidavit does not describe those matters in any detail. Paul Drabsch says that on three occasions he tried to resolve the matter out of Court. The basis for those discussions which were no doubt conducted on a "without prejudice" basis is not clear. In any event, the matter did not resolve by reason of any discussion or otherwise and proceedings were commenced seeking the relief the subject of the application. No controversy of fact has been raised by the respondents and the issues of law raised by the applicant's claim are clear and unarguable. The respondents have failed to depose to facts disclosing a defence on the merits. There is no affidavit which identifies a defence to the applicant's claim as a matter of law nor any facts identified by affidavit or otherwise which might give rise to a controversy of fact which if resolved in the respondents' favour would give rise to a defence to the applicant's claim ( Hocking v Bell [1945] HCA 16 ; (1945) 71 CLR 430 , per Latham CJ at 441-442, adopted by Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2007) 236 ALR 720 ; cf., generally, Finkelstein J in Jefferson Ford Pty Ltd v Ford Motor Co. of Australia Ltd [2008] FCAFC 60 ; (2008) 246 ALR 465 , as to the test to be applied in exercising the discretion under s 31A). Rather, the respondents have simply put the applicant to proof. The defence, properly construed, does not reach the threshold of a denial of the claim. In any event, a general denial of the claim is not sufficient. Nor is it sufficient to simply put the applicant to proof in response to an application under s 31A of the Federal Court Act ( Vans, Inc. v Offprice.Com.Au Pty Ltd [2006] FCA 137). Section 31A is directed to the proceeding itself not simply with deficiencies in the pleadings and in that sense the section addresses the substance and not just the form by which the action or proceeding is structured ( White Industries Aust Ltd v Federal Commissioner of Taxation [2007] FCA 511 ; (2007) 160 FCR 298 at [50] ). Before judgment might be entered pursuant to s 31A of the Federal Court Act, the Court is required to be satisfied that the respondents have no reasonable prospect of successfully defending the proceeding. Even though the defence filed by the respondents need not be hopeless or bound to fail for it to have no reasonable prospect of success, it is clear in the face of the affidavit evidence of the applicant and the terms of the defence filed by the respondents, that the defence is bound to fail. The evidence clearly establishes the case made by the applicant. The Court is satisfied that the respondents have no reasonable prospect of successfully defending the proceeding. On 14 April 2009, Paul Drabsch sent to the Court by facsimile transmission a document setting out grounds of objection to the application. By grounds 1 and 2, he says that his first and foremost objection is that due process was not carried out which resulted in unfair surprise. Those grounds address the service of Ms Barrett's affidavit upon Paul Drabsch on 7 April 2009 which was the day before the directions hearing on 8 April 2009. However, 20 April 2009 was identified as a Court day available on which the foreshadowed notice of motion on the part of the application could be listed and heard. It thus became appropriate to consider Ms Barrett's affidavit on the application on 20 April 2009. Paul Drabsch had by that time received a copy of Ms Barrett's affidavit on 7 April 2009 and a further copy as indicated previously by 14 April 2009. Ground 3 relied upon by Paul Drabsch is that the applicant was required to file and serve its affidavit material by 27 March 2009. The affidavit of Mr King was sworn 27 March 2009 and filed on 30 March 2009. Paul Drabsch was served with that affidavit on or about 30 March 2009. In any event, the motion was heard on 20 April 2009 by which time Paul Drabsch had had an opportunity to consider the content of the affidavit and annexures. On 3 April 2009, he affirmed an affidavit in response which was filed on 6 April 2009. Paul Drabsch contends that the failure to file and serve all affidavits by 27 March 2009 renders that material inadmissible on grounds of default. The material was received for the purposes of the application on 20 April 2009. Ground 4 contends that the applicant's material was not served within the requirements of the Federal Court Rules . The notice of motion was listed for 10.15am, 20 April 2009. By that time, Paul Drabsch, on behalf of the respondents, had received the affidavit of Mr King, a copy of the proposed notice of motion and the affidavit of Ms Barrett on 7 April 2009 and a further copy of the notice of motion and Ms Barrett's affidavit on 14 April 2009. The notice of motion as filed on 15 April 2009 was in precisely the terms of the notice of motion served on Paul Drabsch on 7 April and 14 April 2009. By ground 5, Paul Drabsch contends that he has not had adequate time to file or create a defence on behalf of the respondents. However, Paul Drabsch maintains the position that he accepts the claim of the applicant subject to proof by affidavit of the elements of that claim. The respondents do not assert any facts in contradiction of facts asserted by the applicant and nor do the respondents put forward any affirmative case as a matter of fact or law in answer to the applicant's claim. By ground 8, Paul Drabsch asserts that the evidence of the applicant gives rise to undue prejudice and "therefore must be inadmissible if a fair trial is to be had for the respondents". The affidavit material is admissible and speaks to the foundation facts pleaded in the statement of claim. By ground 9, Paul Drabsch asserts that he has not had sufficient time and "less than 24 hours before a second directions hearing is not acceptable practice". That ground goes to the directions hearing on 8 April 2009 and the service on 7 April 2009 of the proposed notice of motion and the affidavit of Ms Barrett. It was precisely for that reason that the applicant was directed to file the notice of motion returnable at 10.15am on 20 April 2009 and provide Paul Drabsch on behalf of the respondents with a further copy of the notice of motion, a clear copy of the affidavit of Ms Barrett and any other affidavit upon which the applicant would rely on 20 April 2009. The application was not dealt with on 8 April 2009. Paul Drabsch reasserts that the failure to file material by 27 March 2009 and the service of supplementary material on 7 April 2009 must necessarily be fatal to the application on 20 March 2009. Plainly, that is not so for the purposes of the hearing on the later date of 20 April 2009. By grounds 6 and 7, Paul Drabsch refers to Practice Note 5 and Practice Note 15 issued by the Court. He says that Practice Note 5 supports his objection to the applicant's affidavits, as earlier identified. Practice Note 5 is directed to the observation that the filing and service of affidavits does not make them part of the evidence before the Court. The affidavits must be read and relied upon in support of an application. The Practice Note recognises that the requirement of the rules or any order of the Court that affidavits be filed and served is a condition precedent to their becoming part of the evidence. Here, there was an order for filing and service of affidavits by particular dates and the applicant's affidavits were read in support of the application. The applicant's affidavits were required to be filed by 27 March 2009 and the affidavits of the respondents were required to be filed by 3 April 2009. Those orders were made in anticipation of the matter being listed for 8 April 2009. The affidavits formed part of the evidence in the hearing of the application on the later date on 20 April 2009. Practice Note 5 is not relevant for present purposes. Practice Note 15 deals with the orderly provision of information to the Court and to parties before a hearing. The classes of information concern titles by which a person might be described, the correct pronunciation of names, details of interpreting services that might be required, whether an oath is to be taken, any practical and procedural arrangements that may need to be made to accommodate any person and any other information of a similar kind which may be required to facilitate the appropriate treatment of persons before the Court. Practice Note 15 requires such information to be provided no later than 24 hours before a particular hearing. Paul Drabsch relies upon this Practice Note as supporting his criticism of the service upon him on 7 April 2009 of the foreshadowed notice of motion and Ms Barrett's affidavit. Practice Note 15 does not address that topic and in any event the notice of motion was filed and listed for hearing on 20 April 2009. No application was heard and determined on 8 April 2009. On the hearing of the application, the applicant made an election to seek an account of profits from the respondents. Mr King at para 22 of his affidavit expresses his concern about the reference by Paul Drabsch in his email to Ms Barrett of "probably 700 leads" in connection with matters related to the first respondent's website. I actually give marketing material to my clients. The factual material establishes infringement on the part of the respondents and an entitlement to the relief contemplated by the Copyright Act including an order that an account be taken of the profit derived by the respondents by reason of the infringement coupled with an order that those profits quantified upon the taking of accounts, be paid to the applicant. Accordingly, judgment will be entered for the applicant and the orders are these. The first respondent and second respondent are restrained from infringing the applicant's copyright subsisting in a document described as "Copyright Material" in a schedule to the application filed on 29 January 2009 and described as "Marketing Material" in Schedule A to the statement of claim filed on 29 January 2009 (described in these orders as "the Copyright Work") by reproducing (including by way of publication upon a website) or authorising the reproduction of the Copyright Work or a substantial part of the Copyright Work, without the licence of the applicant. An account be taken of the profits derived by the first respondent and second respondent as a result of the infringement of copyright in the Copyright Work. The first respondent and second respondent pay to the applicant such profits determined upon the taking of accounts, together with interest thereon pursuant to s 51A of the Federal Court of Australia Act 1976 . The first respondent, by Paul Drabsch, make, file in the Federal Court of Australia and serve on the solicitors for the applicant on or before the expiration of one month after the making of this order, an affidavit setting out in respect of the business named "I.P.O. Pacific" and operated by the first respondent or formerly operated by the first respondent whether by Paul Drabsch or by him together with others, the total number of clients of the first respondent to whom services described by the first respondent's website were provided, the nature of the services so provided to those clients and a schedule setting out the revenue derived from those clients and the costs and expenses incurred in deriving that revenue. The first respondent on or before the expiration of one month after making this order, make, file in the Federal Court of Australia and serve upon the solicitors for the applicant an affidavit setting out a list of documents which relate to the services provided by the first respondent to its clients and those documents relied upon by the first respondent in formulating the schedule of revenue, costs and expenses derived and incurred by the first respondent as required by order 4, and the respondents shall permit the applicant to inspect such documents identified by the affidavit at a time and place agreed between the parties. The first respondent by Paul Drabsch make, file in the Federal Court of Australia and serve on the solicitors for the applicant, an affidavit identifying the number of copies of any material which contains a substantial part of the Copyright Work which are in the possession, custody or power of the first respondent or Paul Drabsch and such copies be delivered up to the solicitors for the applicant, and Paul Drabsch shall identify in that affidavit any website established by him or the first respondent or anyone on their behalf or either of them which hosts in electronic form any reproduction of a substantial part of the Copyright Work. Further, the applicant says that the respondents have not been able to offer any explanation for the conduct of reproducing a substantial part of the Copyright Work in suit. On that footing, the applicant seeks an order that the respondents pay the costs of the applicant of the proceeding on an indemnity basis. The respondents have elected to put the applicant to proof on its various contentions. That is of course entirely open to the respondents. The applicant has, in a way responsive to the defence filed by the respondents, filed and served affidavit material which establishes each element of the cause of action in suit and an entitlement to the relief ordered against the respondents. The respondents are entitled to test the evidence of the applicant in order to be satisfied that claims made in correspondence are well-founded. However, having put the applicant to the cost of preparing the necessary evidence to support those claims, the respondents must pay the cost of the proceeding. I am not satisfied that those costs should be ordered to be paid on anything other than a party and party basis. Accordingly, a further order will be made that the respondents pay the applicant's costs of and incidental to the proceeding. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for judgment under s 31a as aforesaid in respect of a claim for infringement of the copyright subsisting in a literary work comprising text descriptive of the services of the applicant and reproduced on a website by the respondents intellectual property |
2 He arrived in Australia on 31 May 2006 and applied to the Department of Immigration & Multicultural Affairs for a Protection (Class XA) Visa on 20 June 2006. The delegate refused to grant that visa and an application for review was lodged with the Refugee Review Tribunal on 13 October 2006. 3 The now Appellant attended a hearing before the Tribunal on 6 December 2006 and a second hearing on 2 March 2007. Intervening, on 15 December 2006, the Tribunal wrote to the now Appellant pursuant to s 424A of the Migration Act 1958 (Cth). A further letter written pursuant to s 424A was sent on 9 March 2007. 4 The Tribunal affirmed the decision of the delegate on 10 May 2007. There were significant inconsistencies in his evidence and he has either not explained these inconsistencies or his explanations are not credible. This is but one of the occasions upon which the Tribunal made express findings as to its inability to accept the now Appellant's evidence and the inconsistencies in the evidence being advanced. 5 On 31 January 2008 the Federal Magistrates Court delivered its reasons for its decision to dismiss the application seeking review of the Tribunal's decision: SZKSU v Minister for Immigration & Citizenship [2008] FMCA 77. 6 The Appellant now appeals to this Court from the decision of the Federal Magistrate. 1. The Federal Magistrates Court did not consider that the Refugee Review Tribunal (the Tribunal) did not assess the applicant's claim properly. The Federal Magistrate Court mentioned in para 59 that. 'Merely because the Tribunal was not convinced to accept the applicant's claims. ' 2. The Federal Magistrates Court did not consider that the Tribunal made a jurisdictional error when it did not accept the applicant's claim and evidences when the Tribunal asked the applicant some questions which confused him 3. 9 The Appellant appeared before the Court this morning unrepresented but with the assistance of an interpreter. He had, however, prepared in advance of the hearing an Outline of Submissions which was filed with the Court on 24 April 2008 and which has been read. The Appellant also assisted the Court by responding to questions asked of him via his interpreter. To a limited extent, the concern of the Appellant may be gleaned from the reference to paragraph 59 of the Federal Magistrate's reasons. In this regard, the Tribunal clearly articulated its reasons for rejecting the applicant's claims, based on its findings of "significant inconsistencies" in the applicant's evidence, which it found he had either failed to satisfactorily explain or which were found not to be credible. 11 If what the Appellant intends to convey by this Ground of Appeal is that his claim was not assessed properly because the Tribunal made findings of fact adverse to the case he tried to advance, that ground is doomed to failure. 12 It was the task of the Tribunal to make findings of fact and no reviewable error is exposed simply because those facts were resolved against the now Appellant. This Court should not go beyond its task of judicial review and trespass into the area of reviewing the merits of the decision as determined by the Tribunal: Attorney-General (NSW) v Quin [1990] HCA 21 ; (1990) 170 CLR 1. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone. 13 One matter addressed in the Appellant's written Outline of Submissions may give further content to what is intended to be conveyed by the first Ground of Appeal . Those submissions refer to the findings as to inconsistency in the evidence and contend that " the Tribunal did not accept the applicant's involvement with the Telegu Desam party but the Tribunal did not show ... why it did not accept that the applicant's involvement in the party ". In reviewing the approach of the Tribunal to the evidence given by the Appellant, it is of obvious importance to consider the difficult circumstances in which applicants for refugee status are called upon to give an account of their circumstances and to substantiate their claims: Taylor S, Informational Deficiencies Affecting Refugee Status Determinations: Sources and Solutions (1994) 13 U Tas LR 43. 14 Within those constraints, however, the role of making findings of fact is a role entrusted by the legislature to the Refugee Review Tribunal. Clearly enough, in the present proceedings the Tribunal made adverse findings as to the Appellant's lack of credibility and those findings played an important part in its ultimate conclusion. Where, as in the present case, the Tribunal's findings of credibility are open to it on the material, based on rational grounds and arrived at after a consideration of matters that are logically probative of the issues of credibility, those findings of the Tribunal are findings for the Tribunal alone and not this Court: cf Kopalapillai v Minister for Immigration & Multicultural Affairs [1998] FCA 1126 ; (1998) 86 FCR 547 at 552, 559. Such findings are findings of fact falling far short of jurisdictional error: Re Minister for Immigration & Multicultural Affairs; Ex parte Durairajasingham [2000] HCA 1 at [67] , 168 ALR 407 at 423 per McHugh J. 15 Moreover, an administrative tribunal is not normally required to state what evidence is accepted, rejected or taken into account with respect to findings of fact: cf Guy v Repatriation Commission [2002] FCA 525 , 74 ALD 617. An administrative tribunal is not required to give a subset of reasons as to why it accepted or rejected individual pieces of evidence: cf Chief Executive Officer of Customs v ICB Medical Distributors Pty Ltd [2007] FCA 1538 at [44] , [2007] FCA 1538 ; 97 ALD 746. 16 An alternative manner in which the first Ground of Appeal may be construed is that the Federal Magistrate may have erred by concluding that there was an onus upon the now Appellant to establish before the Tribunal that he was a truthful witness. It may well be that such an approach on the part of the Tribunal would have possibly contravened ss 420 or 425 of the Migration Act 1958 (Cth): Kopalapillai, supra, at 555. But it is not considered that that is what was intended by the Federal Magistrate in the present proceedings; nor is it considered that that was in fact the approach pursued by the Tribunal. The Tribunal, it is considered, needs to be very conscious of not adopting an overly confrontational approach: Kneebone S, The Refugee Review Tribunal and the Assessment of Credibility: an Inquisitorial Role? (1998) 5 AJ Admin L 78. In the present proceedings, the transcript of the proceedings before the Tribunal was not in evidence. And a reading of the reasons of the Tribunal does not disclose anything other than a review of the evidence being given by the Appellant and the reservations that the Tribunal had in respect to some of that evidence. 17 An invitation was extended to the Appellant to expand orally this morning upon what he meant to convey by the first Ground of Appeal . The response provided was, with respect, unhelpful. 18 The first Ground of Appeal is rejected. No reviewable error was committed simply because evidence was not accepted. 20 In some circumstances the manner in which questions may be put may expose a denial of procedural fairness. Procedural fairness requires an opportunity for a party to effectively advance his case. 21 But the mere fact that a party becomes confused does not of itself expose any unfairness. In the present proceedings no instance was identified of any particular question or series of questions being asked by the Tribunal which occasioned any confusion; and, perhaps of greater importance, there is no basis for concluding that any such confusion as may have been experienced by the now Appellant has denied him an opportunity to nevertheless advance such evidence and submissions as he saw fit. 22 From the Appellant's oral submissions this morning, it is understood that he sought to do two things. First, he sought to invite the Court to listen to a tape recording of the proceedings before the Tribunal. That application was denied. 23 It is not considered that this Court should, in such circumstances, itself listen to the tape recordings -- even if it were otherwise minded to do so and to admit such evidence on appeal: Federal Court of Australia Act 1976 (Cth), s 27. The explanation provided by the Appellant for not providing a transcript -- as ordered by the Federal Magistrate -- was the limitation upon the funds available to him. But, if a variation of the order was to be sought, that was an application which should have been made to the Federal Magistrate. There is no evidence that any such application was made. Second, the Appellant sought to identify those questions which he said were confusing. Those questions were said to be questions suggesting that the Appellant in fact faced no danger and was not a member of the political party of which he claimed membership. Those questions, it is considered, were properly put by the Tribunal member and there was little scope for confusion. The lack of any perceived utility in listening to the tape recording was a further reason for rejecting the invitation to do so. 24 Also relevant to any assessment as to whether the now Appellant was confused is a consideration of the s 424A letters and the responses provided. The first of the two letters written pursuant to s 424A was dated 15 December 2006 and followed upon the first hearing held on 6 December 2006. The letter referred inter alia to inconsistencies in the account given by the now Appellant. The response to that letter was received on 21 December 2006. There was no contention then of any confusion. The response was the provision of a number of documents and a photograph. The second letter written pursuant to s 424A was that dated 9 March 2007 and followed the second hearing before the Tribunal held on 2 March 2007. The second letter again identified what were seen to be inconsistencies in the account being advanced. A response was provided on 4 April 2007 and there was again no contention that there was any confusion. 25 The issues canvassed by the Tribunal, it is considered, were fairly raised for comment by the Appellant. Even if there had been transitory confusion during the course of one or other of the two hearings, any such confusion did not deprive the now Appellant of an adequate opportunity to present his case. 26 The second Ground of Appeal is also rejected. 28 The now Appellant has been given the opportunity of attending two hearings before the Refugee Review Tribunal. He has also had the benefit of two letters written pursuant to s 424A of the Migration Act 1958 (Cth). 29 No inference should be drawn from the fact that two hearings were held -- other than, perhaps, the fact that the Tribunal was fully investigating the claims sought to be advanced by the Appellant. Rejected is a submission made orally by the Appellant this morning that the Tribunal conducted the second hearing for the purpose of dismissing his claims. A reading of the Tribunal's decision reveals nothing other than a consideration of the evidence being advanced and opportunities being extended to the Appellant to explain his claims and to address inconsistencies in the accounts being given. 30 The final Ground of Appeal is also rejected. An Affidavit has been filed in Court today quantifying the total costs incurred by the Minister in connection with the proceedings as exceeding $2,753. 32 In those circumstances it is considered appropriate to make the costs order as sought. The appeal be dismissed. 2. The Appellant to pay the costs of the First Respondent fixed in the sum of $2,300. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | difficulties confronting refugees adverse findings as to credibility no onus to prove credibility need for caution on part of refugee review tribunal findings open to be made and not reviewable no need to explain why evidence accepted or rejected two hearings before tribunal no procedural unfairness migration |
The motion for review is some 18 months out of time. For the reasons that appear below, however, I will deal with the motion on its merits. No relevant interest which may be affected by a native title determination in the Torres Strait Regional Seas Claim being disclosed the motion for review will be dismissed. In that motion he asserted that the Hiamo-Tureture people were the descendents of the original Hiamo landowners, Daru Aboriginal people who sailed out through the Torres Strait islands because of attacks from other tribes. The motion was adjourned by order of Connard DDR on 25 August 2005 with a direction that any further affidavits upon which Pastor Dorogori proposed to rely should be filed and served by 8 September 2005 and that they should address the requirements of s 84 of the NT Act. On 22 September 2005 no affidavits had been filed and the notice of motion was dismissed by Connard DDR with no order as to costs. 3 Pastor Dorogori filed the motion now before the Court on 30 April 2007 in effect seeking review of the order of dismissal made on 22 September 2005. An affidavit in support of the motion for review gave no explanation for the delay that has ensued since the original motion was dismissed on 22 September 2005. The affidavit annexed materials said to be relevant to Pastor Dorogori's family history and links to the Torres Strait sea claim area. 4 In Annexure A to the affidavit an account was given of the origins of the Hiamo Umumere people represented by Pastor Dorogori. Because of those attacks the Hiamo people decided to emigrate from Daru and Bobo Islands. They could not however take everybody with them. The weak and the sick decided to stay. The people settled at Murilago and created a ceremony called Tuera. Songs sung during their exodus are still sung in connection with that ceremony. 6 Pastor Dorogori said that his people were those who remained on Daru and Bobo Islands. The Hiamo Umumere's ancestor really originated from Cape York in Bamaga. Than they moved from there as a group to PNG waters. They lived happily there but some how because of killing taking place they have to moved back to where they came from. But because of no space in the canoes some have to stay. So now we are the ones who stayed back in Daru and Bobo island. The spokesman Charley Irigia did not explain this in the Torres Strait sea claim federal court. Therefore we are writing this story to you because they want to know how our relationship is with the Torres Strait Himao Umumere. THERE FOR I APPEALING SEA CLAIM. 8 A third annexure set out a genealogy for the Hiamu Umumere clan. It showed a person called Guza, a male in a line of descent through another male called Dorogori. The line of descent was ultimately traced back to a male called "Kaiku" and before that to one Kabai. The timeframe of the genealogy did not appear. It was evidently produced in 1977. 9 In oral submissions in support of the application Pastor Dorogori referred to the existence of the sea claim. He appeared to assert some positive entitlement for his own people. I was neglected a long time, my clanspeople living neglected across all villages. My clanspeople was neglected, and long suffering. And this is my aim, where I feel that I must line up, fill my form for this. He appeared to be suggesting that he and his clan should be included in any determination of rights in relation to the Torres Strait Islands. He claimed to be an original inhabitant of the area. 10 The motion was opposed by the applicants on the basis that it was out of time and that there was no satisfactory explanation for the delay. The applicants appear to have treated the motion as an application for leave to appeal governed by O 52 of the Federal Court Rules . This was not a correct characterisation. The application was for a review under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (the Act) of a Registrar's decision. They submitted that in any event, the joinder should be refused on the basis that no relevant interest in the claim area was identified nor any interest shown that might be affected by a determination in the proceedings. 11 The Commonwealth in its submissions noted that Pastor Dorogori did not identify any area of land or reefs or sea within the claim area and in respect of which he asserted ownership. Nor was there any material to support such an assertion or to provide any basis for it under traditional law and custom. (6) The Court may, on application under sub-section (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised. There has been a very substantial delay in bringing it. On the other hand issues relating to the joinder of Papua New Guinean parties have only recently been resolved by the Full Court and orders made on 16 November 2007 governing their participation. The orders made would apply to Pastor Dorogori if he were to be joined as a party. There is no relevant prejudice to any other party in the case. I therefore decided to deal with the motion for review on its merits. 18 On its merits the motion for review must fail. There is no basis upon which I could be satisfied that a determination over a Torres Strait regional sea claim area may affect any interest of Pastor Dorogori. In so concluding I have regard to the principles for the identification of relevant interests in Byron Environment Centre Inc v Arakwal People (1997) 148 ALR 46 and various cases in which that case has been followed. That he has a link to the claim area. 2. That he and the people he represents have a history in the Torres Strait claim area. 3. That he is the owner of reefs, seas and waters in the claim area. The assertion of ownership of reefs, seas and waters is no more than that. No historical basis for such a claim is disclosed. The location of areas allegedly owned by Mr Dorogori and his people is not disclosed. The fact that he may be descended from people who came from an island in the Torres Strait does not, of itself, support the inference that there is some kind of interest which may be affected by a determination. 20 In my opinion the motion should be dismissed. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | parties joinder torres strait regional seas claim national of papua new guinea application for review of registrar's decision dismissing joinder motion asserted family and historical links to claim area asserted ownership of reefs, seas and waters no basis for assertion disclosed no identification of area in which ownership is asserted no interest disclosed that may be affected by a determination motion dismissed native title |
The Tribunal had affirmed a decision of a delegate of the Minister of Immigration and Multicultural Affairs, dated 5 September 2005, refusing to grant a protection visa to the appellant. 2 The appellant is a citizen of Fiji. She claimed to have significant concerns for her personal safety and the safety of her children should she be forced to return to Fiji. In particular, the appellant emphasised that she had concerns about raising her three children in Fiji, stating that the situation was unstable and dangerous for both her and her family. 3 In submissions to the Tribunal the appellant raised concerns about her children returning to Fiji, noting that her two sons were New Zealand citizens with no ties to Fiji. It was also claimed that one of the appellant's sons suffered from eczema, which was said to be exacerbated by the humidity in Fiji. 4 The Tribunal found that children born to a Fijian citizen would be entitled under the Fiji Citizenship Act to become citizens through registration. While the Tribunal noted the concerns of the appellant, it ultimately found her statements regarding her fear of returning to Fiji to be both vague and imprecise. The Tribunal concluded that the appellant's fear of returning to Fiji was not activated by reasons which would attract Australia's protection obligations. The Tribunal affirmed the decision of the delegate not to grant protection visas. 5 On 25 July 2006, the appellant applied to the Federal Magistrates' Court claiming that the decision of the Tribunal was made without jurisdiction, or was affected by an error of jurisdiction. The Federal Magistrate found that the appellant had received a copy of the Tribunal decision on 15 January 2006. She had not, however, applied for judicial review until 25 July 2006. His Honour held that, under s 477 of the Migration Act 1958 (Cth) ("the Act "), applications to the Federal Magistrates' Court must be made within 28 days of the notification of the decision, and that that the period could only be extended by up to 56 days if the application for an extension of time is made with 84 days of the actual notification of the decision and the Court is satisfied that it was in the interests of the administration of justice to do so. In this case, the Federal Magistrate noted that the application was not lodged within this 84 day period, and he held that he was, therefore, powerless to grant any extension. His Honour proceeded to dismiss the application. 7 None of these grounds allege error on the part of the learned Federal Magistrate. As already noted, his Honour dismissed the appellant's application because he lacked jurisdiction to entertain it. The application had been filed after the prescribed period had elapsed following the promulgation of the Tribunal's decision and the Magistrate was constrained, by s 477(3) of the Act , from enlarging time within which to commence the proceeding. 8 The appellant appeared in person. She had the assistance of an interpreter. She submitted that she wished to stay in Australia and that she was concerned that proper attention had not been given to the details of her claim to be a refugee. 9 The decision of the learned Federal Magistrate was plainly correct. No appellable error on his part has been identified. 10 The appeal must be dismissed wit h costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | no point of principle migration |
From 21 July 1943 to 17 January 1946 he served in the Royal Australian Air Force. He is taken to have been rendering operational service during each of the above periods (s 6A of the Veterans' Entitlements Act 1986 (Cth) ('the Veterans' Entitlements Act ')). 2 Mr Brown died on 29 June 2003 aged 82. The applicant is his widow. She claimed a war widow's pension asserting that her husband's death arose out of, or was attributable to, his war service. The bases of her assertions were that his habit of smoking was war-caused and that his smoking contributed to his death through ischaemic heart disease. Each of those decisions was based on a finding that Mr Brown's death was due to non-Hodgkin's lymphoma. 5 For the reasons set out below I have concluded that Mrs Brown is not entitled to the relief that she seeks. That subsection authorises an appeal to the Court 'on a question of law' . 7 The limited nature of an appeal on a question of law has recently been considered by the Full Court in Birdseye v Australian Securities and Investment Commission (2003) 76 ALD 321, Comcare v Etheridge [2006] FCAFC 27 , HBF Health Fund Inc v Minister for Health and Ageing [2006] FCAFC 34 and Purvis v Dairy Adjustment Authority (No 2) [2006] FCAFC 38. It is not necessary to repeat here everything said in those cases. It is sufficient to observe that they make clear that the subject matter of an appeal under s 44(1) of the AAT Act is the question (or questions) of law stated in the notice of appeal. The Court has no jurisdiction on such an appeal to evaluate the evidence before the Tribunal. Order 53 r 3(2) of the Federal Court Rules (and see also Form 55A) requires the notice of appeal to state separately the question or questions of law to be raised on the appeal, the order sought and the grounds relied upon in support of the order sought. This final requirement calls for a brief statement explaining why the answer to the question (or questions) of law will lead to the making of the order sought. 8 At the first directions hearing I drew the attention of Mrs Brown's counsel to the fact that there were recent Full Court authorities touching on appeals under s 44(1) of the AAT Act and referred him to the Etheridge judgment in particular. There was an exchange between us concerning the proper formulation of a question of law, the requirements of O 53 r 3(2) of the Federal Court Rules and the alternative source of jurisdiction provided by s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('the ADJR Act'). Counsel disavowed any wish to rely on the ADJR Act but sought, and was granted, leave to file and serve an amended notice of appeal pursuant to s 44(1) of the AAT Act. What was the understanding of the Tribunal on any issue is a question of fact. It is not appropriate for the Court on an appeal under s 44(1) to undertake a comparison of the Tribunal's understanding of a particular issue with the evidence adduced before it for the purpose of determining whether the Tribunal misunderstood the evidence. Question 2.1 is therefore incapable of constituting the subject matter, or part of the subject matter, of an appeal under s 44(1) of the AAT Act. 11 Question 2.2 is not easy to understand. It appears to involve some questions of law; ie the proper construction of statutory expressions. However, it also appears to call for an evaluation of the evidence given by Dr Edwards. It is thus a mixed question of fact and law and, for this reason, not a question of law within the meaning of s 44(1) of the AAT Act (see Etheridge at [16]). Therefore, it is also incapable of constituting the subject matter, or part of the subject matter, of an appeal under s 44(1) of the AAT Act. However, it seems to me, as I have previously sought respectfully to suggest, that the majority judgment in Clements wrongly equates an error of law with a question of law (see, for example, Birdseye at [18]; Australian Securities and Investment Commission v Saxby Bridge Financial Planning Pty Ltd [2003] FCAFC 244 ; (2003) 133 FCR 290 at [46] ; Etheridge at [13]-[17])). This is the view that was taken by Gyles J, the minority judge in Clements at [58]-[67]. See also Purvis esp at [7]. 14 At the hearing of the appeal, Mrs Brown sought leave to rely on a further amended notice of appeal which included a claim for relief pursuant to s 5 of the ADJR Act. The proposed further amended notice of appeal did not seek to expand the subject matter of the proceeding; ie, Mrs Brown's complaints about the decision of the Tribunal remained unchanged. No application was made for an extension of time within which to lodge an application for review under the ADJR Act (see O 54 r 2A of the Federal Court Rules ). No attempt was made to frame the proposed amendments substantially in the form prescribed for an application under the ADJR Act (O 54 r 2). 15 I reserved my ruling on the application for leave to further amend the amended notice of appeal until publication of these reasons for judgment. Unless it can be established that the proposed amendment would strengthen Mrs Brown's claim for relief nothing would be gained by granting the application. 16 I therefore turn to consider the merit of the complaints made by Mrs Brown about the decision of the Tribunal. DID THE TRIBUNAL MISUNDERSTAND DR EDWARDS' EVIDENCE? In his report Dr Edwards expressed the opinion that Mr Brown's terminal illness was due to sepsis originating in his lungs and urinary tract. He stated that Mr Brown's non-Hodgkin's lymphoma had reduced his ability to fight infection and the treatment for that illness similarly compromised his immune state. The underlying cause of death was the rapidly progressive malignant disease. The Tribunal also noted that Dr Edwards' position could be summarised in terms of the evidence given by him which is identified in [18] above. This is not a case of multiple "kinds of death". Accordingly, we find that the kind of death suffered by Mr Brown was "non-Hodgkin's lymphoma". This is in accord with the clinical decision of the palliative care team taken three days before Mr Brown died, that his condition was incurable. In support of this submission counsel drew attention to certain answers given by Dr Edwards in cross-examination. During his cross-examination Dr Edwards said that ischaemic heart disease was a significant underlying disease process that Mr Brown had. He agreed that he might have included ischaemic heart disease in part 2 of a death certificate for Mr Brown; that is, in the section of the certificate which Dr Edwards described as appropriate for recording 'contributing factors, factors that might be in the background, present for many years' . He contrasted factors of that kind with 'causes of death' . 23 Dr Edwards was not asked in cross-examination, or it seems at any time, to express an opinion on whether, because of his ischaemic heart disease, Mr Brown died from pneumonia earlier than would otherwise have been the case. Nor was Dr Edwards asked to express an opinion on whether ischaemic heart disease otherwise accelerated Mr Brown's death. In the absence of answers from Dr Edwards on these questions, it is to be inferred from the answer recorded in [19] above, that Dr Edwards did not think that ischaemic heart disease accelerated Mr Brown's death. 24 The contention that the Tribunal misunderstood Dr Edwards' evidence is untenable. Dr Edwards' evidence was that the proximate or ultimate cause of Mr Brown's death was pneumonia caused by sepsis originating in his lungs and urinary tract; Mr Brown was unable to resist that proximate or ultimate cause because of his rapidly progressive non-Hodgkin's lymphoma. Dr Edwards, for this reason, described non-Hodgkin's lymphoma as Mr Brown's underlying cause of death. While Dr Edwards accepted that Mr Brown suffered from ischaemic heart disease, nothing in his report or evidence provided support for a conclusion that Mr Brown's heart disease played a part in, or accelerated, his death from pneumonia. 25 Dr Edwards' evidence, as summarised above, is entirely consistent with the conclusion of the Tribunal that the Statement of Principles concerning Non-Hodgkin's Lymphoma (dated 12 August 2003) is a Statement of Principles under subsection 196B(2) of the Veterans' Entitlements Act in respect of the kind of death suffered by Mr Brown (see s 120A of that Act). That Statement of Principles defines 'death from non-Hodgkin's lymphoma' to include 'death from a terminal event or condition that was contributed to by the person's non-Hodgkin's lymphoma' (see Instrument No 37 of 2003). Section 120A modifies the operation of s 120 of the Act. Subsections 120A(2) and (4) introduce into the Veterans' Entitlements Act the concept of a Statement of Principles in respect of a 'kind' of death. 27 Subsection 120A(3) relevantly provides that, for the purposes of s 120(3) , a hypothesis connecting the death of a person with the circumstances of any particular service rendered by the person is reasonable only if there is in force a Statement of Principles that upholds the hypothesis. Section 120A(4) relevantly provides that subsection (3) does not apply in relation to a claim in respect of the death of a person if no Statement of Principles has been determined in respect of the kind of death met by the person. 28 The Court has not yet sought to provide definitive guidance on the meaning of 'kind of death' in s 120A --- although the concept has been considered in Repatriation Commission v Hancock (2003) 37 AAR 383 and Repatriation Commission v Towns (2003) 38 AAR 77. This is not an occasion for the provision of that definitive guidance. 29 Mrs Brown contended that the purported reliance by the Tribunal on the evidence of Dr Edwards necessitated the Tribunal finding that a kind of death met by Mr Brown was pneumonia-related infection. This contention must, in my view, be rejected for the following reasons. 30 The Tribunal was alive to the possibility that multiple medical conditions could have contributed to Mr Brown's death. If a medical condition contributed to the death and is relevantly related to service then that is sufficient to establish entitlement to pension (see Hancock [2003] FCA 711 at [8] - [9] . That Statement of Principles, as mentioned in [25] above, is relevant to a death from a terminal event which was contributed to by the person's non-Hodgkin's lymphoma. It defines 'terminal event' to mean the proximate or ultimate cause of death including pneumonia, respiratory failure, cardiac arrest, circulatory failure or cessation of brain function. As discussed above, the Tribunal considered Mr Brown's pneumonia to have been a terminal event as that expression is defined in the Statement of Principles. 32 The above conclusion of the Tribunal has not been shown to have involved any error of law or otherwise to be amenable to review under s 5 of the ADJR Act. Indeed I respectfully suggest that the Tribunal's decision was manifestly reasonable having regard to the evidence and other material before it. 33 In the circumstances it is not necessary for me to give consideration to whether a veteran may meet more than one kind of death, as opposed to a death to which a number of medical conditions contribute, for the purposes of s 120A(4) of the Veterans' Entitlements Act . It's really --- because this man has got bone marrow evidence of a lymphoma ... the major cause of his death in medical parlance would be his lymphoma. The question is, is ischaemic heart disease a kind of death and that would be determined on the balance of probabilities and the respondent would say that it is not. An administrative tribunal such as the AAT is not obliged to accept a submission put to it jointly by the parties to a dispute. The duty of the AAT is to make the correct or preferable decision in the circumstances ( Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577). 36 The above extracts from the Tribunal hearing reveal that the Tribunal let the parties know the approach that it proposed to take, and gave them an opportunity to be heard on whether it should find that the kind of death met by Mr Brown was pneumonia. The Tribunal could hardly have made it plainer that, if it concluded that pneumonia was simply a terminating event in Mr Brown's death, it was unlikely to find that he met a 'pneumonia kind of death'. The respondent's representative showed his appreciation of the approach foreshadowed by the Tribunal in the statement reproduced in [34(c)] above. 37 Mrs Brown was not denied procedural fairness by the Tribunal in the way alleged in paragraph 2.3 of the amended notice of appeal or at all. I do so. 39 I therefore turn to the appeal under s 44(1) of the AAT Act. As mentioned above, neither paragraph 2.1 nor 2.2 of the amended notice of appeal identifies a question of law within the meaning of s 44(1) of the Act. In any event, the complaints thereby made of the decision of the Tribunal are without merit. As stated earlier, the question in paragraph 2.3 contains within it a false assumption, namely that the AAT is obliged to accept a submission advanced jointly by the parties to a dispute. In any event, I am satisfied that Mrs Brown was not denied procedural fairness by the Tribunal. 40 The appeal from the decision of the Tribunal will be dismissed with costs. | appeal from administrative appeals tribunal nature of appeal pursuant to s 44(1) of administrative appeals tribunal act 1975 (cth) appeals on a question of law review under s 5 of the adjr act whether the tribunal misunderstood evidence 'kind of death' of veteran under veterans' entitlements act 1986 (cth) whether denial of procedural fairness by tribunal in not accepting a submission put to it jointly by the parties veterans' entitlements |
It seeks an injunction pending trial to restrain Green Frog from disposing of those shares. It says it needs the injunction because, without it, the shares will be sold and the proceeds applied in partial discharge of a debt due by the second defendant, Opes Prime Stockbroking Pty Ltd (Receiver and Manager Appointed) (Administrator Appointed) (OPS) to ANZ Banking Group Ltd (ANZ). ANZ has a charge over OPS' assets to secure its liability to ANZ and has appointed receivers to take possession of the assets. The receivers contend that Green Frog holds the shares on trust for OPS. 2 The plaintiff's application for an interlocutory injunction has come on very quickly. The evidence it would lead at a trial has only briefly been sketched out. The gist of the evidence is as follows. The plaintiff is in the restaurant business. So is RBNZ. The plaintiff wishes to build up a significant holding in RBNZ. For that purpose it engaged Opes Prime Paradigm (OPP), a company related to the stockbroker, OPS. In a letter dated 16 August 2007 OPP set out the terms upon which it would act for the plaintiff. The letter contained details of the work OPP would perform on the plaintiff's behalf. OPP said it would "co-ordinate the acquisition of stock [in RBNZ] utilizing multiple stockbrokers. " This would "minimize interest in [OPP's] buying activity". OPP suggested that three brokers be used to effect the purchases, Wilson HTM, Citi Smith Barney and OPS. The letter stated that each broker would purchase shares through a "Nominee/Custodial Account". The custodians were Rubicon Nominees Pty Ltd for Wilson, an account to be advised in the case of Citi and Green Frog for OPS. 3 The plaintiff's plan was to purchase shares in RBNZ in part using its own funds and in part using borrowed money. On 31 August 2007 Mr Dickson, a director of OPP, sent an email to Mr Higgon, the sole director of the plaintiff, about the funding arrangement. The proposal was that the plaintiff obtain funds from OPS. The facility account provided by Opes Prime, which will enable you to use the line of credit to assist you fund the acquisition of stock. Please note that as well as the forms being signed, Opes require the standard 100 points identification and for you to deposit a sum of money representing your proportion of the acquisition value of stock to be purchased with Opes Prime. For example, should you anticipate acquiring, say $100,000 of stock in the first week then you should deposit $45,000.00 representing your 45%LVR. 2. These account opening documents were provided to you earlier, in a pack, with the Opes Prime Terms sheet. However, I have attached a soft copy as well. Client should seek their own legal and tax advice. Voting rights to be discussed. 5 The GMSLA to which reference is made in the "Documentation" section is not in evidence. But the parties argued the case on the assumption (as was the fact) that I was familiar with its terms. A derivative of the GMSLA is the subject of my judgments in Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Limited [2008] FCA 594 and CMG Equity Investments Pty Ltd v Australia and New Zealand Banking Group Ltd [2008] FCA 455. 6 Over a period of about five months the brokers were able to purchase the shares. All were registered in the name of Green Frog. The brokers were unable to purchase the number of shares the plaintiff wished to acquire as the market in RBNZ shares is very illiquid. The shares purchased represent 1.25 per cent of the capital of RBNZ. The price paid ranged from NZ$0.71 to NZ$0.89. The plaintiff contributed $300,000 towards the purchase price. The balance was provided by OPS. Together with interest and fees, the plaintiff says that it now owes OPS about $395,000. 7 In his affidavit Mr Higgon said that he understood that the relationship between the plaintiff, OPP, OPS and Green Frog was as follows: (1) OPP would arrange for the purchase of shares in RBNZ by directing one of the stockbrokers to buy them on market; (2) The shares would "belong" to the plaintiff but would be held by a custodian on its behalf; (3) One of the custodians would be Green Frog; (4) OPS would advance funds to enable the purchases to take place. The funds would be advanced under a "margin loan" or "line of credit" secured against the RBNZ shares. Mr Higgon also said that there was no discussion with OPP about the plaintiff entering into a "securities lending or borrowing" arrangement. 8 It is not clear precisely what Mr Higgon meant when he said that the shares in RBNZ would "belong" to the plaintiff. I do not take him to be saying that OPS was to have no interest in the shares. It is, I think, clear that Mr Higgon had in mind that OPS could have recourse to the shares for repayment of the money it had put up for their purchase but that it did not take absolute title to the shares as the GMSLA provided. At least at this stage I am prepared to proceed on the basis that this is what Mr Higgon meant. 9 The principles upon which an interlocutory injunction can be granted are well known. Nothing will be served by repeating them. But, for the purposes of this application, I will make the following few observations. All the cases say, one way or another, that the plaintiff must show he has a chance of success at the trial. The cases also say that the injunction is to be used for the purpose of maintaining the status quo, or maintaining a state of affairs appropriate to maintain, until the trial. They refer to the object of avoiding irreparable harm to the plaintiff, and also of balancing against the plaintiff's harm if the injunction were not granted any harm to the defendant if the injunction were granted. 10 What can be said about these considerations is that there will be some cases where the plaintiff will not be entitled to an injunction unless he has a very strong case. There will be others where the plaintiff's case is not so strong, but to withhold relief would be wrong because of the prejudice the plaintiff would otherwise suffer. And there will be infinite variations in between. 11 In this case the plaintiff seeks to restrain the disposition of what it contends are its shares. It is a claim to preserve property in status quo pending the determination of the plaintiff's claims to that property. That is a common basis for a preservation order. But even in such a case it is necessary to inquire why damages are not an appropriate remedy. Here the reason is that the shares are so thinly traded that it might not in the future be possible to obtain equivalent quantities of them. I accept that there is not a large trade in RBNZ stock. But it should not be too difficult for the plaintiff to purchase an equivalent parcel. It would likely be able to do so at the right price. That is not, however, where the plaintiff's risk lies. It has accumulated the existing parcel as a springboard to acquire an even larger parcel. It will lose that advantage if the shares are sold and it is required to start again. Not only will that be a more difficult task, it is likely to be a much more expensive exercise, especially since the plaintiff's intentions have become known. That is a sufficient reason to hold, if all other factors are satisfied, that an injunction should go. 12 The first of those factors is whether the plaintiff has shown a sufficiently strong case for the grant of interlocutory relief. Here, of course, the plaintiff's problem is that it has entered into an agreement with OPS which, according to its terms, results in absolute title in the shares passing to OPS. In Beconwood I explained in some detail why this was so. 13 But, there are features of this case that suggest the plaintiff may be able to overcome the provisions of the GMSLA. There is a reasonable basis for the plaintiff contending that it is the victim of representations that falsely describe the effect of the arrangement it was entering into. They begin with the reference in the retainer letter to each purchasing broker maintaining a nominee account into which the shares would be placed. There is also the reference in the email of 31 August 2007 to "a Custodian in New Zealand" who would hold the shares. In the case of an outright transfer, the shares would not be held by a nominee or custodian, at least not for the plaintiff. 14 Then there is the Indicative Term Sheet. First of all, that document refers to the "financ[ing]" of the purchase of the shares. This suggests that the plaintiff would borrow funds from OPS. Next it refers to the shares as "security or collateral for the loan". Both these propositions are inconsistent with the GMSLA. On the other hand they are consistent with a funding arrangement that involves, not an outright transfer of the shares, but the creation of a security interest in respect of them. 15 In my opinion there is a reasonably strong case that the plaintiff has been misled about the terms of the arrangement into which it was entering to obtain funding. The misleading conduct would, if it were ultimately made out, be conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth). Moreover, if the plaintiff were able to show a contravention of that section various types of relief would be available to it. Relevantly, pursuant to s 87(2) the court would have power to vary the agreement entered into in reliance on the misleading conduct or to refuse to enforce a provision of that agreement. In this case the court could order that, notwithstanding the GMSLA, the shares held by Green Frog should be delivered to the plaintiff on payment to OPS of the money it had advanced to enable the shares to be purchased in the first place (including the interest and fees owing). 16 Importantly, what distinguishes this case from the others where a client of OPS has failed to get an injunction to restrain a dealing in shares over which the plaintiff claims title, is that here no third party rights have intervened. If it could ever be done, it would need to be a remarkable case for s 87 to override the rights of an innocent third party. But there is no such third party who claims the shares. As mortgagee ANZ has no better title to the shares than its mortgagor, OPS. Its position as mortgagee is fundamentally different from the position that prevailed in the other cases where ANZ claimed absolute title by way of a transfer of the shares in dispute. 17 The next factor is the balancing exercise. While the plaintiff is able to show a degree of irreparable harm it is necessary to balance that harm against the possibility that Green Frog (or ANZ) would be prejudiced by an injunction. It is, in this case, an easy balance to resolve. Provided Green Frog is adequately protected from any loss in the value of the shares between the present and the trial, it will suffer no real inconvenience. 18 The possibility of financial harm being suffered by a defendant is usually compensated by the undertaking in damages which is now a condition of obtaining relief. In a case such as the present I would not act on the undertaking alone. First of all I have had provided to me the balance sheet and profit and loss statement for the Southern Restaurants Group, a group of which the plaintiff is a member. I requested that information because the plaintiff is a single purpose company established to purchase a stake in RBNZ and has no assets, so I could not accept an undertaking from it alone. 19 The financial records, which I have been asked to keep confidential, do not leave me with any confidence that the undertaking in damages could be met. Any undertaking from the group would have to be supplemented by a payment into court to the credit of this action of a sum of $175,000 or the provision of an unconditional bank guarantee in that amount, the form of the guarantee being to the satisfaction of the Registrar. I have opted for a cash security of $175,000 for the following reasons. The shares are currently worth in the order of AU$820,000. They are currently trading at NZ$0.80. In the period from mid-2007 until now there has been a decline in the value of the shares. I have not had the time to work out precisely the amount of the decline but it would represent a fall in the value of 1,230,593 shares in the order of NZ$125,000. A buffer of $175,000 should give Green Frog (and ANZ) full protection if the shares fall in value between the present and the time of trial. 20 The final point I must consider is whether the plaintiff must obtain leave to proceed with this action as OPS is in administration and its receivers (and perhaps also its administrators) claim that OPS is the beneficial owner of the shares. In Cope v Home [2002] NSWSC 777 the plaintiffs sought an injunction restraining administrators of a company from disposing of an asset which, according to the plaintiffs, the company was intending to dispose of to a third party. The plaintiffs claimed that pursuant to an agreement with the company they were entitled to have transferred to them some of those assets. Barrett J said [at 19] that the action against the administrators was "in substance no more or less than a proceeding against the company. " He also said that the action was "an application in respect of the property of the company" although the company's title to that property was in dispute. Accordingly Barrett J held that the plaintiff required leave under s 440D to proceed with the action. 22 Applying the logic of that decision to the case at bar I am bound to hold that the proceeding against Green Frog is caught by s 440D because it involves shares that OPS, a company in administration, claims is its property. I will nevertheless give leave to bring the proceeding against Green Frog because the plaintiff's claim is to recover from that company what it says is its own property. Neither s 440D nor Part 5.3A of the Corporations Act is designed to deprive a person of his property. In most cases it would be wrong to prevent an owner of property bringing a proceeding for its recovery simply because the defendant happens to be in administration: In re David Lloyd & Co, Lloyd v David Lloyd & Co (1877) 6 Ch D 339 , 344. By the same token, I would not allow the action to proceed against Green Frog until the administrators have completed their task of investigating the company's affairs and reporting the result of their investigation to the creditors. In my view the administrators should not be distracted from their task by this proceeding. Nor should they be required to incur any costs to fight the case, especially in circumstances where, by reason of the receivership, they presently have no funds from which to obtain reimbursement. Accordingly, as a condition of the grant of leave I would require the plaintiff to undertake not to proceed with this action any further until further order. It goes without saying that the undertaking would immediately be discharged on the request of the administrators. 23 In the result I am of the opinion that there is a sufficient case against Green Frog to warrant the grant of the interlocutory injunction that the plaintiff seeks. It will have to be supported by an undertaking in damages by all the members of the Southern Restaurants Group. The injunction will be discharged if within ten days the plaintiff does not pay into court the sum of $175,000 or provide an unconditional guarantee from an Australian trading bank for that amount to the satisfaction of the Registrar. If there is a drastic fall in the price of RBNZ shares, Green Frog will be entitled to apply to vary or discharge the injunction. There will also be an order that the plaintiff have leave to continue this proceeding against Green Frog upon it undertaking not to take any further step in the action without the leave of a judge. So far as the costs are concerned I think they should be reserved. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | interlocutory injunction ownership of shares in dispute application to restrain disposition principles to be applied practice and procedure |
2) [2007] FMCA 1481. The appellant, Suzann Janet Owens, was made bankrupt on 10 May 2005. The respondent, David James Lofthouse, is her trustee in bankruptcy. He claims that the beneficial title to four residential properties registered in her name has vested in him pursuant to ss 58 and 116 of the Bankruptcy Act 1966 (Cth). He seeks orders that the bankrupt execute and deliver to him all documents necessary to transfer legal title to the properties. He succeeded before the Federal Magistrate who also ordered the appellant to pay costs. 2 The appellant claims that McInnis FM failed to apply the law relating to the creation of valid trusts correctly, and that beneficial title in the properties lay, as at the date of the bankruptcy, in the hands of a family trust. If that contention is correct, the respondent has no right to any of the properties. 3 The appellant's case can be stated quite simply. She claims that she executed a declaration of trust over the properties on 20 December 2000. The Federal Magistrate rejected that claim on the basis of the evidence before him, and as a matter of law. The appellant submits that he was wrong to do so. The Trustee has at all relevant times agreed to act as trustee of this trust on the terms set out. The Trustee has agreed to transfer her interest in all property owned by her including the property situated at 78 Wattle Road Hawthorn inclusive of its contents to the Beneficiary. The Trustee declares that the Trustee holds the trust estate for the benefit of THE RICHARDSON TRUST and its beneficiaries the children of the Trustee. The Trustee must at the request and cost of the beneficiary transfer the trust estate to the Beneficiary or otherwise deal with the trust estate as the Beneficiary directs. Pauline Baxter is a solicitor, and former friend of the appellant. She was the first respondent to the proceeding before the Federal Magistrate. On 12 August 1994 a "Deed of Settlement" was executed. That Deed of Settlement established the Richardson Trust as a discretionary trust and made Ms Baxter trustee. The amount settled was $25. 6 Originally, the appellant's children and grandchildren were the primary beneficiaries of the Richardson Trust. However, on 18 February 2000 the Deed of Settlement was varied so that the primary beneficiaries named were defined to include the appellant, as well as her children and grandchildren. 7 Aside from filing an affidavit in the proceeding before the Federal Magistrate, Ms Baxter sought to be, and was, excused from further attendance at the hearing. She is not a party to this appeal. They included affidavits sworn by Ms Owens on 29 March 2005, 19 May 2005, 27 May 2005, 31 May 2005 and 10 June 2005. The four latter affidavits related to Ms Owens' application to have the sequestration order, made on 10 May 2005, annulled. It should be noted, however, that ultimately, and for reasons that are not entirely clear, Ms Owens discontinued her annulment application. 9 In the hearing before McInnis FM, Mr Lofthouse swore four affidavits. One was dated 29 September 2006, two were sworn on 30 October 2006 and the last was sworn on 13 March 2007. He also relied upon an affidavit sworn by his partner, Richard Cauchi, on 3 June 2005. In addition, he tendered transcripts of the hearing before the Federal Magistrates Court in the bankruptcy proceeding. 10 In order to understand the findings below, it is necessary to set out in detail some of the appellant's earlier statements about the properties in question which were before his Honour. 11 In her 29 March 2005 affidavit, Ms Owens asserted, unambiguously, that she was the beneficial owner of the properties. That affidavit made no reference to any alleged trust. 12 In her 19 May 2005 affidavit, which was filed in support of her application to annul the sequestration order, Ms Owens again deposed that she was the beneficial owner of the properties. Importantly, she also stated that she had a drawdown facility from the ANZ Bank which was secured by a mortgage over one of those properties, and that the facility was available to pay her personal creditors. 13 In her 27 May 2005 affidavit, Ms Owens contended that she had real estate assets valued at $2,380,000, and that these assets were "readily available" to make payments to her creditors within a short space of time. She repeated this assertion in her 31 May 2005 affidavit, and added that she had refinanced one of the properties by discharging mortgages to the Commonwealth Bank, and granting a new mortgage to Perpetual Trustees. There is nothing to suggest that she informed Perpetual Trustees of the alleged trust. 14 Finally, in the 10 June 2005 affidavit, Ms Owens deposed to the existence of the Richardson Trust. She explained that this was because she had not provided transfers to the trustee. 15 Mr Cauchi's 3 June 2005 affidavit exhibited the appellant's statement of affairs dated 13 May 2005. In that statement of affairs, she said that her income from property was $58,760. In response to the question "Do you own, or are you buying, any land or buildings in Australia or overseas? ", she appended a document detailing valuations of the various properties. She made no reference to any trust. She was asked specifically "Have you transferred any assets to a trust in the last 5 years?". Her response was "No". 16 The position does not improve for the appellant. The respondent's affidavit dated 30 October 2006 exhibited a transcript of a debtor's examination of the appellant conducted on behalf of a creditor in 2003. The transcript recorded that when asked if she owned any property, the appellant had answered "Yes" and identified one of the properties. In addition, the exhibit included a statement of affairs which had been completed by the appellant on 31 January 2003 as part of an unsuccessful attempt to enter into an arrangement under Pt X of the Bankruptcy Act . In that statement of affairs she said that she owned the property which she occupied, and that she had not transferred any property to a trust in the previous five years. She also stated that she had derived income from property in the sum of $58,240. She listed the four properties in question in this proceeding as her own, and the mortgagees in relation to them as her secured creditors. 17 In addition, reference was made before McInnis FM to part of the transcript of the appellant's earlier annulment application. Her counsel submitted during the course of the annulment application that she beneficially owned the properties. She was extensively cross-examined in relation to that matter, and maintained that position. She said that at one time she had thought that the family trust owned the properties, but no longer did so. She also admitted to deducting expenses against the rental income when calculating her personal taxation liability. In other words, when it came to matters of taxation, she treated the properties as her own. 18 Ms Baxter's affidavit, sworn on 19 January 2007, also did nothing to assist the appellant's cause. She swore that she was not aware of the existence of the declaration of trust until she received a copy of the respondent's affidavit of 29 September 2006. She also said that the appellant had never said anything to her about any declaration of trust. She said that she had never been asked to sign transfers in relation to the properties. To her knowledge the only asset of the Richardson Trust was the original sum of $25 settled, together with a small amount of interest that had accrued. The remainder of her affidavit was given over to certain caveats lodged over the titles to the properties by the appellant, after the declaration of trust had first emerged. These caveats were purportedly lodged on behalf of Ms Baxter. However, she said that they were lodged without her knowledge or authority. 19 Before McInnis FM the appellant elected not to file any affidavits in opposition to the respondent's application. She did not seek to cross-examine Mr Lofthouse, Mr Cauchi or Ms Baxter. Nor did she object to any of the documentary material relied upon by the respondent. 20 That left the position before McInnis FM basically as follows. There was no evidence as to the events leading up to the execution of what the appellant now claims is the key document in this case. Nor was there any evidence of any step having been taken to record the existence of the trust now alleged. Indeed, almost all of the evidence was to the contrary. The appellant received the rentals from the properties as her own income, and deducted expenses in relation to them against that income. There was no evidence before his Honour as to who drew the declaration of trust. And, insofar as the appellant had mentioned a trust in the document itself, she seemed to have in mind not so much a declaration of trust, but rather a transfer of all property owned by her to the Richardson Trust. 21 Plainly, the appellant could not succeed in placing these properties beyond the reach of her creditors by establishing that there had been a transfer in equity to the Richardson Trust. There were no transfers ever executed in favour of Ms Baxter as trustee for the beneficiaries of that trust. After the ostensible execution of the declaration of trust in December 2000, nothing further happened to give any indication of the existence of any trust whatsoever. The various affidavits and statements of affairs filed by the appellant were all diametrically opposed to any such trust having been created. When the purported declaration of trust first surfaced, the appellant's position was that whatever might have taken place, it had not been an effective arrangement. At that stage she was still pursuing an annulment of the bankruptcy. It was not until she had abandoned that proceeding that she altered he position entirely, and (without explanation) suddenly maintained that she had divested herself of the beneficial interest in the properties pursuant to the declaration of trust. 22 McInnis FM found that when it suited Ms Owens' interest to do so she claimed that she owned the properties, both legally and beneficially. Once she abandoned her application for annulment, she denied beneficial ownership. 23 Accordingly, his Honour found that Mr Lofthouse was entitled to the relief sought. His Honour concluded he could not be satisfied that the document had in fact been executed on the date that it bore. Implicitly, at least, this meant that he was not satisfied as to its genuineness. He noted that appellant had not produced the original, and that she had relied instead upon a photocopy which was annexed to one of the affidavits filed on behalf of the respondent. He further noted that she had led no evidence as to the circumstances surrounding the creation of the document. In addition, Ms Barbara Johansson, who had purportedly witnessed the declaration of trust did not give evidence. Nor did any of the appellant's children. Ms Baxter, the trustee of the Richardson Trust, swore that she had no knowledge of the declaration of trust. His Honour regarded that as significant given that the properties in question are plainly of considerable value, and the Richardson Trust had otherwise been moribund since its creation in 1994. 25 If his Honour's finding regarding the authenticity of the document is not disturbed that, for practical purposes, is the end of this appeal. If the document is not accepted as genuine, it would be unnecessary to embark upon any question relating to its construction, or whether it in fact operates as a declaration of trust. 26 It was for that reason that, belatedly, on 20 November 2007, just 10 days before this appeal was scheduled for hearing, the appellant filed affidavits affirmed by herself and by her elder daughter, Georgia MacDougall. She foreshadowed an application to rely upon these affidavits by way of further evidence in this appeal. During the course of the hearing, she filed two additional affidavits, one affirmed by her on 3 December 2007, and one sworn by Ms Johansson on 30 November 2007. 27 Mr Gardiner, on behalf of the respondent, opposed the tender of these affidavits. He pointed out that the appellant is legally qualified, and had practised as a solicitor for many years. She was obviously familiar with the need to file affidavits in order to establish facts in court proceedings. He submitted that the appellant had had ample opportunity to place before McInnis FM any evidence upon which she might seek to rely. He noted that his Honour frequently alluded to the appellant's failure to adduce any evidence regarding the circumstances in which the declaration of trust supposedly came into existence. Yet she made no application, at that stage, to file any affidavit material to meet his Honour's concerns. Nor did she seek to allay those concerns by giving viva voce evidence regarding this matter. 28 Mr Gardiner submitted that the further evidence upon which the appellant was now seeking to rely had always been available to her. He submitted that at no stage had she provided anything like an adequate explanation as to why that material had not been led before his Honour. 29 Mr Gardiner submitted that I should find that the appellant made a deliberate, tactical, decision not to put on evidence before his Honour. He submitted that, rather than expose herself to cross-examination, the appellant had elected to rely on the document as it stood, hoping that she could overcome any doubts as to its authenticity. He further submitted that the appellant now seemed to blame her counsel for what took place below, implying that she acted on his advice that there was no need to adduce evidence as to the document's creation. He noted, however, that her counsel had been briefed only shortly before the hearing, and long after the expiry of orders requiring her to file any affidavits upon which she proposed to rely. 30 In addition, Mr Gardiner noted that the appellant had not sought an adjournment of the proceeding below for the purpose of filing affidavits. He submitted that, as a general rule, this Court will decline to permit further evidence to be led on appeal unless it is established that the evidence could not with reasonable diligence have been obtained before trial. He further submitted that it is also a requirement that the further evidence be cogent and of such importance that its tender below would be likely to have led to a different result. 31 I note that the discretion to receive "further evidence" on appeal is conferred by s 27 of the Federal Court of Australia Act 1976 (Cth). That discretion must be exercised judicially, consistently with proper process and in the interests of justice: Sobey v Nicol and Davies [2007] FCAFC 136 at [71] . 32 The traditional constraints which govern the reception of "fresh evidence" on appeal, at common law, are that the party seeking to adduce that evidence must show that reasonable diligence was exercised to procure the evidence for the trial, and that it is tolerably clear that had it been available, and led, an opposite result would have been achieved: Orr v Holmes [1948] HCA 16 ; (1948) 76 CLR 632 at 635 and 640. 33 It is clear that s 27 enables the Court to receive further evidence even though the more stringent common law requirements which apply in relation to fresh evidence have not been satisfied: Cottrell v Wilcox [2002] FCAFC 53 at [20] citing CDJ v VAJ [1998] HCA 76 ; (1998) 197 CLR 172 at 184---186 per Gaudron J, 199---201 per McHugh, Gummow and Callinan JJ and 230---238 per Kirby J. Nonetheless, some factors regarded as relevant to the reception of fresh evidence are also relevant when considering whether to receive further evidence. In particular, the Court will have regard to the cogency of the further evidence, and the chances that it would have led to a different result if tendered at the trial. 34 Section 27 has been considered in a number of recent cases. In Williams v Official Trustee in Bankruptcy [2000] FCA 304 the Full Court observed (at [34]) that it was necessary for the proponent of the further evidence to establish that it could not, with reasonable diligence, have been discovered before trial. However, in Moore v Minister for Immigration and Citizenship (2007) 161 FCR 236 the Full Court expressly stated (at [7]) that it was unnecessary to decide whether, in the proper exercise of the Court's discretion, the party seeking to adduce further evidence had to satisfy that requirement. 35 In Williams v Grant [2004] FCAFC 178 no explanation was offered for the failure to adduce particular evidence before the primary judge. That was regarded as relevant when leave to adduce further evidence was refused. Similarly, in Djalic v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 151 ; (2004) 139 FCR 292 the Court refused to receive further evidence, essentially because there was no suggestion that it had been unavailable prior to trial. 36 In Murdaca v Accounts Control Management Services Pty Ltd [2007] FCA 577 Stone J, after discussing a number of relevant authorities, said (at [6]) that the evidence "must have sufficient probative value that it is likely to have produced a different result had it been presented at the trial". 37 As part of the process of determining whether to receive the appellant's further evidence in this case, I indicated that I would hear what both she, and her daughter, had to say on a provisional basis, without at that stage ruling upon the admissibility of the affidavit material. I did so because I regarded the cogency of the proposed further evidence highly relevant to the exercise of my discretion. Both the appellant and her daughter were cross-examined. Indeed, the appellant was cross-examined a second time. Ms Johansson, whose affidavit was filed at a later point in time, was also cross-examined. 38 I can deal with the evidence of the appellant's daughter very briefly. In her affidavit she deposed to having been informed by her mother of the "declaration of trust" shortly after it was executed (which she stated was 20 October 2000 rather than 20 December 2000). It soon became clear, under cross-examination, that she had no recollection whatever of this event. Nor did she have the slightest understanding of anything that may have occurred. Her only knowledge of a trust appeared to relate to the Richardson Trust. Her evidence could not possibly provide any support for the appellant's claim that the declaration of trust was executed in December 2000. I therefore declined to receive her evidence pursuant to s 27. 39 I turn next to the appellant's two affidavits, which were affirmed on 13 November 2007 and 3 December 2007 respectively. The first thing to note about the affidavit affirmed on 13 November 2007 is that the version served on the respondent contained a number of errors. In that version Ms Owens said that she prepared and signed the declaration of trust on 20 October 2000 (rather than on 20 December 2000, the date the document bears). In other words, she made precisely the same mistake regarding this critical date as did her daughter. She repeated that error on several occasions. However, the version that was eventually filed with the Court on 20 November 2007 contained handwritten amendments which changed the references from "October" to "December". 40 In her 3 December 2007 affidavit, the appellant again misstated the date upon which the declaration of trust had been executed, this time saying that it was 20 December 2007. Plainly, that was a typographical error, though it illustrated a degree of laxness on the part of the appellant towards the accuracy of material filed with the Court that seems to have permeated almost all of her many affidavits filed in relation to her bankruptcy. 41 In her 13 November 2007 affidavit, the appellant gave no explanation as to why she continued to rely upon a photocopy, rather than the original of the declaration of trust. Under cross-examination, she suggested that the original was likely to be with one or other of the various legal advisors from whom she sought assistance over the years. She acknowledged that she had made no attempt to obtain the original, and in submissions suggested, somewhat half-heartedly, that there might be a lien over the document. On the second occasion on which she was cross-examined, she said that after the first day of the hearing she had sent facsimiles to the various solicitors who might have possession of the original, but she had received no reply. She accepted that she had not issued a subpoena for the production of the original, and plainly could have done so. 42 It is one of a number of extraordinary features of this case that the appellant has done virtually nothing to secure the original of the declaration of the trust. This was so even after she was alerted to the importance of the issue when McInnis FM delivered his judgment refusing to accept the authenticity of the document. It is also particularly extraordinary given her claim, made under cross-examination and repeated in her second affidavit, that she paid stamp duty on the document. If she had, the document would bear the date of stamping, and might establish the date on which it was executed. 43 The appellant says nothing in either of her affidavits as to why the evidence upon which she now proposes to rely was not led before McInnis FM. Under cross-examination, she specifically waived client-lawyer privilege, and stated that she had conducted her case before his Honour on the basis of the advice of her counsel. She said that her counsel had told her that it was not necessary for her to adduce any evidence because her case turned entirely upon questions of law. 44 In her 3 December 2007 affidavit Ms Owens asserted that she had known Ms Johansson for over 25 years, but had had no contact with her for, at the very least, the last four years. She said that she had discussed extensively with Ms Johansson the outcome of her divorce proceedings in the Family Court, and her concern that the division of property had been unfair. That had led her to appreciate the need to protect the future interests of her children, and to execute the declaration of trust to achieve that effect. She said in oral evidence that her divorce occurred in 1999, and that her appeal against the property orders made had been dismissed in 2000. She said that Ms Johansson, a transcriber, had witnessed the document at her home where she undertook secretarial work in her front room. It was at that point that she added, unequivocally, that she paid stamp duty on the declaration of trust shortly thereafter. 45 Ms Johansson, in her affidavit, said that she had known Ms Owens for many years. She identified her signature on the photocopy of the declaration of trust dated 20 December 2000. She said that she did not recall having signed the document. She said that it must have been signed more than three years ago as she had had no contact with Ms Owens for that period. I have no reason to disbelieve anything that she said. It should have been perfectly obvious to the appellant, and to her counsel, that the respondent would not meekly accept as genuine a document in the form of a photocopy of the declaration of trust. That was made abundantly clear from the earliest stages of the trial before McInnis FM, if not well before that time. There was much to be said in favour of the contention that the declaration of trust surfaced conveniently and opportunely only after the appellant found herself in difficulty with her creditors. As can be seen, the appellant's own conduct right up to the time that she sought annulment of her bankruptcy was entirely inconsistent with the existence of a declaration of trust going back to December 2000. The many affidavits which she filed during the course of the bankruptcy proceeding, and the information which she provided in support of a possible Pt X composition with her creditors, all asserted, unequivocally, that she was the beneficial owner of the properties in question. So too did her statement of affairs to the respondent after her bankruptcy. The sudden change in her position, once the annulment proceeding was abandoned, would have set alarm bells ringing in relation to the genuineness of the declaration of trust. 47 It was common ground before me that Ms Owens had the onus of establishing the existence of the trust that she asserted. The only conceivable way that she could do so, in this case, would be to have the declaration of trust not merely accepted as genuine, but also construed as manifesting the intention to declare a trust. The failure to take any steps beyond executing the document meant that no other form of trust could arise: see Marchesi v Apostoulou [2006] FCA 1122 at [13] ---[28] and the cases cited therein. 48 In those circumstances, Mr Lofthouse had no choice other than to initiate proceedings in the Federal Magistrates Court in order to clarify the ownership of the properties. The appellant elected not to place any evidence before that Court explaining why she had contended for so long that the properties were beneficially owned by her. 49 Even if one were to accept the document purportedly executed by Ms Owens on 20 December 2000 as authentic, it cannot, in my view, be regarded as a valid declaration of trust. It goes without saying that the document is poorly drafted. At the very least, it demonstrates that Ms Owens was unclear as to precisely what she intended at the time. A declaration of trust does not speak of the trustee (in this case Ms Owens) having "agreed to transfer" her interest to a third party (in this case the Richardson Trust). The fact that at two points in the document the words "declaration of trust" are used cannot be regarded as conclusive of that having been the appellant's intention (just as the failure to use those precise words would not be conclusive against her having had that intention). 50 In addition, the operative provision of the document is completely at odds with what may be described as "the recitals". It is true that equity has traditionally allowed a measure of latitude towards those who create documents which purport to constitute express trusts. However, there is no authority of which I am aware that suggests that the Court should, in effect, entirely reconstruct a document which is as badly drawn, and unclear, as this. 51 It may be, as the respondent acknowledges, that McInnis FM did not always keep clear the distinction between the principles that govern a declaration of trust, and those that govern the creation of a trust by transfer. Nonetheless, his Honour's factual findings, and his willingness to receive evidence of the subsequent acts of the appellant as bearing not only upon the authenticity of the document but also whether, as drawn, it reflected a genuine intention to declare a trust, are in my view unimpeachable. 52 In that regard I should explain that his Honour was invited by counsel for Mr Lofthouse to follow the decision of Young CJ in Eq in Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624 (approved by the New South Wales Court of Appeal in Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72). 53 The facts in Hyhonie were remarkably similar, in many respects, to those in the present case. The issue was whether a document dated 14 March 1997, and signed by a Mr Robert Yazbek, operated effectively as a declaration of trust. Unlike the document in the present case, the declaration of trust in Hyhonie was impeccably drawn. However, after it was executed it did not surface again for some years until an accountant employed by the relevant corporate entity found it, and arranged for it to be stamped. There was a wealth of evidence in that case, as in the present, that notwithstanding the declaration of trust, Mr Yazbek continued to treat the shares, which were the subject of that declaration, as his own personal property. However, in the seventeenth edition (2000) the authors suggested that the dissenting judgment of Isaacs J (who favoured an objective, rather than subjective test when considering whether a trust had been declared) would today be preferred in England. In Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) [2000] HCA 25 ; (2000) 202 CLR 588 Gaudron, McHugh, Gummow and Hayne JJ said (at [33]). " (Footnote omitted. However, he noted that in Re Cozens [1913] 2 Ch 478 it had been held that the absence of any such communication raised a strong inference against an intention to create such a trust. In the end, he concluded that the evidence taken as a whole clearly established that, despite the execution of the declaration of trust, Mr Yazbek had not genuinely intended to hold the shares on trust for anyone. The trust deed was in existence, but it was never seriously considered until the time came for it to be given significance about the time of Robert Yazbek's bankruptcy. However, this onus on Mr. Leroy was an evidentiary onus, and the ultimate onus remained on the appellants to prove the creation of a trust. The existence of this ultimate onus had some significance in this case, where there was substantial evidence tending to rebut an intention to create a trust. Yazbek. 61 Dr Glover, who appeared on behalf of the appellant, submitted firstly that Hyhonie was not binding upon me, and next that it was wrongly decided. He submitted that the judgments at first instance and in the Court of Appeal were per incuriam because they ignored the parol evidence rule. That submission must be addressed. 62 The parol evidence rule is regarded as a rule of substantive law, and not a rule of evidence: see S Odgers, Uniform Evidence Law (7 th ed, Lawbook Co, 2006) at [1.3.200]. It is not affected by the enactment of the Evidence Act 1995 (Cth). " (Footnotes omitted. See, eg, Bank of Australasia v Palmer [1897] AC 540 at 545. Plainly, the test for intention in the law of contract is objective, and not subjective. In such circumstances, one can readily understand the difficulty in seeking to lead evidence of the subjective intent of the parties, (unless one enters into the realm of sham). Jolliffe establishes that the test for intention in relation to a declaration of trust is subjective. In principle, therefore, the parol evidence rule would not be expected to operate to exclude evidence which bears upon the actual intent of the declarant at the time of the purported declaration of trust. 66 It may be that this provides the answer to Dr Glover's point that the parol evidence rule was not considered in Hyhonie . Indeed, there is authority, directly in point, to support the conclusion that the parol evidence rule does not prevent evidence of subsequent conduct from being taken into account when determining whether a trust was validly declared. The written declaration signed by him at the time of the opening of the accounts declared that the money would be the exclusive property of his daughters. In those circumstances, Napier J, relying on Commissioner of Stamp Duties (Qd) v Jolliffe , held that, notwithstanding the terms of the written instrument said to constitute a trust, evidence was admissible to show that the document was never intended to operate as a binding declaration of trust. " (Footnotes omitted. He acknowledged, however, that the majority judgment was binding upon me. That is obviously so, particularly since Jolliffe has been cited without disapproval in later High Court decisions. It has also been applied by the Full Court of this Court. See, for example, Baker v Official Trustee in Bankruptcy , Federal Court of Australia, unreported, 3 August 1995 per Burchett, Ryan and Carr JJ; and Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415 at 422. I reject that submission. I cannot see how the parol evidence rule can apply, with full rigour, in circumstances where the actual state of mind of the declarant must be ascertained. If the submission were correct, it would lead to peculiar outcomes. For example, evidence could not be received of a contemporaneous oral statement by a declarant that, despite the use of the term "declaration of trust" in a document then executed, no such trust was actually intended. That would be contrary to what the majority in Jolliffe identified as the task to be undertaken in determining whether a declaration of trust had been made. 73 In this case, even if the declaration of trust were to be regarded as an authentic document, executed on the date that it bears, it does not manifest a sufficiently clear intention to declare a trust. It is at best a confused document, suggesting at some points a desire on the part of Ms Owens to transfer her assets to the Richardson Trust, while at others suggesting perhaps a desire to hold those assets on trust for the beneficiaries of that Trust. He may, of course, do this by actually transferring the property to the persons for whom he intends to provide, and the provisions will then be effectual; and it will be equally effectual if he transfers the property to a trustee for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol. But in order to render the settlement binding, one or other of these modes must, as I understand the law of this court, be resorted to, for there is no equity in this court to protect an imperfect gift. The cases, I think, go further, to this extent, that if the settlement is intended to be effectual by one of the modes to which I have referred, the court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer the court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust. Ms Owens has not discharged the ultimate onus of establishing a declaration of trust preceding her bankruptcy. McInnis FM was correct to so find. There was overwhelming evidence, based upon her subsequent conduct, that she did not regard herself as holding the properties on trust for anyone. That evidence was admissible, particularly in circumstances where the declaration of trust itself was, to put it kindly, an ambiguous and uncertain document. 76 Although it is unnecessary finally to determine whether I would, in the exercise of my discretion, receive the further evidence proffered, I should indicate that my inclination would be not to do so. I do not regard that evidence as cogent, and certainly not sufficiently cogent to warrant its reception. Even Ms Johansson's evidence, which I do accept, only demonstrates that the document in question was created at least three years ago. It does not demonstrate that, as Ms Owens claims, it was executed in December 2000. Three years ago Ms Owens was already fully immersed in difficulties with her creditors, and the creation of that document at any point after about early 2003 would be of no assistance to her. 77 In any event, for the reasons set out earlier in this judgment, primarily on the issue of construction, the reception of this further evidence would not have affected the outcome of this proceeding. 78 The appeal must be dismissed with costs. I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. | appeal from orders of federal magistrates court transferring beneficial title of properties to trustee in bankruptcy whether appellant beneficial owner of properties whether document titled "declaration of trust" effective whether document manifested intention to declare a trust document ambiguous in its terms whether parol evidence rule applicable appellant's subsequent conduct inconsistent with declaration of trust application to adduce "further evidence" pursuant to federal court act 1976 (cth) s 27 further evidence relevant to creation of purported "declaration of trust" principles relevant to reception of further evidence whether evidence could have been led below whether evidence sufficiently cogent to warrant its reception whether evidence likely to have produced different result bankruptcy trusts practice and procedure |
For some time, it has been the oldest proceeding in my docket and, on occasions, I have described it publicly as the most delinquent proceeding in my docket. It has proved extraordinarily difficult, over almost two and a half years, to produce a situation in which the parties would be ready to go to trial. In recent months, I have taken to making somewhat stringent timetabling orders, in an effort to persuade the parties to focus on the case, and to prepare it adequately for trial. Much time and effort has been wasted on both sides over that time, and there have been long periods of delay. The Court file is replete with notes of telephone conversations by my associates with the solicitors for the parties, seeking information as to why timetabling orders have not been complied with. The picture is, indeed, a very sorry one. 2 The matter was listed for the trial to begin this morning. This has caused a change of counsel on both sides in fairly recent times, and that, in turn, has caused a flurry of activity. On 19 August 2008, the respondent forwarded to the Court a further amended defence and cross-claim, apparently in the hope of seeking leave to file it. I had intended to deal with any leave issue this morning. The further amended defence and cross-claim raised for the first time, so far as the pleadings were concerned, a constitutional issue concerned with the nature of the judicial power of the Commonwealth. At a previous directions hearing, I had asked the question whether some of the relief sought by the applicant really amounted to seeking the advisory opinion of the Court on what might be the situation if certain events were to occur. The respondent finally sought to take that up in the amended defence and cross-claim. 3 Subsequently, on 28 and 29 August, ie Thursday and Friday of last week, and after prompting by my associate, the solicitors for the respondent began sending the requisite notices, pursuant to s 78B of the Judiciary Act 1903 (Cth), to the Attorneys-General for the Commonwealth, the states and the relevant territories. I am advised that responses have been received from all but the Attorney-General for Western Australia by this morning. There is a question, however, as to whether a reasonable time has elapsed, so as to permit the proceeding to go ahead this morning in any event. 4 At 9.29 am today, there arrived on the facsimile machine in my chambers minutes of order proposed by consent of the parties. Those orders involve the vacation of the trial date, leave to the applicant to file a further amended application and further amended statement of claim, an order pursuant to s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) transferring the proceeding to the Supreme Court of New South Wales, and some consequential orders as to costs in relation to the costs thrown away by the amendments sought, and by the vacation of the hearing. 5 I was mystified by receiving these orders at such a late stage and in that form, but counsel for both parties have enlightened me substantially this morning. The effect of the further amendments proposed by the applicant is to eliminate, perhaps altogether, the federal elements of the claim, and to focus, largely, on points of construction in relation to the licence agreement that is the subject of the proceeding. The applicant's representatives have a concern that, if it turns out that the Court does not have jurisdiction because relief sought originally was not within the exercise of the judicial power of the Commonwealth, then it might turn out that the entire proceeding was a nullity, and that the other matters that had been raised in it were not capable of determination in this Court. 6 It is essentially for that reason that it seems to me that it might be in the interests of justice to accede to the request that I transfer the matter to a State Supreme Court. While the question whether the relief sought, some of which remains in the proposed further amended application, is truly relief that can be granted by a court would still have to be determined, it would not have to be determined in the context of the exercise of the judicial power of the Commonwealth. If there were doubt about the jurisdiction of this Court from the outset, then it would be better that the parties not be required to have that doubt resolved to the disadvantage of one or other of them. 7 I confess reluctance to order the transfer at the present time. The amounts of money spent in the preparation of this proceeding for trial have far exceeded what ought to have been spent, and the transfer of the matter to another court, effectively with a new start in relation to pleadings, is something that I am very reluctant to do. Having regard to the difficulties caused by the possible constitutional issue, and by the abandonment of what might be called the elements of federal jurisdiction in the proceeding, however, I am prepared to accede to what the parties desire me to do. 8 The transfer that is sought is to the Supreme Court of New South Wales. The facility to which the licence agreement relates is in Queensland, and the respondent is a Queensland corporation. On the other hand, the respondent is represented by lawyers from Sydney. The governing law of the licence agreement is stated to be the law of New South Wales. In pleadings to date, the respondent has relied on a New South Wales statute. Accordingly, the dispute is not entirely divorced from New South Wales. In the circumstances, I think I should accede to the parties' agreed desire that the transfer should be to the Supreme Court of New South Wales. 9 On looking closely at the terms of the orders sought, I have some difficulty with those relating to costs. Having heard counsel in relation to the orders for costs, I have decided that I am willing to make the order that the applicant pay the respondent's costs thrown away by the amendment, and by the vacation of the hearing. I am not, however, prepared to make the order proposed that those costs be taxed and payable forthwith. The practicalities of such an order seem to me to defeat it. Once the proceeding is transferred to the Supreme Court of New South Wales, the file must be sent immediately by the registry of this Court to the registry of that court. The absence of the file would, effectively, defeat any attempt by a registrar of this Court to tax costs pursuant to such an order. 10 The parties have discussed the matter between themselves, and resolved it by counsel for the applicant offering an undertaking to consent to an order in the Supreme Court of New South Wales that the costs the subject of that order be assessed and paid forthwith. That the date fixed for the trial of this proceeding, 3 September 2008, be vacated. 2. 3. 4. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | jurisdiction cross-vesting whether in interests of justice to transfer proceeding by consent to state court doubt about whether judicial power of the commonwealth could be exercised proceeding may have been a nullity proposed amendment to remove federal element from proceeding costs thrown away by reason of amendment proceeding transferred to state court whether court should order that costs be taxed file to be forwarded to state court courts and judges practice and procedure |
2 The first issue is whether it should be stayed, pursuant to s 7(2) of the International Arbitration Act 1974 (Cth) (the IA Act). An alternative foundation for the stay application, based upon s 53(1) of the Commercial Arbitration Act 1984 (Vic) was not pressed at the hearing. 3 The second issue, which requires determination only if a stay is refused, is whether the applicant is entitled to summary judgment pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) on its claim for a declaration that the respondent is obliged to accept all purchase orders submitted by the applicant pursuant to an Exclusive Distribution Agreement (the Agreement) between the applicant and the respondent of 15 May 2007 during the first year of the term of the Agreement, and that its obligation to do so is not conditional upon or otherwise circumscribed by the amount of credit insurance that the respondent has in place, and for a declaration that the respondent is in breach of cl 4.3 of the Agreement. Under the Agreement, the respondent appointed the applicant as its exclusive distributor of Airwell products (air conditioners) in Australia and New Zealand for a period of three years. That period commenced on 1 July 2007. 5 The applicant, for its part, agreed not to import or sell or promote any competing products, other than its existing business products or further refinements of those products, during that period. The applicant was to submit purchase orders to the respondent, and the respondent was obliged to accept such purchase orders within two days except in defined circumstances. The applicant was obliged to meet minimum volumes of sales, specified at $A20m in the first year. The applicant was granted extended credit terms of 180 days for the first year of the Agreement, and reduced credit terms in the subsequent years. In the event that suitable insurance cannot be obtained the parties must agree on other ways of protecting payments and, in this process, the parties must act in good faith and use all reasonable endeavours to achieve a commercial outcome. On 9 September 2007 the respondent informed the applicant that it would not accept purchase orders submitted by the applicant under the Agreement due to the withdrawal of credit insurance. That led to an exchange of correspondence between the parties. 7 However, the position is that the applicant continues to assert that, during the first year of the Agreement up to 30 June 2008, it is entitled to unconditional acceptance of its purchase orders upon the credit line apparently in place at 1 July 2007. The respondent for its part maintains that it is not obliged to accept such purchase orders because credit insurance for the first year of the term of the Agreement is not fully in place. It has refused to accept the purchase orders submitted by the applicant since about 6 September 2007. 8 On 16 October 2007, the applicant instituted these proceedings claiming declarations concerning the proper construction of the Agreement, in particular for a declaration that the respondent is obliged to accept purchase orders submitted by the applicant pursuant to the Agreement in the first year of the term, and that the respondent's obligation is not conditional upon or otherwise circumscribed by the amount of credit insurance that the respondent has in place during that year, and consequently that the respondent by its conduct is in breach of the Agreement. It also seeks a declaration in the alternative that the respondent has engaged in conduct that is misleading or deceptive or is likely to mislead or deceive, in contravention of s 52 of the Trade Practices Act 1974 (Cth), and an order pursuant to s 87 of that Act restraining the respondent from rejecting any purchase order submitted by the applicant in the first year of the term of the Agreement on the ground that the value of the total sales to the applicant exceeds the amount of available credit insurance to the respondent. 9 By motion of 24 October 2007, the applicant applied pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) for summary judgment to be entered in its favour in respect of the primary declaratory relief sought as to the respondent's obligations under the Agreement and its breach of cl 4.3 of the Agreement. 10 That prompted the motion which is the subject of the first issue. On 16 November 2007 the respondent applied for an order that the proceedings be stayed pursuant to s 7(2) of the IA Act. Section 7(1)(d) of the IAA provides that s 7 applies to an agreement where a party to an arbitration agreement is a person who was, at the time when the agreement was made, domiciled or ordinarily resident in a country that is a Convention country. The respondent was incorporated in the Netherlands on 12 September 1995 and has its principal place of business in Amsterdam, the Netherlands. Section 3(3) of the IA Act provides that, in such circumstances, it is ordinarily resident in the Netherlands. There is clear evidence that the Netherlands is a Convention country. The condition (3) above is also clearly satisfied. 13 The existence of an arbitration agreement is said to emerge from cl 20 of the Agreement. The number of arbitrators shall be 1. The place of arbitration shall be Melbourne, Australia. The language of arbitration shall be English. The arbitral award shall be final and binding upon both parties. 20.3 Nothing in this Section 20 prevents a party seeking injunctive or declaratory relief in the case of a material breach or threatened breach of this Agreement. Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration. The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. If there is no obligation by agreement to submit a certain dispute to arbitration, it is apparent that in respect of that dispute there is no "arbitration agreement". See e.g. Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 ; (2006) 157 FCR 45 ( Comandate ) at [192], [235], [237], [238] and [249]; ABB Power Plants v Electricity Commission of New South Wales t/as Pacific Power (1995) 35 NSWLR 596; PMT Partners Pty Ltd v Australian National Parks and Wildlife Service [1995] HCA 36 ; (1995) 184 CLR 301 at 310. Article II cl 1 also contemplates that some only of the potential disputes between the parties may be agreed to be submitted to arbitration. That is apparent from the use of the expression quoted above. 17 The applicant contended that, in respect of the claims now made, there is no arbitration agreement and that the subject matter in issue is not capable of settlement by arbitration. 18 The question whether there is an agreement to submit a dispute about the proper meaning and operation of the Agreement in the circumstances which have arisen turns largely upon the scope and operation of cl 20.3 of the Agreement. It clearly contemplates urgent injunctive or declaratory relief, where there is a threatened breach of the Agreement. As a matter of construction, such a threatened breach of the Agreement need not be, but may be, a material breach. It also contemplates those specific forms of relief --- an injunction or a declaration --- where there is a material breach of the Agreement as well as where there is a threatened breach of the Agreement. 19 The respondent contended that cl 20.3 does no more than make it clear that an arbitrator may grant injunctive or declaratory relief, and that an arbitrator may do so without the parties going through the procedural steps prescribed by cl 20.1(a) and without the time required for those steps to be taken having to pass before arbitration. It pointed out that cl 20.3 does not expressly refer to injunctive or declaratory relief being granted by a Court. It also drew attention to cl 25 which says that the Agreement is governed by the laws of Victoria, and that "Subject to Section 20, the parties irrevocably submit to the courts of Victoria, and any courts of appeal from such courts, in relation to the subject matter of this Agreement". Thus, it submitted, cl 20 of the Agreement amounted to an arbitration agreement in respect of the present matters in issue between the parties so that the Court was obliged to stay the proceeding. That was the outcome in Elders CED Ltd v Dravo Corporation (1984) 59 ALR 206. 20 I shall shortly return to the question whether, by cl 20 of the Agreement, the parties agreed to submit such a dispute as the present to arbitration. I first briefly mention the fourth element referred to in [12] above. 21 The issue as to the proper construction and application of the Agreement in the circumstances which have arisen is, in my view, in the terms of the concluding words of the first paragraph of Art II cl 1 of the Convention, a subject matter capable of settlement by arbitration. I consider the broad approach to the meaning of that expression adopted in Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd (1979) 2 NSWLR 243 at 250; and Comandate [2006] FCAFC 192 ; (2007) 157 FCR 45 per Allsop J (with whom Finkelstein J agreed) at [235] also supports that view. The applicant did not strongly dispute that proposition. The claim for summary judgment did not include the claim based upon the alleged breach of s 52 of the Trade Practices Act 1974 (Cth), so that it may be unnecessary to determine whether that claim also is one capable of settlement by arbitration as within the compass of cl 20.1 of the Agreement. However, such a claim also has been held in a similar context --- that is, an arbitration agreement extending to disputes concerning the rights, duties or liabilities of any party --- to fall within the scope of the arbitration agreement: see e.g. per Gleeson CJ (with whom Meagher and Sheller JJ agreed) in Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 166 ( Francis Travel ); Recyclers of Australia Pty Ltd v Hettinga Equipment Inc [2000] FCA 547 ; (2000) 100 FCR 420 at [63] and [73]; and Comandate [2006] FCAFC 192 ; 157 FCR 45 per Finn J at [7]. 22 As noted, that leaves for resolution the question whether the present dispute, which as to its subject matter I find is capable of settlement by arbitration, is one which the parties have agreed to submit to arbitration. 23 The determination required is objectively to ascertain the intention of the parties, having regard to the text of cl 20 of the Agreement in the context of the whole Agreement and to the factual matrix in which the clause and the Agreement came into being: see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24 ; (1982) 149 CLR 337 at 351; Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64 ; (1984) 156 CLR 41 at 62; Bahr v Nicolay (No 2) [1988] HCA 16 ; (1988) 164 CLR 604 at 616-617. 24 Apart from the nature of the Agreement itself, there was no particular factual matrix which either of the parties agreed was of especial significance. They are unlikely to have intended that different disputes should be resolved before different tribunals, or that the appropriate tribunal should be determined by fine shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing points of argument. I respectfully agree with, and adopt, the views of their Honours. Where there is an agreement to arbitrate, there are sound commonsense and commercial reasons why the scope of the disputes agreed to be arbitrated should be robustly assessed. 25 It is a logically prior question as to whether there is an agreement to arbitrate, so as to oblige the parties to the Agreement to do so, in relation to the present proceeding. But for cl 20.3 of the Agreement, I would have little doubt that they had done so. The consideration referred to in the preceding paragraph is, in addition, a reason why cl 20 of the Agreement should be construed as a whole, including cl 20.3, and should be construed in a broad and practical way. That, however, does not relieve the Court from the task of considering cl 20 as a whole including cl 20.3. 26 Clause 20 of the Agreement indicates the circumstances in which disputes between the parties to the Agreement are to be submitted to arbitration. It could also have indicated powers agreed to be conferred upon the arbitrator. In the case of sophisticated remedies such as an injunction or a declaration, it was formerly generally thought that express conferral of power to grant such remedies upon an arbitrator is desirable: Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240; IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466 at 486 ( IBM Australia ). That is because an arbitrator is not exercising judicial power. An arbitrator exercises power conferred by agreement between the parties to the arbitration agreement, or an award or order by an arbitrator is binding on the parties by reason of their agreement: see Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1 at 14. Hence, if a party against whom an arbitrator has made an award fails to comply with the arbitrator's orders, the enforcement of the award is through proceedings in an appropriate court. 27 In that context, it is helpful to refer to cl 20.1(b). The reference to arbitration is in accordance with the Rules for the Conduct of Commercial Arbitrations of the Institute of Arbitrators and Mediators Australia. Those rules as in force at the time these proceedings commenced, were the Institute of Arbitrators and Mediators Arbitration Rules 2007 (the 2007 Rules). Rule 22.1 of the 2007 Rules provides that the Model Law shall apply to any international arbitration conducted under the 2007 Rules. The reference to the Model Law is a reference to the Model Law on International Commercial Arbitration prepared by the United Nations Commission on International Trade Law (UNCITRAL) and adopted by the General Assembly of the United Nations on 11 December 1985. Article 17 of the Model Law, as senior counsel for the respondent pointed out, is expressed as empowering an arbitrator to order any party "to take such interim measure of protection" as the arbitrator considers necessary in respect of the subject matter of a dispute. See also Pt III of the IA Act, including s 23 of the IA Act. They are sufficiently wide to encompass a declaration as to the meaning and proper operation of the Agreement in the circumstances which have now arisen. Indeed, as senior counsel for the respondent contended, in Cufone v Cruse [2000] SASC 17 Bleby J after a review of certain authorities concluded at [58] that an arbitrator generally has an implied power under an arbitration agreement to grant such rights and remedies as would have been available to a Court if the parties had sought to enforce their contract in a Court of law of appropriate jurisdiction, including declaratory relief. That decision was upheld on appeal: Cufone v Curse (sic) (2000) 210 LSJS 238; [2000] SASC 304. 28 At least in the case of declaratory relief, which would in the present circumstances reflect a necessary determination by the arbitrator of the meaning and manner of operation of the Agreement in the process of arbitration, it is clear enough that there was no need to expressly grant the arbitrator power to give declaratory relief. That power would have been implied. The same may be said about final "injunctive" relief. If the present dispute is one which the parties have agreed to submit to arbitration, depending upon the proper construction and operation of the Agreement, the respondent may have been ordered by an arbitrator to meet the purchase orders presented by the applicant from time to time up to 30 June 2008 independently of the amount of credit insurance available to it. That would necessarily follow from an arbitral determination in the applicant's favour on the issue in dispute. The power to grant injunctive relief in an arbitrator would therefore be implied where cl 20 operates as an agreement to submit a particular dispute to arbitration. See also Government Insurance Office of New South Wales v Atkinson-Leighton Joint Venture [1981] HCA 9 ; (1981) 146 CLR 206 per Mason J (with whom Murphy J agreed) at 246-247; IBM Australia 22 NSWLR 466 at 480; Rolls and Son (Produce) Ltd v J Alastair McGregor & Co Pty Ltd (1973) 6 SASR 358 at 378. As with any award of an arbitrator, if not complied with, the applicant would have had to resort to a Court of appropriate jurisdiction to enforce the award, but the character of such an order by the arbitrator is an injunctive one. 29 Apart from there being no need for cl 20.3 to expressly grant to the arbitrator powers which the arbitrator already apparently has, in respect of a dispute which the parties have agreed to be arbitrated, cl 20.3 is not expressed in terms of a grant of power to an arbitrator, or in terms of the confirmation of the grant of power to an arbitrator, to grant particular forms of relief. It does not say, as it could readily have done if that was intended, that the arbitrator, in addition to other powers granted by this clause, should have power to grant declaratory or injunctive relief; or it could have said that to avoid doubt, the arbitrator etc. There are other available ways in which cl 20.3, if intended to ensure that arbitrator has power to grant declaratory or injunctive relief, might have been clearly expressed. It does not do so. It is expressed as not preventing (i.e. preserving to) a party the right to seek injunctive or declaratory relief in relation to certain types of breaches of the Agreement. The focus on the preservation of a party's right to seek such relief is by way of contrast with, or alternative to, the arbitral procedure imposed by cl 20.1. In addition, if the parties' intention were to ensure certain forms of relief were available to an arbitrator conducting an arbitration under cl 20.1, one would expect the expression of those additional powers also to be included in cl 20.1 rather than the place they are presently found. In my view, that observation is reinforced by the content and location of cl 20.2, a clause dictating the parties' obligations under the Agreement pending the resolution of their dispute by arbitration under cl 20.1. 30 I accept the other contention of the respondent that cl 20.3 is intended to address circumstances of some urgency, whether by reason of a threatened breach or of a material breach of the Agreement. That is plain enough. But of itself that does not indicate how the parties intended to agree for urgent disputes to be addressed. And, as the present circumstances illustrate, cl 20.2 does not operate helpfully where there is a dispute as to what the parties' respective obligations are. 31 In my view, cl 20.3 should therefore be seen, at least in part, as part of the bargain between the parties as to how their disputes should be resolved where there is a "threatened breach" encompassing conduct which one party asserts amounts to a breach of a term of the Agreement and the other does not. The use of the term "threatened breach" may also encompass foreshadowed contentious conduct as well as actual contentious conduct by one party. Clause 20.3 should also be seen as part of the bargain between the parties as to how their disputes should be resolved where there is a "material breach" or an asserted "material breach" of the Agreement. There is no definition of what may constitute a "material breach". But, clearly, the present dispute concerns what may be a material breach; the respondent did not contend to the contrary. It is clearly a dispute in respect of which cl 20.2 does not operate satisfactorily as each of the applicant and the respondent considers that it is continuing, or seeking to continue, its obligations under the Agreement and that the other party is failing to do so. 32 The textual matters to which I have referred, in my view, point to the parties' agreement being to treat disputes to which cl 20.3 refers differently from the regime for arbitration specified in cl 20.1. That is not an agreement simply to skip the procedural prescription for consultation in cl 20.1(a) before arbitration, for the reasons I have given. I further consider the difference in subject matter in cl 20.1(b) and cl 20.3, and in the verb used in cl 20.3 also support that conclusion. Clause 20(1)(b) has as its subject the dispute, and it is the dispute which is referred to arbitration. Clause 20.3 has as its subject the agreement to a dispute being referred to arbitration (and the holding position prescribed by cl 20.2). It is that subject which does not prevent the parties in certain circumstances from "seeking" certain relief. That is, as a matter of grammar, the rights the parties have agreed to preserve to themselves by cl 20.3 are available, notwithstanding the arbitration agreement in cl 20.1. Clause 20.3 is not confined in its subject matter to the agreement to consultation prior to arbitration contained in cl 20.1(a). And, I think the use of the word "seeking" also contemplates, in the overall text of cl 20, proceeding in different way from referral to an arbitrator. 33 Clause 20.1(b), in the customary way, uses the term "referred to arbitration", and as I have noted above also provides for the arbitration to be conducted under the 2007 Rules. Art II cl 1 of the Convention also refers to an agreement to submit to arbitration certain differences, and Art 7(1) of the Model Law uses the expression agreement to submit to arbitration certain differences. Clause 20.3 then preserves to a party the right to seek (my emphasis) certain forms of relief in the circumstances to which it applies. It may readily be seen that the focus in cl 20.1 is upon the referral of a dispute to arbitration whereas the focus in cl 20.3 is upon the remedies available in resolution (or interlocutory resolution) of a dispute, so the particular semantic difference to which I am presently referring is only of relatively minor significance. But, putting aside the question of interlocutory relief, the need to express the entitlement of a party to "seek or ask for" (cf The Macquarie Concise Dictionary, (2 nd ed, The Macquarie Library Pty Ltd, 1988 p 899) declaratory or injunctive relief from an arbitrator is not evident. This is not a case where the applicant is seeking interlocutory relief, but I note that Art 9 of the UNICTRAL Model Law in Sch 2 to the IA Act addresses that circumstance, as well as Art 17. 34 I do not regard cl 25 of the Agreement as helpful in informing the meaning and application of cl 20 of the Agreement. It specifies the governing law of the Agreement to be the laws of Victoria, and "subject to Section 20" the parties submit to the Courts of Victoria. That reference to cl 20 of the Agreement, it seems to me, is central as to how cl 20 overall operates in relation to the present question. Counsel did not refer to other contextual matters in the Agreement which might assist in resolution of that question. 35 There is one general contextual matter which I think is significant. The Agreement was clearly the result of extensive negotiation and careful drafting. It comprises 38 clauses and two schedules, including a detailed pricing schedule, and many of the clauses are themselves broken into subclauses and then paragraphs. It is not necessary to refer in detail to each of the clauses to illustrate the thoroughness and care apparent in its terms, and in the commercial negotiations leading to them. There is no real scope to conclude that the parties were not alert to the nuances of their expressed agreement. I think that point is significant when determining the scope of the arbitration agreement in cl 20 of the Agreement. 36 The analysis of the structure and wording of cl 20 of the Agreement has indicated that the preserved entitlement of a party under cl 20.3 (in circumstances in which applies) is not one which is confined to seeking declaratory or injunctive relief from an arbitrator in an arbitration. To that extent, I reject the contention of the respondent. However, as I noted earlier, in construing a clause of an agreement such as cl 20, I should adopt a robust and commonsense view in determining what the parties have agreed, or more explicitly the extent to which they have agreed to submit their disputes to arbitration. One might ask rhetorically why they may have chosen different means of dispute resolution, or why in their commercial bargain they might (as the applicant contends) have chosen separate forms of dispute resolution depending upon the nature of the relief sought, or indeed where a party seeks declaratory or injunctive relief, why the circumstances in which such relief might be sought are so widely expressed (threatened or material breaches). Senior counsel for the respondent described the width of cl 20.3 as enabling "a coach and horses" to go through it. 37 It is easy to say that the Court should adopt a commercial commonsense approach to the construction of the parties bargain: see Antaios Compania Naviera SA v Salen Rederierna AB (The Antaios) [1985] AC 191 at 201 per Lord Diplock; Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70 ; (2001) 210 CLR 181 at 198. But it does not flaunt business common sense that the parties, having agreed upon arbitrating their disputes, should nevertheless agree upon an optional alternative dispute resolution process --- by way of court proceedings --- in certain circumstances. There is no inherent commercial reason why certain disputes where declaratory or injunctive relief is sought should not be agreed to be determined by a court. There is nothing to suggest such resolution would or should be less speedy or less efficacious or more expensive. Particularly where the parties have demonstrated such care in arriving at, and expressing, their bargain, the syntactical and semantic analysis of cl 20 as a whole should not be ignored because it suggests a preserved alternative but limited dispute resolution process by court proceedings. The availability of such access to the courts would not defeat the commercial purpose of the agreement; indeed it may serve it; cf per Kirby J in Corumo Holdings Pty Ltd v C Itoh Ltd (1991) 24 NSWLR 370 at 378. I am mindful that, cl 20.3 does not expressly refer to circumstances seeking from a court (my emphasis) declaratory or injunctive relief. But for the reasons already given, in my view, it indicates that in respect of certain forms of dispute where particular relief is sought the arbitration obligation specified in cl 20.1 and recognised in cl 20.2 is a qualified one. I therefore decline the application to stay the proceeding. 40 The general nature of the Agreement is set out above. I shall not repeat it. The term of the Agreement is three years, commencing on 1 July 2007, there being no evidence of any other agreed commencement date: see cl 19.1. 41 I infer from cl 7 of the Agreement that the parties negotiated carefully about payment terms generally, and in particular that in the course of striking their bargain the issue of the respondent having insurance for any credit line to be provided to the applicant was also the topic of negotiations. Clause 7.5 permits the termination of the Agreement at the second and third years of the term of the Agreement if the applicant by the commencement of either of those times has been unable to satisfy the requirements of an insurer proposing to provide to the respondent credit insurance in respect of the credit line agreed to be provided during that term of the agreement. Clearly, too, the assurance that the applicant would be able to meet its liabilities to the respondent under its line of credit was important: clause 5.2 specifies the minimum volume of sales to be purchased by the applicant from the respondent. 42 The details of the negotiations leading to cl 7.4 in the Agreement are not necessary to refer to. The Agreement was executed after those negotiations. Clause 7.4 commences by recording that for year one of the term of the agreement (the year commencing on 1 July 2007) "insurance is in place". 43 The evidence indicates that it was only some time later, in August 2007, that the respondent had some difficulties with the credit insurer which apparently had agreed to provide credit insurance to the respondent during the first year of the term of the Agreement. As noted, the position deteriorated to the point where the respondent from about 6 September 2007 said that it would no longer accept the applicant's purchase orders, or at least would not do so unless adequate credit insurance or some other protection for the credit line it offered to the applicant was in place. 44 I note that the unmet purchase orders presented by the applicant to the respondent to about 16 October 2007 are of the order of about $A4.25 million. 45 The applicant's contention, in the undisputed circumstances, is that neither cl 7.4 nor any other clause of the Agreement entitles the respondent, during the first year of the term of the Agreement, to decline to meet the applicant's purchase orders. That is because, it contends, the change in circumstances by the apparent withdrawal during that year of the credit insurer of the applicant's line of credit is not an event which gives such a right to the respondent. 46 The respondent contends that cl 7.4 entitles it to insist upon credit line insurance being in place for the whole of the first year of the term of the Agreement, and alternatively that the position is not so clearly in the applicant's favour that summary judgment should be entered. 47 I commence my consideration of the respective contentions by noting that there may be cases where summary judgment is appropriate even though that requires careful consideration of a detailed contract: see per Barwick CJ in General Steel Industries Inc v Commissioner for Railways (New South Wales) [1964] HCA 69 ; (1964) 112 CLR 125 at 129-130. 48 It is necessary to note that the provision of terms of credit by the respondent and, on the other hand, the obligation of the applicant to make timely payments in accordance with the Agreement are clearly set out and are respective obligations independent of any credit insurance secured by the respondent. Clause 4 deals with the process of the applicant submitting purchase orders to the respondent, and of the respondent accepting and meeting them. Clause 4.3, if it operates in the present circumstances, obliges the respondent to accept and meet purchase orders. That is one of the asserted obligations of the respondent which it is presently declining to meet, and concerning which the applicant seeks declaratory relief. Clause 5, as noted earlier, obliges the applicant to purchase a minimum volume of the respondent's products in each year of the term. Clause 6 deals with prices and rebates. 49 Clause 7 deals generally with payment terms. Clause 7.1 prescribes payment for each purchase order 90 days from the relevant bill of lading, but in the first three years of the term of the Agreement the payment terms are extended: for the first year, payment is required only 180 days from the bill of lading, although interest at 1% runs on each 30 day period after the standard 90 day payment term; for year two of the term, the extended credit is for 150 days and for year three it is 120 days, again with the same interest obligation. Failure to meet payments within the specified time entitles the respondent to terminate the Agreement: cl 7.2 (see also cl 19.3 and cl 19.5(a)). The term of the Agreement is three years, but it may be extended at annual pauses by agreement. Clause 7.1 suggests the parties contemplated extension of the term beyond three years to be a realistic prospect. 50 Clauses 7.4 and 7.5 deal with the respondent securing credit insurance in respect of the credit line granted to the applicant. They are not expressed as being tied to either the obligation of the respondent to accept and meet purchase orders or to the obligation of the applicant to pay for goods ordered. The operation of cl 7.4 is expressly confined to the second and third years of the term, and it qualifies the obligation of the respondent to grant the credit line it agreed to provide to the applicant in those years. It primarily obliges the applicant, in respect of the second and third years of the term, to satisfy "the requirements of an insurance provider" so that the respondent can arrange suitable credit insurance. There is no such obligation imposed upon the applicant in respect of the first year of the term. It also imposes a secondary obligation on the applicant if suitable insurance cannot be obtained during those years of the term: to agree on other ways of "protecting payments" with the respondent; and both the applicant and the respondent must act in good faith in doing so. Clause 7.4 thus recognises that the credit line agreed to be provided by the respondent is a conditional one only in respect of the second and third years of the term of the Agreement. It does not oblige the applicant to secure credit insurance for the respondent at all, although in respect of the second and third years of the term the applicant must satisfy the requirements of a credit insurance provider. It obliges the respondent to seek such insurance within a prescribed time, and (consistently with cl 7.4) the applicant to satisfy the requirements of the potential credit insurance providers. Clause 7.5 also provides for the consequences of the parties being unable to secure credit insurance in respect of the second or third years of the term: the respondent is entitled to terminate the Agreement (see also cl 19.3). It does not provide for termination of the Agreement if, for some reason, credit insurance satisfactory to the respondent lapses during the first year of the term. 52 Clause 19 dealing with the term and termination also does not provide for termination of the Agreement if the credit insurance in place at the commencement of the term (and said to be for "year 1") for some reason lapses. There is no obligation on the part of the applicant under the Agreement which the respondent asserts it has not met, and which might entitle it to terminate the Agreement. Clauses 4.3 and 7.1, for the reasons I have given, operate independently of cl 7.4 of the Agreement in respect of the first year of the term. 53 In my view, the fact that the credit insurance in place for the first year of the term, apparently to the satisfaction of the parties at the time of the Agreement, has for some reason been withdrawn, or partly withdrawn, at least by one of the insurers does not relieve the respondent from its obligations under the Agreement. It is unclear why that difficulty has arisen; that is left as a matter of speculation. There is no indication from the respondent as to whether it has rights to enforce the insurance agreement against the insurer. There is no suggestion that the applicant has acted in any way to affect the insurer's attitude. The respondent has not made any suggestion that the Agreement, by the events which have happened, has been frustrated. It has made no suggestion that the Agreement, and in particular cl 7.4, does not reflect accurately the bargain between the parties, so that in response to the applicant's claim it might seek some form of rectification of the Agreement or any other form of equitable relief. It has not argued that any other obligation on the part of the applicant should be implied into the Agreement in a form which might disentitle it from the relief it seeks in the events which have happened. It argued only that the Agreement, including cl 4.3 and cl 7.1 and cl 7.4, on its proper construction does not oblige it to accept and meet the applicant's purchase orders during the first year of the term because, for some unidentified reason, the credit insurance it had in place for the first year of the term has been withdrawn or partly withdrawn. For the reasons I have given, I reject that argument. 54 I have therefore reached the firm view that the respondent has no reasonable prospect of successfully resisting the claim. 2. The respondent has, by its conduct in refusing to accept purchase orders submitted by the applicant, breached cl 4.3 of the Agreement. | international arbitration act 1974 (cth) agreement provides for arbitration of disputes but also provides that the agreement does not prevent a party from applying for declaratory or injunctive relief in certain circumstances dispute in those circumstances where declaratory relief sought whether agreement obliged parties to submit the dispute to arbitration in those circumstances construction of arbitration clause in agreement application to stay proceedings refused arbitration clause whether arbitration clause obliged parties to submit to arbitration when declaratory or injunctive relief sought construction of arbitration clause application for summary judgment agreement to supply goods on receipt of purchase orders credit terms provided supplier procured credit insurance but credit insurer withdrew whether supplier entitled to decline to meet purchase orders summary judgment whether appropriate to construe contract to determine whether supplier had no reasonable prospect of success in declining to meet purchase orders where supplier's credit insurance in respect of credit line given to purchaser had been withdrawn or reduced arbitration contract contract practice and procedure |
WDP operates in Western Australia providing pathology and medical diagnostic services to doctors, hospitals and commercial clients. Dr Reading became a partner in 1989. There are currently 11 such partners. 2 The central elements of her complaint are that in about 2005 WDP adopted a 'differential remuneration' policy that involved different levels of remuneration for partners. Dr Reading says that an attempt was made to reduce her remuneration but she stopped this from occurring. Dr Reading contends that the structure is 'open to gross unfairness and corruption' and is a fertile ground for discrimination to occur. She points to various instances where she says that her male counterparts have received more favourable financial consideration than she has. Dr Reading cites other examples of discrimination in the form of discriminatory work hours and rosters involving very heavy and stressful duties, denial of her request for part-time work, being forced to work fulltime or to resign, being allocated duties that were normally performed by junior staff, being unfairly treated on leave allocations and being excluded from social activities conducted by male partners. 3 Dr Reading also points to the lack of opportunities for higher duties such as the position of head of the department, being undermined professionally and being subjected to intimidation about work performance, flexibility requests and work hours. 4 She claims damages against all respondents. 6 The first respondent by motion dated 11 June 2008 sought to strike out the application brought by Dr Reading pursuant to O 11 r 16 of the Federal Court Rules (the Rules) or alternatively sought orders that Dr Reading be required to file a points of claim. When the matter was last before me, I directed that Dr Reading file a points of claim designed to clearly set out precisely what unlawful acts she relied upon in support of her cause of action. The first, fifth and tenth respondents now seek an order that certain paragraphs of Dr Reading's points of claim be struck out. In the alternative, those respondents seek an order that the applicant file an amended points of claim. 7 Dr Reading clearly feels aggrieved. On the other hand, the proceedings which Dr Reading has pursued have become complex and costly for all of the respondents. Serious allegations are made. To some extent the procedural difficulties can be attributed to the fact that Dr Reading is acting in person. The determination of these motions does require a balancing. On the one hand there are the respondents' concerns as to exposure to serious accusations against them (and the cost in defending themselves in relation to those accusations). On the other hand there is a need to exercise some restraint as to the expectations of a litigant in person in relation to law and procedure. 8 The dispute must be, at least on its face, highly amenable to the benefits of mediation. Where such a complaint is made, the Commission must refer it to the President of the Commission (s 46PD). If a complaint is referred to the President, the President must inquire into it and attempt to conciliate it. The President in turn is empowered to terminate a complaint on any one of a number of grounds set out in s 46PH of the HREOC Act. One of those grounds is that the President is satisfied that there is no reasonable prospect of the matter being settled by conciliation (s 46PH(1)(i)). In circumstances where the President decides to terminate a claim, the President must notify the complainants in writing of that decision and the reasons for it (s 46PH(2)). There is no suggestion in these proceedings that the Commission has not carried out its functions in accordance with the obligations under the HREOC Act. 10 Where a termination of that nature has occurred, there is provision under s 46PO of the HREOC Act for an application to be made to this Court or to the Federal Magistrates Court. (2) The application must be made within 28 days after the date of issue of the notice under subsection 46PH(2), or within such further time as the court concerned allows. (2) The other Orders of these Rules apply, so far as they are relevant and not inconsistent with this Order, to a proceeding in the Court alleging unlawful discrimination. The relevant provisions for the purposes of Dr Reading's complaint are those set out in s 17 of the SDA which deals with discrimination in partnerships. Under s 31A, the Court is empowered to give judgment for a respondent to a proceeding where the Court is satisfied that the applicant has no reasonable prospect of successfully prosecuting a proceeding. In considering whether a party has a reasonable prospect of success, the Court need not be satisfied that the proceeding is hopeless or bound to fail (s 31A(2)). It may be thought, in those circumstances, that the purpose of the enactment of s 31A was to relax the rigours of the test imposed by the High Court in General Steel Industries [1964] HCA 69 ; 112 CLR 125 as to the necessary circumstances in which a proceeding may be struck out summarily: Jewiss v Deputy Commissioner of Taxation (2006) 65 ATR 222 and White Industries Australia Ltd v Commissioner of Taxation [2007] FCA 511 ; (2007) 160 FCR 298. So much is supported by the Attorney-General's second reading speech on the Migration Litigation Reform Bill 2005 (Cth) which was the legislative vehicle which introduced s 31A. It is appropriate that this provision is of general application. It will be a useful addition to the courts' powers in dealing with any unsustainable case. It is contended for Dr Armstrong and Dr Latham that a plain reading of s 46PO of the HREOC Act makes it clear that as a precondition to the accrual of jurisdiction by this Court, the complaint made in the Court must be limited to persons who were respondents to the terminated complaint before the Commission. 19 Dr Armstrong and Dr Latham were not named as respondents to the complaint in the Commission. It follows, they say, that the Court has no jurisdiction to hear Dr Reading's application against them. Section 46PO does not provide for a general statutory cause of action available to anyone who may have been at any time affected by the unlawful discrimination. The statutory cause of action is only available to those who made the complaint or on whose behalf the complaint was made. It only lies in respect of the subject matter of the complaint to the Commission. Importantly, for the purpose of this appeal, it only lies against the respondents to the terminated complaint. Also importantly, the application commencing the proceeding upon the cause of action must be brought within 28 days after the date of issue of the s 46PH(2) notice, or such later time as the Court allows. 19 The intention is to limit the complaint which is to be brought to the Court to the same complaint as was made to the Commission by the same complainants and against the same respondents. It is easy to understand why that is so. The intention is to ensure that the Commission is always the filter for claims of unlawful discrimination before they are brought to the Courts, unless the President is satisfied that the complaint involves a matter of public importance that should be considered by the Federal Court or the Federal Magistrates Court. In acting as that filter, the President attempts to conciliate every complaint of unlawful discrimination which is not lacking in substance and which has not been otherwise adequately dealt with or cannot be effectively dealt with by another statutory authority: s 46PH(1). 20 The provisions briefly summarised above clearly assume that there is a respondent to the relevant complaint. Under s 3 of the Commission Act, respondent in relation to a complaint means the person or persons against whom the complaint is made . Clearly enough, therefore, when a complaint is lodged pursuant to s 46P of the Commission Act, the complaint must be against a person. A person, of course, may be an individual or some other entity that has legal personality. That is to say, there must be someone to respond to the complaint, being the person whose acts, omissions or practices are said to be unlawful under, relevantly, the Discrimination Act. That is not surprising having regard to the requirements of s 46PF that the President attempt to conciliate the complaint. The President must be able to identify a legal person who could participate in such a conciliation. First, a complaint must have been terminated. Secondly, the President must have given notice under s 46PH(2). If both those events occur, then an affected person, as defined in the Commission Act, may bring a proceeding in the Federal Court of Australia or the Federal Magistrates Court alleging unlawful discrimination against the respondents to the terminated complaint. The section does not authorise an affected person to bring a proceeding against anyone other than a respondent to the terminated complaint. Section 46PO(3) makes it clear that the unlawful discrimination that is alleged in the proceeding must be the same as the unlawful discrimination that was the subject of the terminated complaint or must arise out of the same acts, omissions or practices that were the subject of the terminated complaint. Thus, it is a condition of s 46PO that the application that is authorised by s 46PO be brought against the respondent to the complaint. 22 The notice and letter terminating the complaint and giving the President's reasons make it clear that Dr Armstrong and Dr Latham were not respondents to the complaint before the Commission. I find the complaint substantiated. I declare that the respondent Dr Federick Toben, representing the Adelaide Institute, should remove the contents of the Adelaide Institute web site from the World Wide Web and not re-publish the content of that web site in public elsewhere. On the contrary, the President at all times, while acknowledging correspondence from Mr Grigor-Scott, referred to the 'Bible Believers' Church' or the 'Church' as the respondent to the complaint. As indicated above, there is no legal entity known as Bible Believers' Church. 23 Dr Reading herself acknowledges in her claim, Dr Armstrong and Dr Latham left the practice in April 2006 and were certainly not members of the Partnership at the time Dr Reading brought the complaint before the Commission in December 2006. 24 The proposition raised by Dr Reading, however, is that by naming WDP as the respondent in the Commission, she effectively encompassed Dr Armstrong and Dr Latham even though at the time of lodging her complaint they were no longer partners of WDP. 25 Order 42 of the Rules would permit the action to have been commenced against WDP. The extent to which, if any, joint and several liability may or may not apply as between parties would then be determined by substantive law including legislation governing the dealings of partnership in the context of potential liability, inter alia, under the HREOC Act. It is true that one who sues partners in the name of their firm is in reality suing them individually just as much as if the names of the partners were all set out: Western Bank of City of New York v Perez, Triana & Co [1891] 1 QB 304 at 314 per Lindley LJ. The members of the partnership do not form a collective whole, distinct from the individuals who make up the partnership, Rose v Federal Commissioner of Taxation [1951] HCA 68 ; (1951) 84 CLR 118 at 124. So as to avoid the difficulty of naming all the members of a partnership that sues or is sued, court rules commonly provide that a partnership may sue or be sued in its firm name, and that when a partnership is so sued, the service of one partner shall be the service of all partners. 26 However, Dr Armstrong and Dr Latham were not members of WDP at the date of the complaint. The surrounding facts appear to make it clear that the complaint was against the members of the Partnership as it was constituted at the date of the making of the complaint rather than against previous partners of the firm against whom (in the case of Dr Armstrong and Dr Latham), no specific complaint was raised. It had always been open to Dr Reading to join such retired partners by name if it was intended that the complaint should be raised expressly against them but she did not do so. 27 Dr Reading submits that because complaints to the Commission included incidents which date from mid-2005 to December 2006, Dr Armstrong and Dr Latham are responsible for any unlawful character of those incidents as they were partners at the time. It is contended that in effect Dr Armstrong and Dr Latham were respondents of the Commission claim even though they were not named in that capacity. She relies in effect upon two matters to support that contention. First, Dr Reading relies on a number of documents referred to in her affidavit of 24 June 2008 in which references are made to Dr Armstrong and Dr Latham. One is a letter from Dr Reading's then solicitors dated 27 November 2006 to the Partnership. In that letter can be found references to Dr Armstrong and Dr Latham. Apparently a letter in similar terms was made available to Dr Armstrong and Dr Latham. That reference, in my view, does not, without more, amount to those persons being respondents in the Commission. In Dr Reading's complaint lodged with the Commission electronically on Sunday, 31 December 2006, she describes circumstances which had ensued over a period of time saying that the events being complained about were 'long standing last 2-3 years' and 'worse this year January to December'. Again there is no specific reference to Dr Armstrong and Dr Latham in this letter but Dr Reading would rely on the fact that the period in respect of which the complaints were raised, encompasses in part a period in which they were members of the Partnership. In another document, an email dated Tuesday, 31 October 2006 the position is the same. There is no specific reference to Dr Armstrong and Dr Latham in that email but the complaints which it raises, while not descending to specifics in any detail, does make reference to her long period of tenure as a partner. 28 The other general proposition advanced by Dr Reading is that Dr Armstrong and Dr Latham assisted with the investigation by the Commission of her complaints after the complaint was lodged. Again however, answering the Commission's questions, giving assistance and providing information do not amount to the same thing as being a respondent to the complaint. 29 It is clear in my view that the communications to which I have referred above including Dr Reading's email of 31 October 2006 and the letter sent on her behalf on 27 November 2006 were directed to the then current members of the Partnership. Not only had Dr Armstrong and Dr Latham ceased to be members of that Partnership in April 2006, but it was contended for them, without objection, that they were never parties to the Partnership Deed which is referred to in the 27 November 2006 letter. 30 Dr Armstrong and Dr Latham point to the fact that even if the complaint filed in the Commission was intended to be directed to Dr Armstrong and Dr Latham as well as WDP, there is no suggestion that they were served with a copy of the complaint, that they instructed the firm of solicitors representing WDP (they have instructed other solicitors), that they accepted any responsibility for or paid any contribution to WDP's legal expenses or otherwise participated or had any involvement in opposing the complaint. 31 In my view there is no basis for a conclusion that Dr Armstrong and Dr Latham were individual respondents to the Commission proceedings. Indeed, the conclusion can only be to the contrary. 32 Dr Reading has proposed in recognition of the fact that WDP alone was the respondent in the Commission that she would amend her application in this Court so as to delete the reference to the individual respondents. In doing so, she makes it clear that she apprehends that they would remain personally liable but acknowledges that the proceedings in this Court may be issued only as against the respondent in the Commission. The proposal she raises to remove Dr Armstrong and Dr Latham from the list of individual respondents in these proceedings does not address the fundamental jurisdictional point of whether or not they, as individuals, were respondents to the Commission complaint and thus whether they are now amenable to the jurisdiction of this Court in these proceedings. They were not respondents. The only appropriate solution is to allow the application of Dr Armstrong and Dr Latham for the proceedings against them to be dismissed pursuant to s 31A of the Act. Dr Reading accepts, as I understand it, that Dr Ruba did not in any real practical, or personal sense participate in any allegedly unlawful conduct, indeed to the contrary, that she was supportive of Dr Reading. It is also clear that Dr Ruba had ceased being a partner long before the complaint was filed in the Commission. It is by no means clear that she was a partner at the time of any alleged breach or breaches by other partners. 34 There was no formal motion in relation to Dr Ruba but it will be clear, no doubt, from my reasons that in my view she should not have been joined to the proceedings. Similar observations may be made in respect of the ninth respondent. 36 It is desirable to retrace the history a little to consider the arguments relevant to this motion. As has been outlined, on 31 December 2006 Dr Reading filed a complaint against WDP in the Commission alleging discrimination on the grounds of sex. 37 Following the lodging of the complaint, WDP through its solicitors received correspondence from the Commission advising of the complaint. This was constituted by a letter of 22 June 2007 and advising that the complaint alleged sex discrimination in a partnership under the terms of the SDA. I note that both parties have attempted to resolve this complaint, however, to date the parties have not been able to resolve Ms Reading's concerns. Therefore, I am writing to you to seek a response in relation to Ms Reading's complaint. Ms Reading states that she is a senior partner of the Partnership and has been with the Partnership for nearly 20 years. Under the HREOC Act , the President is required to inquire into complaints and attempt to resolve complaints by conciliation. Enclosed with this letter is information on the Commission's complaint procedures including specific information on the conciliation process. Conciliation is a process conducted to effect a settlement of the complaint that is mutually acceptable to all parties. If you wish to discuss possible resolution of this complaint by conciliation, please contact the officer who is handling the matter for me on the phone number provided at the end of this letter. At this stage, I am seeking your assistance as part of my inquiry into the complaint, I therefore request a response to the allegations in general. Please provide details of Ms Reading's partnership history with the Partnership including details in relation to her position, duties and dates of service. Please provide all relevant documentation including a copy of the partnership deed. 2. What are the hours Ms Reading is required to work? What are the hours Ms Reading's male colleagues are required to work? If Ms Reading is required to work longer hours than her male colleagues, what are the reasons for this? In particular, please comment on Ms Reading's claim that she is required to work longer hours than her male colleagues. Please provide all relevant documentation. 3. What is Ms Reading's rate of pay? Is Ms Reading paid less than her male colleagues? If so, what are the reasons for this? Please comment on Ms Reading's claim that she is paid less than her male colleagues, including male colleagues who are junior to her. Please provide all relevant documentation. 4. Did Ms Reading apply to work a four day week? If so, what was the outcome of her request? If Ms Reading was denied the opportunity to work a four day week, what were the reasons for this? Do some of Ms Reading's male colleagues work a four day week? If so, what are the reasons for this? Please provide all relevant documentation. 5. Has Ms Reading been requested to perform junior staff duties? If so, what duties was she asked to perform and what were the reasons for this? Have any of Ms Reading's male colleagues been requested to perform junior staff duties? If so, what duties were they asked to perform and what were the reasons for this? Please provide all relevant documentation. 6. Did Ms Reading make any complaint (verbal or written) to the Partnership about the alleged events described in her complaint? If so, please advise to whom the complaint was made and whether any action was taken to address the complaint, including what steps were taken to investigate the complaint and the outcome of this. Please provide copies of any relevant documentation. 7. Please provide an outline of the steps taken by the Partnership to promote a work environment that incorporates its obligations under the SDA. Please provide details of any sex discrimination policies and procedures adopted by the Partnership and the date these were adopted. As indicated above, under the HREOC Act , the President is required to investigate this complaint and, where appropriate, try and resolve the complaint by conciliation. If the matter cannot be settled or is terminated on some other ground, the complainant may then make an application to the Federal Court of Australia or the Federal Magistrates' Court for the court to hear the allegations of unlawful discrimination. It may be necessary for me, in carrying out the President's statutory functions, to provide your response, or relevant parts of it, to the complainant or to include your response in a report to the Court if the matter is not conciliated or is terminated I would appreciate your response within twenty-one (21) days of receipt of this letter. If you have any questions about this matter please contact ... on ... (direct), who is handling this matter on the President's behalf. Thank you for your cooperation. I will not repeat that complaint in full but I observe that the 22 June letter from the Commission was clearly giving only a synopsis of the original complaint. 39 As also outlined above, after an investigation was conducted, on 10 April 2008 the President of the Commission terminated the complaint pursuant to s 46PH(1)(i) of the HREOC Act on the ground that there was no reasonable prospect of the complaint being settled by conciliation. 40 Subsequently, Dr Reading filed a Form 5 and Form 167 as prescribed by O 81 of the Rules seeking damages from the Partnership and the other named respondents on the basis of unlawful discrimination. 42 Although O 81 of the Rules governs applications alleging unlawful discrimination, other Orders of the Rules also apply to such applications providing they are not inconsistent with O 81 (O 81 r 4(2)). While an application under O 81 is not a pleading in the strict sense ( Thomson v Orica Australia Pty Ltd [2002] FCA 939 and Sheikholeslami v Brungs [2007] FCA 556) , nevertheless, it remains a fundamental requirement of procedural fairness that any respondent should be provided with a claim which clearly and concisely sets out allegations against the respondent with sufficient particularity to permit a defence: Banque Commerciale S.A., en Liquidation v Akhil Holdings Ltd. [1990] HCA 11 ; (1990) 169 CLR 279 at 286. 43 Pursuant to O 81 r 5 of the Rules an applicant pursuing a claim under the HREOC Act in this Court is required to do so pursuant to a Form 167. The prescribed Form sets out various questions which are designed to be answered by an applicant. 14 What remedy are you asking Court for? The document is extremely comprehensive but is in more of a combined form of an unsworn affidavit and submissions rather than a pleading. It also contains some very general remarks which do not articulate precisely a date or dates on which the alleged unlawful acts occurred and which members of WDP were involved. The document contains what might be described as argument rather than simply a list of facts and particulars. 45 Making all the reasonable allowances for a litigant in person, the fact remains that any respondent attempting to deal with this application would suffer real prejudice in recognising the case he or she is to meet in terms of a concise statement of facts and particulars. 46 It was for that reason that on the last directions hearing that I directed that Dr Reading file a more succinct points of claim. 47 On 7 July 2008, Dr Reading filed her points of claim. This document is also very lengthy. It is some 45 pages. It is, however, an improvement on the original claim in terms of clarifying the areas of her complaint. 48 In both its original submissions and in subsequent submissions developed after receipt of the points of claim, the first, fifth and tenth respondents have raised the concern that much of the material set out in each of those documents includes reference to allegations which are not the same or not the same in substance as the matters in the terminated complaint. It is also said that they do not rise out of the same or substantially the same acts, omissions or practices the subject of the terminated complaint. 49 Under the points of claim, on the other hand, there are not only references to sections of the legislation which are said to be relevant to Dr Reading's complaint but also detailed submissions on those topics. Dr Reading makes the point that she is not precluded by pleading rules from pleading matters of law. Ordinarily pure assertions of law should not be pleaded --- Middlesex County Council v Nathan (1937) 2 KB 272; Re Vandervell's Trusts (No 2) [1974] 3 WLR 256. The exception to this is when doing so clarifies the case already pleaded by reference to material facts: Allstate Life Insurance Co v ANZ Banking Group Ltd [1994] FCA 636. It is common to raise a point of law when there is a point of law which if decided in one way is going to be decisive of the litigation: Everett v Ribbands (1952) 2 QB 198 at 206 but this is usually in a defence, not in a statement or points of claim. Nor does the unlawful discrimination alleged in the application arise out of the same (or substantially the same) acts, omissions or practices that were the subject of the terminated complaint. 51 The first, fifth and tenth respondents complain that the most significant of the deficiencies in the points of claim is that despite the order made on 25 June 2008, the points of claim does not identify the dates or approximate dates of the alleged unlawful conduct. Clearly this is important as partners come and go, that is, retire, join and/or reconstitute the partnership. Dr Reading admits that she is unable to recall dates of circumstances which occurred perhaps three years ago. But nevertheless the stipulation of dates within a reasonable period, is clearly required so as to enable the respondents to respond to the allegations. 52 Also omitted from the points of claim is sufficient identification of which of the partners of the Partnership participated in the allegedly unlawful conduct in any sense. 53 In my view, these deficiencies are fundamental and are much more significant than the complaint which is raised that the points of claim contains reference to decided cases, is more in the nature of submissions and contains lengthy citations of sections from the SDA. 54 The most serious category of deficiency is that the substance of the claims goes beyond the claims in the Commission --- if not to the full extent claimed by the Partnership, then nevertheless, quite significantly. It was in relation to that complaint that she contended that she had been 'constructively dismissed'. She contends that this is covered by item 4 in the original notice of dispute dealing with the allocation of annual leave during school holidays and how preference was given to Dr Trown. 59 As to the fourth point concerning absence of help in shifting offices upstairs, she says again that being specific this complaint was 'actually included early on in the notice of dispute that was submitted to the Commission and they considered that'. 60 Dr Reading makes the same submission concerning the fifth matter identified by the first, fifth and tenth respondents concerning sexually explicit conversations. Dr Reading says that this complaint was identified in par 8 on p 16 of the notice of dispute. This complaint in my assessment is not one that was at the heart of the many matters raised before the Commission. The essence of those allegations was in relation to financial equality and work equality issues arising by reason of breaches of the SDA. This particular complaint was not raised by the Commission nor pursued at all after a brief initial passing reference by Dr Reading. It will be struck out. 61 As to par 6, concerning victimisation, Dr Reading says that she has included victimisation because it was a breach of the HREOC Act which caused her great stress and financial loss in terms of the fact that she was refused sick leave entitlements until she withdrew the application from either the Commission or these proceedings and she was threatened with expulsion from WDP. In my view, the victimisation claim should not be maintained and will be struck out. I do not believe such a claim can be discerned within the topics raised with the Commission. 62 The remaining claims, that is the 1 st to 4 th category of claims, in my view can stand, at least, in substance. The Commission itself did not quote all of the claims which were made by Dr Reading to it but rather sought input from WDP in relation to a requirement to work longer hours than male colleagues, being paid less than male colleagues, being denied the opportunity to work a four day week and being requested to perform junior staff duties. There is no evidence that Dr Reading complained to the Commission that it had failed to adequately identify the essence of her complaints. It would follow from this that in my view the following paragraphs should be struck out, pars 419, 425-442 / 444-446 / 450-459. The application against the third and fourth respondents is dismissed. 2. There will be leave to file and serve within 6 weeks of this order a fresh amended points of claim. 3. In relation to any complaint of breach of the Human Rights and Equal Opportunity Commission Act 1986 (Cth), specific dates and specific persons are to be either identified or not pleaded. 4. The topics that have been struck out as going beyond the complaints raised in the Commission are not to be pleaded again. 5. Any submissions from any party in relation to costs is not to exceed two pages in length and is to be filed and served within 10 days. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | written complaint lodged with human rights and equal opportunity commission alleging unlawful discrimination termination of complaint pursuant to s 46ph of the human rights and equal opportunity commission act 1986 (cth) application made to this court for relief pursuant to s 46po of the hreoc act different parties named to complaint in part different conduct the subject of the terminated complaint question of striking out claims based on different parties and the different conduct summary judgment application and strike out application relevant principles for each claim against non-parties to hreoc complaint before the commission struck out elements of claim which were not the same or arising out of the same or substantially the same acts also struck out leave to amend human rights practice and procedure |
The text of entered orders can be located using eSearch on the Court's website. The agreement was made on behalf of Great Wall by the second respondent, Mr Frank Capocchiano. The substance of the agreement was that, in return for providing $200,000 towards the purchase by Great Wall of a property known as 10 Yallah Road, Yallah ( the Yallah Property ), Mr Rafeletos would become a 20% shareholder of Great Wall and would be appointed as a director of Great Wall. It is common ground that an agreement was made, although its precise terms may be unclear. Mr Rafeletos seeks relief in the nature of specific performance of the agreement or, in the alternative, damages for its repudiation. However, the respondents say that, on 29 March 2002, Mr Rafeletos resiled from the agreement and that the agreement that was made is no longer operative. Mr Rafeletos disputes that assertion. Ms Daniella Capocchiano, Mr Capacchiano's daughter, was originally joined as a respondent, apparently because she was, at the time of the making of the arrangements that are in issue, a shareholder of Great Wall. However, no relief was sought against her and on 30 April 2009, the proceeding was dismissed as against her. As I have said, Great Wall and Mr Capocchiano admitted that an agreement along the lines described above was made. Accordingly, the proceeding has been conducted on the basis that the primary evidentiary burden is borne by the respondents. That is to say, the respondents have the burden of establishing that the agreement of March 2002 came to an end consensually on 29 March 2002. However, Mr Rafeletos continues to bear the onus of establishing any entitlement to relief, assuming that the respondents fail to establish that the agreement came to an end consensually. The first prayer for relief in the original application, filed on 19 December 2007, was for an order, pursuant to s 175 of the Corporations Act 2001 (Cth) ( the Corporations Act ), that the share register of Great Wall be rectified so as to record that 50% of the issued share capital of Great Wall be registered in the name of Mr Rafeletos. Further ancillary relief was also claimed. In the statement of claim originally filed on behalf of Mr Rafeletos, the following relevant allegations were made: On 3 March 2008, an amended statement of claim was filed on behalf of Mr Rafeletos. The amended statement of claim asserted that the alleged agreement was made in July 2002, although all of the other relevant events were alleged to have occurred in March 2002. It seems that the reference to July 2002 was an oversight. In their defence to the original statement of claim and to the amended statement of claim, both Great Wall and Mr Capocchiano admitted the making of an agreement between Mr Rafeletos and Great Wall in March 2002 concerning the acquisition of a 20% share in Great Wall by Mr Rafeletos. Mr Capocchiano and Great Wall also admitted that Mr Rafeletos was not appointed a co-director of Great Wall and that he was not transferred a 50% shareholding in Great Wall. However, they asserted that, " by an accord and satisfaction " on 29 March 2002, the day after exchange of contracts for the purchase of the Yallah Property by Great Wall from Tobiano, Mr Rafeletos had " withdrawn his acceptance of the offer " made by Mr Capocchiano on behalf of Great Wall. The defence of Great Wall and Mr Capocchiano made the following additional allegations: From 29 March 2002 onwards, the loan repayments and interest on a $200,000 loan paid by Mr Rafeletos to Tobiano had been paid or met by Mr Capocchiano or Great Wall. On or about 28 May 2004, Mr Capocchiano, at the request of Mr Rafeletos, directed his daughter, Sarah Capocchiano, who held a property at Koonawarra ( the Koonawarra Property ) on trust for Mr Capacciano, to transfer the Koonawarra Property to DG Empire Pty Ltd ( DG Empire ) for nil consideration, by way of repayment of the $200,000 advanced by Mr Rafeletos on 28 March 2002. On 18 August 2008, after the hearing had begun, counsel for Mr Rafeletos foreshadowed a further amended statement of claim, in which the reference to July 2002 as the date of the alleged agreement would be changed to March 2002. However, that proposed further amended statement of claim was not filed. On 19 August 2008, in the course of the hearing, Mr Rafeletos foreshadowed a second further amended statement of claim, in which alternative allegations were made of an agreement in March 2002 between Mr Capocchiano, on behalf of Great Wall, on the one hand, and Mr Rafeletos, on the other, whereby Mr Rafeletos would acquire an interest in the shareholding of Great Wall by the issue and allotment of additional shares in Great Wall. In one set of allegations, it was alleged that Mr Rafeletos would acquire a 50% interest in Great Wall by the issue and allotment of 20 shares, on the one hand, or that he would acquire a 20% interest by the issue and allotment of five shares, on the other hand. In a second set, it was alleged that Mr Rafeletos would acquire a 50% interest by Mr Capocchiano transferring ten of his existing shares or alternatively would acquire a 20% interest by Mr Capocchiano transferring four of his existing shares. Otherwise, the terms of the alleged agreement were the same as had been alleged in the earlier pleadings. On 28 August 2008, a further amended statement of claim was filed, in which agreements along the lines foreshadowed on 19 August 2008 were alleged in the alternative. On 1 October 2008, the solicitors for Mr Rafeletos wrote to the solicitors for the respondents, saying that Mr Rafeletos had instructed them to accept the allegation that Mr Rafeletos was to be given only 20% of the issued shares in Great Wall. Thereafter, the proceeding has been conducted on the basis that the alternative allegations in the further amended statement of claim, that Mr Rafeletos was to acquire a 50% interest in the shareholding of Great Wall, would not be pressed. However, although the terms of the letter of 1 October 2008 were announced in open court, no further amendment was made to remove the claims concerning a 50% interest. On 9 October 2008, Great Wall and Mr Capocchiano filed a defence to the further amended statement of claim of 28 August 2008. In that defence, they denied the allegation of an agreement whereby Mr Rafeletos was to acquire 50% of the shareholding in Great Wall, but admitted that an agreement had been made in March 2002 by Mr Capocchiano, on behalf of Great Wall, that Mr Rafeletos would acquire a 20% share in Great Wall and would be appointed a director of Great Wall in return for the payment of $200,000 " towards the purchase of " the Yallah Property. In that defence, they also repeated the allegation that, by an accord and satisfaction made on 29 March 2002, Mr Rafeletos resiled from the agreement that they admitted was made in March 2002. They also repeated the allegations concerning the payment of the $200,000 loan and the transfer of the Koonawarra Property to DG Empire. The hearing was adjourned on several occasions to enable additional evidence to be called. On 2 May 2008, the proceeding was fixed for hearing on 18 and 19 August 2008 on the basis that it would take two days. The hearing began on 18 August 2008 and continued on 19 August 2008, when it was adjourned part heard to 14 October 2008. The hearing was adjourned to 16 October 2008 and continued part heard on 17 October 2008. The hearing was then adjourned for further hearing on 4 and 6 November 2008. On 4 November 2008 the hearing was adjourned to 28 November 2008 for directions when it became apparent that further relevant witnesses may be called. The hearing resumed on 28 April 2009 and continued on 29 and 30 April 2009. The net effect is that the time from the commencement of the hearing until the evidence and submissions finally ended was inordinately long. Such delays make it difficult not only for the parties but also for decision making. The Commission's records show that Mr Capocchiano was the only director of Great Wall at all relevant times, having been appointed in September 1997. In March 2002 Mr Capocchiano was 69. He had three daughters and lived with his wife on a property at Albion Park Rail. He conducted a tiling business from premises situated at Port Kembla. The records of the Commission show that, at relevant times, the issued share capital of Great Wall was 20 shares, which were held, as to 16, by Mr Capocchiano beneficially, and, as to four, by Daniella beneficially. Daniella's address in the Commission's records is the same as her father's. There was no evidence as to the circumstances in which Daniella became a shareholder of Great Wall. The character and personality of Mr Capocchiano are such that it is more likely than not that Daniella became a shareholder because her father wanted her to be a shareholder and that she acted as a shareholder in accordance with her father's directions. The essential issue in the proceeding is whether or not there was a consensual abandonment of the agreement made in March 2002 between Mr Rafeletos and Great Wall. The only direct evidence relevant to that issue was the evidence of Mr Capocchiano, which was given in chief by affidavit and in cross-examination. It is undesirable to have written evidence as to oral communications that are in dispute. However, since the events in question, Mr Capocchiano has suffered a stroke, which has rendered him partly immobile and otherwise caused him some disability. For that reason, counsel for Mr Rafeletos did not object to the reading of an affidavit sworn by Mr Capocchiano as to the critical matters. There was, however, extended cross-examination of Mr Capocchiano. Mr Rafeletos also gave evidence on that question, denying any abandonment of the agreement. His evidence was given entirely orally. Daniella also gave evidence, as did non-party witnesses called by the parties. The evidence of those other witnesses is relevant only to the extent that it tends to corroborate or undermine the respective versions of events advanced by Mr Capocchiano and Mr Rafeletos. None of the evidence was directly corroborative of the evidence of Mr Capocchiano or Mr Rafeletos as to the abandonment of the agreement. Much of the further evidence adduced related to the conduct of the parties after March 2002 in relation to the development of the Yallah Property. In short, Mr Rafeletos argued that, pursuant to the agreement, he had a significant involvement in the development of the Yallah Property. Mr Capocchiano, on the other hand, vehemently denied that Mr Rafeletos had anything to do with the Yallah Property after March 2002. While it is common ground that an agreement relating to the acquisition by Mr Rafeletos of 20% of the issued capital of Great Wall was made, it has been necessary to explore the evidence concerning the making of the agreement. The conflicting evidence may have a bearing on the credibility of Mr Rafeletos and Mr Capocchiano. As I have indicated, Mr Capocchiano suffers from a disability. English is not his first language and his English is not perfect. However, I have no reason to doubt that he comprehends English perfectly well and, although his disability may have affected his speech, he had no difficulty in understanding questions and in making himself understood in the course of cross-examination. Mr Capocchiano was regularly belligerent and offensive in the course of giving evidence. On a number of occasions, it was necessary to direct him to control his outbursts. Lack of self control is not, of itself, a matter that would necessarily go to the discredit of a witness. However, his evidence in cross-examination and his demeanour generally displayed a distinct reluctance to give frank and forthright answers. I am not confident that I can accept any evidence given by Mr Capocchiano that is not corroborated. Mr Rafeletos observed greater decorum than Mr Capocchiano in giving his evidence. However, a singular aspect of his case casts doubt upon his credibility. As I have indicated, Mr Rafeletos first claimed that there was an agreement that he be given 50% of the share capital of Great Wall. After defences had been filed admitting an agreement relating to 20% of the share capital of Great Wall, Mr Rafeletos amended the statement of claim to allege in the alternative an agreement involving 20%. Ultimately, he abandoned his claim for 50%. In his evidence in chief, Mr Rafeletos gave evidence that the proposal that was put to him by Mr Capocchiano was for Mr Rafeletos to make an investment of $300,000 in return for becoming a director and a 50% shareholder in Great Wall. He made no mention in his evidence of an agreement concerning a 20% share. Mr Rafeletos also said that he originally applied to St George Bank for a line of credit of $300,000 and filled out an application accordingly. His evidence was that, following a discussion with his father, he decided to limit his investment to $200,000 and that he then revised his application to St George Bank. However, the only material produced on subpoena by St George Bank indicated only an application for $200,000 and no application for $300,000. I shall describe in more detail the evidence relating to St George Bank and the circumstances relating to an advance made by it to Mr Rafeletos. However, the significance of that matter, in assessing the credibility of Mr Rafeletos, is that none of the evidence corroborates his assertion that the initial discussion that he engaged in with Mr Capocchiano involved the acquisition of 50% of the share capital of Great Wall. There is nothing to corroborate any reference to 50% or to providing $300,000 towards the purchase of the Yallah Property. As I have said, Mr Rafeletos subsequently abandoned any claim to 50% and relied on the admission made by Great Wall and Mr Capocchiano. In the circumstances, I would not be disposed to accept the uncorroborated evidence of Mr Rafeletos. Great Wall and Mr Capocchiano relied upon the evidence of Mr David Yates, a surveyor, as corroborating Mr Capocchiano's assertions that, after the alleged withdrawal of Mr Rafeletos from the arrangement in March 2002, Mr Rafeletos had very little to do with the development of the Yallah Property. Mr Rafeletos, on the other hand, relied upon the evidence of Mr Michael Le Serve, a real estate agent, who acted for Great Wall in connection with the proposed sale of lots in the subdivision of the Yallah Property. Neither witness was impressive. Mr Yates gave the impression of being deliberately uncooperative and that he would not offer any assistance to the case advanced by Mr Rafeletos if he could avoid it. He has a continuing relationship with Great Wall and Mr Capocchiano that casts some doubt on his objectivity and reliability. I would not regard his evidence as in any way disinterested. Mr Le Serve, on the other hand, has been involved in a litigious dispute with Great Wall and Mr Capocchiano, such that it is likely that he would be reluctant to give any assistance that might advance their case. In addition, Mr Le Serve has been under medical care in circumstances that may cast some doubt on the reliability of his recollection. Mr Rafeletos also relied upon the evidence of his father, Mr Costa Rafeletos, to rebut the case advanced on behalf of Great Wall and Mr Capocchiano that Mr Rafeletos wished to withdraw from the proposed arrangement because of advice given by his father. Mr Costa Rafeletos could not be treated as a disinterested witness. It is highly significant that Mr Murray Reid, a chartered accountant, who acted for Grant Wall, was not called to give evidence. Mr Capocchiano confirmed that Mr Reid is still practising and could have given evidence if required. Mr Reid might have given evidence as to the instructions he received from Mr Capocchiano, or someone else for that matter, pursuant to which he prepared documentation intended to give effect to the arrangements between Great Wall and Mr Rafeletos. He could also have given evidence as to any instructions he might have been given not to proceed with the proposed documentation. More significantly, Mr Reid could have given evidence concerning a discussion that Mr Rafeletos claimed to have had with him in 2007. Mr Rafeletos says that he first ascertained that he had not been made a director and shareholder of Great Wall when he had a discussion with Mr Capocchiano following Mr Capocchiano's stroke in December 2006. I shall return to that matter later. However, I consider that an inference can be drawn from the failure by Great Wall and Mr Capocchiano to call Mr Reid that his evidence would not have assisted their case. Ultimately, as I understand the position, it is common ground that any agreement made by Mr Rafeletos was made with Great Wall. That is the primary position adopted by Mr Rafeletos and that is the admission made by Great Wall and Mr Capocchiano in their defence. I propose to say something about the contract between Great Wall and Tobiano for the purchase of the Yallah Property. Next it will be necessary to examine the evidence as to the arrangements made in the discussions between Mr Rafeletos and Mr Capocchiano. A significant matter relevant to the resolution of the dispute is the way in which the parties treated the sum of $200,000 that was in fact provided by Mr Rafeletos in connection with the payment of the deposit under the contract for the purchase of the Yallah Property by Great Wall. On 25 January 2002, Thomas & Bisley, solicitors, wrote to Great Wall enclosing a draft contract for the sale and purchase of the Yallah Property by Tobiano to Great Wall for the sum of $1,600,000. The contract provided for the payment of a deposit of $300,000. The letter said that, on exchange of contracts, a bank cheque for $300,000 payable to Tobiano would be required. On 3 March 2002, ANZ Bank wrote to Great Wall outlining an indicative proposal for a term loan facility of $1,800,000 for the purpose of purchasing the Yallah Property and assisting in development costs. The security for the facility was to be a registered first mortgage over the Yallah Property, a fixed and floating charge over the assets of Great Wall, an unlimited guarantee by Mr Capocchiano and a charge over an unidentified term deposit of $175,000. There was no evidence that that proposal was pursued. It may be that the terms of the security were unacceptable to Mr Capocchiano. However, that is a matter of speculation. On 12 March 2002, Nigel Duncan & Associates, solicitors, who were acting for Great Wall, wrote to Thomas & Bisley. After referring to correspondence that is not in evidence, the letter said that Great Wall would proceed with the purchase "as originally negotiated and amended as per" another letter that is not in evidence. The letter of 12 March 2002 also referred to an application to Wollongong City Council concerning the Yallah Property that was "presently on foot" and asked whether Tobiano was agreeable to a special condition authorising Great Wall to proceed with that application. Thomas & Bisley responded on 15 March 2002, attaching a concept subdivision proposal and saying that Tobiano understood that that proposal had been initiated by consultation with Wollongong City Council. They said, however, that no development application had yet been lodged in respect of the Yallah Property. The letter requested exchange of contracts immediately, if the matter was to proceed. Mr Rafeletos met Daniella in 2000, when she was working as a waitress at a nightclub. At that time, Daniella lived in Caringbah and was about to move to Mortdale. Mr Rafeletos and Daniella developed a close personal relationship, which lasted until 2007. Mr Rafeletos said that Daniella told him in early March 2002 that her father was interested in investing in a property on the South Coast and that he was looking for a partner to go in with him 50/50 to buy the property. Mr Rafeletos replied that he would be happy to go and inspect the property. Mr Rafeletos said that, on a Sunday in early March 2002, he picked up Daniella from her apartment in Mortdale and they travelled down to the Yallah Property, where Daniella introduced Mr Rafeletos to her father. Daniella said that she first introduced Mr Rafeletos to her father at his tile shop at Port Kembla. She gave evidence that her father and Mr Rafeletos had a discussion at their first meeting. However, she did not participate in that discussion and did not know what was said. In his affidavit, Mr Capocchiano also said that he first met Mr Rafeletos at the premises at Port Kembla where he operated his tiling business. The location where Mr Rafeletos and Mr Capocchiano first met is not of itself material. However, the difference in the versions given by the witnesses highlights the difficulty in reconciling their competing versions of events and in forming a judgment, on the balance of probabilities, as to what actually happened. In any event, it is clear that there was a discussion between Mr Rafeletos and Mr Capocchiano on a Sunday in March 2002. Mr Cappochiano told him that he had an existing company that would buy the property but that he was unable to come up with a deposit or other money to fund the purchase. He told Mr Rafeletos that he was seeking an investment of $300,000 in return for which he would make Mr Rafeletos a director and a 50% shareholder of Great Wall. He told Mr Rafeletos that the Yallah Property was 90 odd acres and that there was a development application in respect of a 19 block subdivision. He said that, after selling 18 blocks, they would have the last lot, which was 27 acres with a factory and offices on it, for free. Mr Capocchiano told Mr Rafeletos that the factory was an ex abattoir called "Illawarra Meats". He said that he had done business with Illawarra Meats and that the abattoir closed down in 1986. Mr Rafeletos said that he asked Mr Capocchiano why they would not buy the property in their own personal names. Mr Capocchiano responded that it was safer to buy in the name of his company, which was an established company. He said that it was much safer personally in case anything went wrong so that they would not lose their existing assets. In response to an enquiry as to the structure of Great Wall, Mr Capocchiano told Mr Rafeletos that he was the sole director and that he and Daniella had shares in Great Wall. He said that Great Wall had no other assets. Mr Rafeletos said that Mr Capocchiano told him that, if he invested in Great Wall, he would be a director with him and he and Mr Rafeletos would be the only shareholders. He told Mr Rafeletos that he would organise with his accountant, Mr Murray Reid, for Mr Rafeletos to become a director and shareholder. Mr Rafeletos told Mr Capocchiano that he would be able to come up with the $300,000. Mr Capocchiano told Mr Rafeletos to be very quick as there was a lot of interest in the Yallah Property. Mr Rafeletos said that Mr Capocchiano then proceeded to point out to him where the subdivision would take place and where the boundaries of the lots would be. Mr Rafeletos said that they spent about 45 minutes walking around the Yallah Property looking at the lots. Mr Rafeletos said that, after they had walked over the Yallah Property, he told Mr Capocchiano that he loved the property and that he wanted it. He said that he would organise finance for the deposit and that Mr Capocchiano should organise with Mr Reid to make him a director and shareholder of Great Wall on the following Monday morning. Mr Rafeletos said that, at the end of the meeting, he asked Mr Capocchiano why he needed help to buy the property. Mr Capocchiano replied that he wanted a partner because the banks were unable to give him any finance because of his age. Mr Rafeletos said that he then returned to Sydney. Daniella did not accompany him. Mr Capocchiano gave a somewhat different version of the first meeting. He said that Mr Rafeletos was introduced to him by Daniella as her boyfriend and that Mr Rafeletos told him that he had heard that Mr Capocchiano was purchasing a property for development and the he would like to be involved. Mr Capocchiano replied that he was buying the property for his family in the name of Great Wall. He said that Mr Rafeletos told him that he wanted to be involved in the purchase. Mr Capocchiano said that he told Mr Rafeletos that he would give him a 20% share of Great Wall for $200,000. He said that Mr Rafeletos accepted and said that he also wanted to be a director of Great Wall. Mr Capocchiano said that he agreed to that. Thus, it is common ground that a discussion took place in March 2002 as to the terms and basis upon which Mr Rafeletos might acquire an interest in Great Wall and become a director of Great Wall. The difference is as to whether the sum of $300,000, rather than $200,000, was mentioned and whether Mr Rafeletos was to acquire a 50% interest, rather than a 20% interest, in Great Wall. Neither version casts any light on the basis upon which Mr Rafeletos was to contribute either $300,000 or $200,000. For example, it is by no means clear whether either of them turned his mind to the question of whether: Mr Rafeletos said that, on the following day, Monday, he made an appointment with St George Bank, with which he had been dealing for some years, to discuss how he could come up with the finance that he needed to enable him to contribute to the deposit. He said that he attended a meeting with an officer of St George Bank, at which he asked for an advance of $300,000 on the security of a block of units at Lakemba that he owned. He said that he filled out an application form, signed the form and left it with the bank officer. Mr Rafeletos said that, on the Monday afternoon, he went to the home of his father, Mr Costa Rafeletos, and told his father that he had met Mr Capocchiano, who wanted him to go into partnership with him in the purchase of the Yallah Property, for a price of $1,600,000. He told his father that he had to come up with $300,000 to become a partner in Great Wall, the company that was going to buy the Yallah Property. He also told his father that Mr Capocchiano had promised that he would become a director of Great Wall. He told his father that he had been to St George Bank and offered his Lakemba units as collateral for a loan to provide the deposit. Mr Rafeletos said that his father told him that, if he was going in as a partner, he should not be putting up the full $300,000 required for the deposit. He asked why Mr Capocchiano could not put up $150,000 and Mr Rafeletos put up the other $150,000. Mr Rafeletos told his father that that was the deal he had done with Mr Capocchiano, who could not get finance because of his age. Mr Rafeletos senior asked how someone who wants to buy a property for $1,600,000 could not come up with $150,000 as a deposit. Mr Rafeletos said that, after the discussion with his father, he spoke to St George Bank again and said that he wanted to borrow $200,000 instead of $300,000. Despite the assertion by Mr Rafeletos that he had originally applied to St George Bank for a loan of $300,000, the only material produced by St George Bank in answer to a subpoena was an application for a loan of $200,000 dated 19 March 2002 signed by Mr Rafeletos. Mr Rafeletos said that, subsequently, Mr Capocchiano telephoned him and asked how he was going with the finance. Mr Rafeletos replied that everything was okay and that he should have an answer by the end of the week. He did not say that he told Mr Capocchiano at that stage that he was only asking for $200,000. Mr Rafeletos said that in reply to his enquiry as to how he was going with the directorship, Mr Capocchiano responded that it was all fine but that they needed to push the finance because they were running out of time. Mr Rafeletos said that, a day or so later, he rang St George Bank and enquired about progress. He was told that approval had been given for $200,000. Mr Rafeletos then rang Mr Capocchiano and said that he had finance for $200,000. He said that Mr Capocchiano responded that that was okay and that he would get the other $100,000. He told Mr Rafeletos to organise a cheque for $200,000 and come down to Port Kembla with it. Mr Rafeletos asked Mr Capocchiano what name he should put on the cheque and he was told to put the name "Tobiano Pty Ltd" as the payee of the cheque. On 20 March 2002, St George Bank wrote to Mr Rafeletos saying that, as at that date, loan funds totalling $200,000 were available to him " for settlement of your home ". The letter stated that monthly repayments in the sum of $1,157 would be due on the twentieth of each month and that the repayments would be automatically deducted from a St George Bank savings account in the name of Mr Rafeletos. Mr Rafeletos then went to the St George Bank branch in Kings Cross and collected a cheque for $200,000 payable to Tobiano. He travelled down to Mr Capocchiano's tile shop in Port Kembla, where he met Mr Capocchiano and gave him the cheque. Mr Capocchiano put the cheque in his pocket. Another of Mr Capocchiano's daughters, Loredana, also gave Mr Capocchiano a cheque, which he also put in his pocket. Mr Rafeletos and Mr Capocchiano then went in Mr Capocchiano's car to the office of Nigel Duncan & Associates in Wollongong Mall. Mr Rafeletos said that they went into the office of Nigel Duncan & Associates, where Mr Capocchiano introduced him to a solicitor. Mr Capocchiano told the solicitor that Mr Rafeletos was his partner in, and a co-director of, Great Wall. He said that they were there to exchange contracts on the Yallah Property. The solicitor said that he had no knowledge that the exchange was to take place that day. Mr Capocchiano then made a telephone call to someone in which he said that he had $300,000 in his pocket and that he wanted to give it to someone to exchange contracts on the Yallah Property. The solicitor then placed a contract in front of Mr Capocchiano and Mr Rafeletos and they both signed it. Mr Capocchiano's evidence was not inconsistent with Mr Rafeletos so far as the events of that day are concerned. He confirmed that he and Mr Rafeletos travelled together to the offices of Nigel Duncan & Associates in Wollongong, where they each signed a contract for the sale and purchase of the Yallah Property by Great Wall from Tobiano. The front page of the contract, which is in evidence, confirms that each of them signed it. On 26 March 2002, Mr Reid sent to Great Wall documentation designed to effect changes to the capital structure of Great Wall. Mr Reid said that the documents must be signed and be returned to him before any changes could be made. The documentation included forms of consent to act as a director of Great Wall by Mr Rafeletos and by Loredana Capocchiano. In addition, there were draft minutes of a meeting of the directors of Great Wall showing Mr Capocchiano, Mr Rafeletos and both Daniella Capocchiano and Loredana Capocchiano as directors present at the meeting. Thus, the author of the document appears to have assumed, apparently erroneously, that Daniella was already a director of Great Wall. The notification was completed in handwriting. It showed the number of shares issued as 100. However, that figure was altered from 80. The notification stated that the amount paid, or agreed to be considered as paid, was $1.00 per share. There was no mention of any premium, such as would be expected if the sum of $200,000 was to be paid to Great Wall as consideration for the allotment of shares. The documentation prepared by Mr Reid tends to corroborate Mr Capocchiano's version of the discussion with Mr Rafeletos concerning the latter's involvement in Great Wall, to the extent that it indicates that Mr Rafeletos would have a 20% interest, rather than a 50% interest. On the other hand, no mention is made of the nature of the proposed contribution of $200,000 by Mr Rafeletos in connection with the purchase of the Yallah Property. That would suggest that the $200,000 was to be treated as a loan by Mr Rafeletos to Great Wall. In any event, the documentation remained unsigned and incomplete. The principal issue in the proceeding is why nothing further was done. While the evidence given by Mr Rafeletos explained why the original proposal of $300,000 was reduced to $200,000, it did not explain why the documentation referred only to a 20% interest rather than a 50% interest. Further, there was no explanation as to the proposal for Loredana to acquire shares in Great Wall and become a director. On 2 April 2002, Nigel Duncan & Associates wrote to Mr Capocchiano confirming that, in accordance with his instructions, contracts for the purchase of the Yallah Property by Great Wall had been exchanged on 28 March 2002. The letter pointed out that the contract provided for the balance of the purchase price, of $1,300,000, to be paid on or before 28 March 2003. In addition, the letter pointed out that Great Wall was to have the benefit of possession of the Yallah Property from the date of exchange and was to pay interest on the balance of the purchase price outstanding from that date. On 2 April 2002, a bank cheque for the sum of $200,000, which was issued by St George Bank, was deposited for the credit of an account in the name of Tobiano. The amount of that cheque was debited to an account in the name of Mr Rafeletos with St George Bank. Thus, it is clear that $200,000 of the $300,000 deposit paid by Great Wall on exchange of contracts to purchase the Yallah Property was provided by Mr Rafeletos. The basis upon which the sum was provided is by no means clear. There is no contemporary objective evidence to support the assertion by Mr Rafeletos that he originally asked St George Bank for $300,000 and then varied his application. It is more probable that he only ever asked St George Bank for an advance of $200,000, following discussion with his father and renegotiation with Mr Capocchiano. It may be that there was originally a discussion along the lines that Mr Rafeletos would procure funding in the sum of $300,000 to enable the whole of the deposit to be paid. In return, he would receive a half share in the project, through a shareholding in Great Wall. It seems that there was some disagreement between Mr Rafeletos and his father concerning the proposed involvement of Mr Rafeletos. It may be that, following his discussion with his father, Mr Rafeletos renegotiated the bargain with Mr Capacchiano on the basis that he would procure $200,000 by way of finance in return for a 20% interest in the project. All of that, however, is pure speculation. The arrangements that were in place, following exchange of contracts for the purchase by Great Wall of the Yallah Property, are curious, whichever version of the events given by the parties is to be accepted. On the one hand, if the agreement was abandoned, it is curious that Mr Rafeletos would permit the sum of $200,000 to remain as a loan to Great Wall, without any security for repayment and without having any interest in the development of the Yallah Property. There would be no commercial rationale for Mr Rafeletos, having resiled from the arrangement, to leave an unsecured loan of $200,000 outstanding for an indefinite period on terms that were not evidenced by any writing. On the other hand, if there was no departure from the arrangement to make Mr Rafeletos a director and shareholder of Great Wall, it might be thought curious that monthly repayments in respect of the St George Bank loan were made by Great Wall or Mr Capocchiano. One might expect that, if Mr Rafeletos was to acquire an interest in Great Wall, whether it be 20% or 50%, he would be expected to provide consideration for that interest equal to its value at that time. There is no direct evidence as to the financial position of Great Wall as at the end of March 2002. In particular, there is no evidence to suggest that shares in its capital had any significant value at that time. Great Wall had its interest in the contract to purchase the Yallah Property negotiated at arms length. That contract was unlikely to have any significant value of itself. There is no evidence that the consideration payable was less than the value of the Yallah Property. It may be possible to draw an inference, from the contents of the letter from ANZ Bank that Great Wall had a deposit of $175,000. Even if such an inference were drawn, it would be offset by liabilities, resulting in minimal shareholders equity of Great Wall. Towards the end of the hearing, accounts of Great Wall as at 30 June 2004 and 30 June 2006 were tendered by Mr Capocchiano and Great Wall. Those accounts had comparative figures for 30 June 2003 and 30 June 2005 respectively. The comparative figures in the accounts as at 30 June 2004, being the figures as at 30 June 2003, show negative shareholders equity of $24,618. That is to say, they show that the liabilities of Great Wall as at 30 June 2003 exceeded its assets as at that day by $24,618. Projecting those figures backwards would give rise to an inference that, as at March 2002, there was no shareholders equity in Great Wall. One would not expect that Mr Rafeletos would pay $200,000 to acquire shares in a company that had no shareholders equity. A more commercial arrangement would have been that, in consideration of Mr Rafeletos procuring finance in the sum of $200,000, he would be given the opportunity of sharing in the proposal of acquiring, developing and selling the Yallah Property. It would be perfectly consistent with such an arrangement that, having procured the finance, and having accepted the risk to St George Bank, Mr Rafeletos would be given an interest in the development, through a shareholding in Great Wall, and that Great Wall itself would repay the loan obtained on its behalf. On balance, I consider in the state of the evidence as to the financial position of Great Wall as at March 2002, that it is more likely than not that the ultimate arrangement that was made between Mr Rafeletos and Great Wall, in the discussions between Mr Rafeletos and Mr Capocchiano, was that Mr Rafeletos would procure funding for Great Wall in the sum of $200,000. In return Mr Rafeletos would be given 20% share of the capital of Great Wall for a nominal sum. That is consistent with the documentation prepared by Mr Reid on instructions from Mr Capocchiano. The more likely arrangement, therefore, was that Mr Rafeletos was to procure finance for Great Wall, in consideration for which he would be given a proportion of its capital for a nominal sum. That is far more likely than the possibility that Mr Rafeletos would pay $200,000 as consideration for the acquisition of shares in a company that had no shareholders equity. Mr Capocchiano said that he replied that, if that is how Mr Rafeletos's father felt, he should not worry about it. He said that he would take over the loan and make the repayments. He said he would pay out the loan when he sold the Koonawarra Property. He said that Mr Rafeletos told him that he would send the details of the St George Bank Savings account to him. He said that, following that conversation, he took no further action in relation to the documentation sent to him by Mr Reid. Mr Capocchiano said that, following the conversation that he said he had with Mr Rafeletos on 29 March 2002, Mr Rafeletos has had no further involvement in Great Wall or any other of its property dealings until December 2006. Mr Rafeletos denies that he had any such conversation with Mr Capocchiano on 29 March 2002 such as Mr Capocchiano alleges in his affidavit. Costa Rafeletos gave evidence that his son never told him that he had withdrawn from the arrangement with Mr Capocchiano concerning the Yallah Property. He said that the only argument he had with his son about the proposal was an argument before the exchange of contracts. In cross-examination Costa Rafeletos said he had a disagreement with his son when he was rushing to give a cheque to Mr Capocchiano. He said that he told his son to be careful to get the right papers before he went any further. He said that his son was angry because he was delaying him in taking the cheque to Mr Capocchiano. He denied that his son ever told him that the deal was not going to proceed. A great deal of the evidence was directed to the conduct of the parties after March 2002. In particular, attention was given to the transfer of the Koonawarra Property to DG Empire. There is a question as to whether that was by way of satisfaction of any indebtedness of Great Wall in respect of the payment of $200,000. It is may be significant that the Koonawarra Property was not owned by Great Wall. I have a real doubt as to whether Mr Capocchiano had any interest in the Koonawarra Property, after it was acquired by his daughter. He said that, by 2004, he considered that the Koonawarra Property had a value in the order of $250,000 to $260,000. Mr Capocchiano said that, in April 2004, Mr Rafeletos told him that he would like to build a house on the Koonawarra Property. Mr Capocchiano said that Mr Rafeletos told him that he would get a loan to build a house and would have excess funds when construction was complete so that he would be able to pay out the St George Bank loan. DG Empire was incorporated on 3 July 2003. Its directors were, and are, Daniella and Mr Rafeletos, each of whom is also a secretary. DG Empire has twenty issued shares of $1 fully paid. Mr Rafeletos and Daniella Capocchiano each own ten shares beneficially. Under a trust deed bearing the date 14 July 2003, DG Empire is the trustee of the DG Empire Trust. The settlor of that trust was Mr Reid. The settled sum was $10. The trust deed named Mr Rafeletos and Daniella Capocchiano and any spouse of either of them and any child of either of them as both income beneficiaries and corpus beneficiaries. Under the trust deed, Mr Rafeletos was given power to appoint new or additional trustees and power to remove a trustee. There was no evidence as to the circumstances in which the trust deed was executed. It is another matter in respect of which Mr Reid might have been able to give some relevant evidence. Daniella gave evidence that, in early 2005, she assisted Mr Rafeletos in preparing a document in support of an application to St George Bank for finance for a proposal by DG Empire to acquire land at Warrawong. She said that she prepared a document, called " Statement of Position " in accordance with instructions given to her by Mr Rafeletos. Mr Rafeletos accepts that the document that Daniella says she prepared is consistent with his financial position at that time, save for a reference to a loan to Great Wall in the sum of $200,000, financed by St George Bank, as an asset of Mr Rafeletos. Mr Rafeletos denied that he gave instructions for the preparation of the document. The circumstances in which the document came to light and was tendered throw some doubt on its genuineness. While Daniella said that the document was prepared in connection with a proposed application to St George Bank for finance, the document was not produced by St George Bank in answer to a subpoena that covered such a document. It is therefore more likely than not that no such document was ever provided to St George. While Mr Rafeletos denied that he had ever seen the document before it was shown to him in cross-examination, it is not inconsistent with the arrangement that I consider it is more likely than not was put in place in March 2002, following the discussions between Mr Rafeletos and Mr Capocchiano. That is to say, it is consistent with an arrangement, under which Mr Rafeletos was to procure finance for Great Wall, that he would show the loan to Great Wall as an asset to offset his liability to St George Bank. Even if the document was prepared on the instructions of Mr Rafeletos, I do not regard it as inconsistent with the stance adopted by Mr Rafeletos in the proceeding. On 3 March 2005, St George Bank wrote to the directors of DG Empire, as trustee of DG Empire Family Trust, offering two loan facilities, being a fixed commercial loan of $1,500,000 and a variable commercial loan of $800,000. The security for the two facilities was to include mortgages over a commercial property at Warrawong owned by DG Empire and a mortgage over property located at Sussex Inlet owned by Great Wall. In addition, there were to be guarantees by Mr Rafeletos and Daniella as well as by Great Wall and Mr Capocchiano. On 15 March 2005, National Australia Bank wrote to the directors of DG Empire, as trustee for DG Empire Family Trust, agreeing to provide two facilities, being a fixed rate bill facility in the sum of $1,500,000 and a floating rate bill facility in the sum of $900,000. The security required was similar to that to be provided in connection with the St George Bank facility. There is no evidence that Mr Capocchiano was aware of the terms of those facilities or that he had ever consented to give a guarantee in respect of borrowings by DG Empire. On the other hand, an inference can be drawn that the banks were informed by the directors of DG Empire that Great Wall may be prepared to give financial assistance in connection with a borrowing by DG Empire. That may be consistent with Mr Rafeletos believing that he maintained some interest in Great Wall. In any event, it appears that neither of those facilities was taken up. It is common ground that on 28 May 2004 there was a transfer of the Koonawarra Property from Sarah Capocchiano to DG Empire. The transfer that Sarah signed in favour of DG Empire contained an acknowledgement of receipt of consideration of $200,000. However, on 10 June 2004, Mr Vic Cuoco, of Verekers, solicitors, wrote to Sarah confirming that the transfer had been completed but that no moneys had passed through the firm in relation to the transaction. The letter confirmed that any transfer money was to be dealt with directly between Sarah Capocchiano and the purchaser. The letter also confirmed that there was to be no adjustment of rates on settlement. The Koonawarra Property was a double block when initially bought. Sarah Capocchiano said that her father arranged for subdivision of the land and told her that he would like to put it in her name so that she could get a start in life. That indicates that Sarah was to be the beneficial owner. However, she said that, in 2004, Mr Capocchiano told her to transfer the Koonawarra Property to her sister and Mr Rafeletos. Sarah said that she assumed that she would be paid the sum of $200,000 at some time in the future. That suggests that she understood that she was the beneficial owner. The circumstances concerning the transfer in May 2004 from Sarah Capocchiano to DG Empire are ambiguous. At that time, it appears that a close, personal relationship between Mr Rafeletos and Daniella Capocchiano continued to exist. Further, there is no objective evidence to suggest that the transfer of the Koonawarra Property was intended to be by way of discharge of any liability of Great Wall to repay the advance of $200,000 made by Mr Rafeletos. Indeed, the transfer was to DG Empire, which was acting as a trustee. Daniella held 50% of the shares in DG Empire and was an equal discretionary beneficiary with Mr Rafeletos under the terms of the DG Empire Trust. Further, the accounts of Great Wall as at 30 June 2007 continued to show indebtedness in the sum of $110,000, the sum shown in the accounts as at 30 June 2003. I do not consider that the transfer should be taken to be by way of satisfaction of any indebtedness of Great Wall to Mr Rafeletos. Curiously, those accounts, as well as the accounts for earlier years, which were tendered later, showed a liability to Mr Rafeletos of $110,000. Mr Capocchiano proffered no explanation for such an item in the accounts. In any event, it is not inconsistent with an arrangement such as I have just described that Mr Rafeletos would be shown as a creditor. The accounts of Great Wall as at 30 June 2007 were put forward as indicating that it would be unlikely that Mr Capocchiano regarded Mr Rafeletos as having an interest in Great Wall. The accounts show a total equity of $9,031,342. Non-current assets include property, plant and equipment having a value in excess of $13 million. Apart from the Yallah Property, Great Wall was the owner, as at 2 June 2006, of four parcels of land at West Wyalong and a parcel of land at Sussex Inlet. An inference can be drawn that Great Wall continues to hold those parcels. Mr Rafeletos gave evidence that he was involved with Mr Capocchiano in the purchase of the West Wyalong property. Be that as it may, there is no evidence one way or the other as to whether any increase in value of the West Wyalong property or the Sussex Inlet property contributed to the shareholders' funds shown in the accounts of Great Wall as at 30 June 2007. I regard the evidence as entirely equivocal. It is common ground that the payments required by St George Bank in respect of the advance of $200,000 made to Mr Rafeletos were not thereafter made by Mr Rafeletos. Payments were, however, made, although the evidence is unclear as to the precise identity of the payer or the source of the funds. In his affidavit, Mr Capocchiano said that, following his conversation with Mr Rafeletos on 29 March 2002, all statements from St George Bank had been sent to him at his Albion Park Rail home and that all repayments had been made by him or by Great Wall. He said that all instalments had been paid since the first instalment due in April 2002, although three payments made on 23 July 2002, 21 August 2002 and 18 October 2002, were paid into a different St George Bank account in the name of Mr Rafeletos. Incomplete statements in relation to the account of Mr Rafeletos with St George Bank are in evidence. Those statements show credits in the sum of $1,157 on 23 July 2002 and 21 August 2002. That is the amount of the monthly repayment specified by St George Bank in its letter to Mr Rafeletos of 20 March 2002. Great Wall and Mr Capocchiano place considerable store on the fact that, following the advance by St George Bank to Mr Rafeletos, all correspondence concerning that advance was directed away from Mr Rafeletos to one or other of Great Wall and Mr Capocchiano. It is common ground that Mr Rafeletos made no repayment in respect of the loan. On the other hand, it is by no means clear from the evidence who made the repayments. In any event, for the reasons I have indicated above, that question may be equivocal. To the extent that the payments were made by Mr Capocchiano by way of advance to Great Wall, one would expect to see an item in the accounts of Great Wall showing a liability to Mr Capocchiano. The purported accounts of Great Wall as at 30 June 2007 show an item of non-current indebtedness to Frank and Italia Capocchiano as at that date of $1,383,452. However, there was no evidence as to the manner in which that debt came into existence, assuming that the accounts give a true and fair view of the financial position of Great Wall. Mr Rafeletos gave evidence that he was actively and directly involved with the development of the Yallah Property. He said that that involvement included meetings on the site. However, that evidence was denied by Mr Yates, who denied having met Mr Rafeletos before December 2006. Mr Yates was clearly involved at various times with the proposed subdivision of the Yallah Property. Correspondence dealing with the Yallah Property to which Mr Yates was a party, between June 2003 and March 2007, makes no reference to any involvement on the part of Mr Rafeletos. On the other hand, the correspondence makes passing reference to Mr Capocchiano. On any view, Mr Yates was acting on behalf of Great Wall and Mr Capocchiano was the majority shareholder of Great Wall. I consider that the correspondence in question is equivocal as to whether or not Mr Rafeletos had any involvement in Great Wall after March 2002. Mr Rafeletos also asserted that he had signed an agency agreement with Mr Tim Fitzgerald, a real estate agent, in connection with the sale of lots in the subdivision of the Yallah Property. Mr Fitzgerald was not called to give evidence and no agency agreement was tendered. As I have said, the evidence of Mr Rafeletos should not be accepted unless corroborated. However, the absence of evidence from Mr Fitzgerald does not necessarily corroborate the evidence of Mr Capocchiano. Mr Rafeletos also asserted that he was engaged in negotiations for the sale of lots in the subdivision of the Yallah Property and that he had signed transfers. None of the transfers in evidence was executed by him whether as agent of Great Wall or otherwise. On the other hand, it may be significant that, in December 2006, a transfer to a purchaser of one of the lots in the subdivision of the Yallah Property was prepared on the basis that Mr Rafeletos would sign it as a witness. He actually signed the transfer, but his name was ruled through and only the signature of Mr Capocchiano was operative. That may tend to corroborate the version of events given by Mr Rafeletos in relation to his discussion with the solicitor concerning his authority to sign documents on behalf of Great Wall. It is, however, of very minimal weight. Great Wall and Mr Capocchiano also relied on the evidence of Ms Marie Field, a real estate agent, Ms Cheryl Lappin, a planning officer with Wollongong City Council, and Mr Nathan McEwan, a solicitor, all of whom had some involvement with the development of the Yallah Property. None of them supports the evidence of Mr Rafeletos and Mr Le Serv that Mr Rafeletos had an involvement at an early stage in the sales of lots in the subdivision of the Yallah Property. Once again, that evidence is equivocal. Towards the end of 2006, Mr Capocchiano's stroke resulted in his hospitalisation. At that time, Great Wall was involved in settlement of the sale of lots in the subdivision of the Yallah Property. Mr Rafeletos said that he was told by the solicitor acting in connection with the sales that the solicitor could not accept instructions from him because he had no authority from Great Wall and was not a director of Great Wall. Mr Rafeletos said that he went straight to Mr Capocchiano to ask why he was not a director. He said that Mr Capocchiano promised that he would do what he had promised in 2002 and confirmed that he would make him a director and give him a 50% shareholding in Great Wall, which, at that stage had not occurred. He said that Mr Capocchiano told him to speak to Mr Reid. Mr Rafeletos said that he subsequently spoke to Mr Reid and told him that he was supposed to be a director from the beginning and was supposed to have 50% of the shares. He said that he told Mr Reid that Mr Capocchiano had asked him to organise the papers and to go and see him and get the share certificates rectified. Mr Rafeletos said that he subsequently spoke to Mr Capocchiano and told him that Mr Reid was preparing all the paperwork for the directorship and the 50% shareholding and that he would bring them down for Mr Capocchiano to sign. He said that Mr Capocchiano told him that was fine and that he would sign the documents as soon as Mr Reid had all the paperwork organised. Mr Rafeletos said that a couple of days later he received a phone call from Mr Reid in which Mr Reid said that he had visited Mr Capocchiano, who had had a change of mind. He said that Mr Capocchiano was not going to sign the documents. Mr Rafeletos said that he then went to the hospital again to see Mr Capocchiano, who said that he could not help because he had previous problems with a former son-in-law. Mr Capocchiano denied that such a discussion took place. It is curious that Mr Rafeletos had not taken any steps before then to confirm his position as a director and shareholder. It is significant that he says that, even then, he referred to a 50% interest. Great Wall and Mr Capocchiano also place some store on the fact that Mr Rafeletos gave no evidence of having made any attempt, prior to the end of 2006, to follow up the proposal that he be made a shareholder of, and become a director of, Great Wall. There was evidence that he became a director and shareholder of DG Empire, indicating that he had some knowledge of the formalities involved. Nevertheless, the circumstances in which that occurred were not explained and I regard that matter as equivocal. I would not regard Mr Rafeletos as someone who is familiar with the niceties of documentation relating to the internal management of a limited liability company. Evidence was adduced concerning arrangements made between Mr Capocchiano or Great Wall, on the one hand, and Mr Rafeletos, on the other hand, while Mr Capocchiano was in hospital. An account was opened with a building society on which Mr Rafeletos operated. There was considerable dispute as to whether the expenses debited to that account were expenses of Great Wall or whether the account was no more than remuneration to Mr Rafeletos for services that he provided in connection with the subdivision and sale of lots in the Yallah Property, by reason of Mr Capocchiano's indisposition. In any event, it is of some significance that, when Mr Capocchiano was unable to attend to the affairs of Great Wall, he looked to Mr Rafeletos for assistance. Having regard to the failure to call Mr Reid to rebut the evidence given by Mr Rafeletos, that even at that late stage he was to be made a director until Mr Capocchiano changed his mind, I would be disposed to conclude that the arrangements that were then put in place tend, if anything, to undermine Mr Capocchiano's evidence concerning the alleged discussion on 29 March 2002. I am not persuaded, on the balance of probabilities, that the discussion alleged by Mr Capacchiano took place on 29 March 2002. There is no defence of laches or delay. Nor is there any allegation of any acquiescence or conduct on the part of Mr Rafeletos that might give rise to an estoppel. It follows that the agreement made between Mr Rafeletos and Great Wall remained and, subject to any repudiation continues to remain on foot. Subsequently, he amended his claim to seek specific performance of the alleged agreement as well. He claims specific performance of an alleged agreement with Great Wall to give effect to the documentation enclosed with Mr Reid's letter of 26 March 2002. However, that documentation makes no mention of the sum of $200,000 that was to be provided on some basis by Mr Rafeletos to Great Wall in connection with the purchase of the Yallah Property. Alternatively, Mr Rafeletos seeks specific performance of an alleged agreement with Mr Capocchiano, whereby Mr Capocchiano agreed to transfer shares representing 20% of the issued capital of Great Wall. It is unclear whether Mr Rafeletos seeks specific performance of an agreement that involved paying $200,000, as consideration for the transfer or allotment of shares, or of an agreement that involved lending $200,000 to Great Wall unsecured. The defence filed on behalf of Great Wall and Mr Capocchiano admits the making of an agreement but does not deal specifically with the identity of the parties to that agreement. Further, the admission does not deal with the question of whether the sum of $200,000 to be provided by Mr Rafeletos was to be by way of consideration for the acquisition of a 20% interest in the issued capital of Great Wall or merely by way of finance to assist in the purchase of the Yallah Property. A fortiori , it does not deal with the question of whether, if the former, it was a payment to Mr Capocchiano for his shares or a payment to Great Wall for the allotment of new shares in accordance with the documentation prepared by Mr Reid. None of the matters to which I have just referred was addressed in substance by either party. In particular, Great Wall and Mr Capocchiano made no submission that any arrangement that was made was void for uncertainty. However, they resist an order for specific performance of the agreement that they admit was made on March 2002. As I understand their position, their defence is the alleged abandonment of the agreement immediately after contracts for the sale and purchase of the Yallah Property had been exchanged. The delay between the making of the agreement and claiming orders for specific performance is a consideration relevant to the question of the grant of specific performance. As I have said, the claim for specific performance was not made until some time after the proceeding was commenced. Even if it had been made at the time of the initial commencement of the proceeding, it was still some five years after the time for performance by Great Wall of its obligations under the agreement. It may be possible for a term to be implied that the allotment or transfer to Mr Rafeletos of a 20% interest in the share capital of Great Wall would be effected within a reasonable time after the performance by him of his side of the bargain, namely, providing the sum of $200,000 in connection with the payment of the deposit under the contract for the sale and purchase of the Yallah Property. Even so, a period of some five years elapsed before the commencement of the proceeding on 5 October 2007. The agreement, on any view, was made prior to 28 March 2007. There has been no evidence from Mr Rafeletos that he is ready, willing and able to perform any further obligations on his part yet to be performed under the agreement. On the other hand, it may be that there is very little for him to do, other than to pay a nominal sum as consideration for the allotment of shares, to agree to be bound by the constitution of Great Wall as a shareholder and to consent to act as a director. He has otherwise performed his side of the bargain, namely, the provision of finance in the sum of $200,000 towards the payment of the deposit under the contract for the sale and purchase of the Yallah Property. Evidence was adduced to show other transactions that had been entered into by Great Wall, such as the acquisition of properties at Sussex Inlet and West Wyalong. That evidence may rebut the suggestion that Mr Rafeletos had any continuing interest in Great Wall, although I consider that it is equivocal. There is no basis for a conclusion that there was a joint understanding or intention that Mr Rafeletos would share in any other venture that might be undertaken by Mr Capocchiano, either through Great Wall, or otherwise. It is by no means clear that, if Mr Rafeletos had been a shareholder of Great Wall, the acquisition by Great Wall of the West Wyalong property and the Sussex Inlet property would have occurred. They are matters that would militate against the exercise of discretion in favour of the grant of specific performance of the agreement that made in March 2002 between Great Wall and Mr Rafeletos. In all of the circumstances, I do not consider that an order for specific performance of the agreement of March 2002 is warranted. I am not satisfied that that agreement can now be performed as it would have been if shares were allotted and Mr Rafeletos was appointed as a director within a reasonable time after 28 March 2002. I do not consider on balance, that the parties would be in the same position as they would have been, had those steps been taken at that time. It follows that it is unnecessary to determine whether an order for rectification of the register of members would have been an available remedy. The intention of Mr Rafeletos and Mr Capocchiano was that Great Wall would be used as the vehicle for a joint enterprise between them. The enterprise involved acquiring the Yallah Property with borrowed funds, developing it by means of subdivision and selling lots in that subdivision, so as to generate a profit. I consider that the bargain between Great Wall and Mr Rafeletos was that, in consideration of Mr Rafeletos' procuring finance in the sum of $200,000 to enable Great Wall to pay the deposit under the contract for the purchase of the Yallah Property, Mr Rafeletos would be allotted 20% of the issued capital of Great Wall for a nominal consideration. Great Wall would thereafter discharge the obligations of Mr Rafeletos in respect of the finance that he procured. It is clear that Mr Capocchiano and Great Wall have repudiated that contract, such that it would be open to Mr Rafeletos to terminate the contract and sue for damages for its breach. That is an alternative remedy claimed by Mr Rafeletos. I consider that damages should be determined by reference to the value that 20% of the issued capital of Great Wall would have had at the date of judgment if the only activity in which Great Wall had engaged after the date of the agreement had been the acquisition, development and sale of lots in the Yallah Property. However, I am mindful of the fact that some of the conclusions that I have reached may not have been fully addressed by the parties. Accordingly, I propose to treat these findings as provisional. I propose to list the proceeding for directions for the purpose of considering the further steps necessary for determination of the quantum of damages and to hear any application for leave to make further submissions in relation to my provisional findings. I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | agreement that applicant would be provided with a 20% interest in share capital of first respondent and would be appointed as a director of first respondent in consideration of applicant providing funds towards the purchase of property by first respondent whether agreement was consensually abandoned whether grounds exist for rectification of share register as per s 175 of the corporations act 2001 (cth) whether contract repudiated by respondents giving rise to an election to terminate and sue for damages specific performance effect of delay between agreement and the claiming of orders for specific performance whether applicant ready, willing and able to perform obligations whether agreement is capable of being performed corporations contracts equity |
At the time she was worth more than half a million dollars and had at least $100,000 in her bank account. She owed the applicant, who was her only creditor, little more than $2,000. Now Ms Cross' tutor, a Deputy Protective Commissioner of New South Wales, asks the Court to set aside the sequestration order which made Ms Cross bankrupt. 2 In these reasons I will refer to the applicant as the 'Creditor', the first respondent as 'Ms Cross' and the second respondent as the 'Trustee'. That the Court review the decision of the Registrar made on 9 August 2004 to make a sequestration order. For an order that the sequestration order made by the Registrar on 9 August 2004 be set aside. Such further or other order as this Court may see fit. That the applicant [the Creditor] pay the costs of and incidental to this application. 6 As contemplated by s 35A(5), in bankruptcy proceedings O 77 r 8 of the FCR provided that an application for review must be brought within 21 days of the date of the registrar's decision. Therefore, the present application should also be seen to encompass an application for an extension of time pursuant to O 3 r 3. 7 Ms Cross did not appear before the registrar on 9 August 2005 and the FCR provide that an order made in the absence of a party may be set aside: O 35 r 7. This provides an alternative basis for the second order sought in the notice of motion and there is no time limitation on the bringing of such a motion. 8 Another way in which Ms Cross' bankruptcy might end is by annulment by the Court pursuant to s 153B of the Bankruptcy Act 1966 (Cth) ('the Act'). Mr Jones had filed notice of intention to oppose the motion. The application was made at the commencement of the hearing of the motion and the formal order of joinder is the first of the orders disposing of the motion. On 28 May 2003 the Creditor commenced proceedings in the Local Court at Kogarah against her for unpaid contributions to the Creditor's administrative and sinking funds totalling $1,813.58 and interest of $29.81. On 15 June 2003 a licensed commercial agent served Ms Cross with a Statement of Liquidated Claim. I did on [the] 15 th day of June, 2003 duly serve the defendant Isabell Jean Cross with this Statement of Liquidated Claim by delivering a true copy thereof to a male apparently not less than the age of sixteen (16) years and apparently residing at 12/28 Tullimbar Road, Cronulla being the defendant's usual place of residence. At the time of service I said to the person to be served, 'Does Isabell Jean Cross reside here? ', to which the person replied, "Yes". A writ of execution subsequently issued but remained unsatisfied. On 21 January 2004 the Creditor caused a bankruptcy notice to be served on Ms Cross. On Wednesday the 21 st of January, 2004 at 8:50 o'clock in the afternoon [sic] I did duly serve Isabell Jean Cross with the Bankruptcy Notice herein by delivering a true copy thereof, signed and dated by the Official Receiver, in a sealed envelope addressed to the debtor and placing it under the door of her residence at 12/28 Tullimbar Road, Cronulla. At the time of service I spoke with a male occupant of Unit 11 and he said to me in words to the effect [sic] , 'She's home now. ' I knocked on the door, however, no-one came to the door. I then walked to the rear of the unit and looked in from the balcony. All the lights were on inside and I observed a female sitting on the lounge. I attempted to get her attention but she refused to acknowledge my presence. I then returned to the front door and again tried knocking on the door. There was no response and I, therefore, placed the envelope containing the Bankruptcy Notice under the door. I had previously attended the address on at least seven previous occasions without success including the previous day when neighbours had again advised me that the debtor was at home and had observed her inside the unit from the balcony, however, she refused to come to the door. Mr Adrian Mueller had carriage of the matter for the Creditor's solicitors, J S Mueller & Co, and swore an affidavit in relation to the present motion. It was difficult to locate the whereabouts of the respondent in order to effect service of the creditor's petition upon her. For this reason a number of inquiries were made by my firm in order to ascertain the respondent's whereabouts and obtain further information about the respondent and her affairs. As a result of these inquiries on or about 31 March 2004 J. S. Mueller & Co. became aware that the respondent was at Sutherland Hospital. We knew she was residing at home when she was served with the bankruptcy notice. We knew she was at this stage in Sutherland Hospital. What we didn't know is how long she was going to be there or anything about that. We understood she was in the psychiatric unit. That's correct. No response was received to this correspondence. Defendant has been discharged. File has gone to medical records. He is going to try and locate file and get address where Defendant is. Ms Haragli had contacted a member of Sutherland Hospital's Records Team and obtained an address for Ms Cross' next of kin, a Mrs Smith. Mrs Smith was said to live in Victoria and to have dementia. An attempt to contact Mrs Smith by telephone was unsuccessful. We understand that you are the mother of Isabell Jean Cross who owns unit 12 in that property. We look forward to hearing from you. She advised that she is in contact with [the] debtor and confirmed that the debtor's address is at the unit. She would not provide any further information. She said that she needed [the] debtor's okay before she could do that. She refused to co-operate and would not allow me to set her up for sub-service. He is not able to recall the terms of the conversation but does recall that Ms Sanders indicated that she was a social worker from Sutherland Hospital and that Ms Cross was under the care of Sutherland Hospital at that time. Creditor's Petition. Affidavit of Truth of Statements in Paragraphs 1, 2 and 3 of Petition. Affidavit Verifying Paragraph 4 of Petition. Consent to Act as Trustee. Affidavit of Service of Bankruptcy Notice. The Respondent's social worker, Kelly [sic] Sanders (Tel: ...) has indicated that the Respondent will be released from the hospital within the next 48 hours and we therefore request that you attend Sutherland Hospital today in order to effect personal service of the Creditor's Petition upon the Respondent . On Tuesday the 13 th of July, 2004 at 12:34 o'clock in the afternoon I did duly serve Isabell Jean Cross the debtor herein with an Official copy of the Petition, being duly sealed with the Seal of the Court and signed by an officer acting with the authority of the District Registrar of the Federal Court by delivering the same to Isabell Jean Cross personally at Sutherland Hospital, Psychiatric Unit, 430 Kingsway, Caringbah. At the time of service I identified the person I served as the said Isabell Jean Cross by asking the person to be served, "Are you Isabell Jean Cross, the person referred to in this Creditor's Petition? ", to which the said person then replied, "Yes". I served the debtor in the presence of Kelly [sic] Sanders a Social Worker working with the debtor. There was no uncertainty around Ms Cross' status as a current inpatient on the Psychiatric Unit. Unfortunately my recollection of this day does not include what the Solicitor's representative said to Ms Cross or myself, or what Ms Cross or myself said to the representative in regards to the papers that had been served. I also note that at the time Ms Cross did not appear to understand the serious nature of the documents she had been handed. Despite this, I encouraged Ms Cross to seek legal advice to which she agreed, and as such we telephoned the Sutherland Office of Legal Aid and arranged for an appointment to be held on the 12 th August, 2004 at 9:30 am. Ms Cross was agreeable to attending this appointment at that time. This marked the end of my contact with her. She was unable to furnish me with any details without the consent of [Ms] Cross. She would not confirm even if there was a current order or any proceedings pending. Note from previous discussion between [Ms Haragli] and Gupta (see email 7/7/04) that Gupta won't divulge information without the consent of [Ms] Cross. There was no Legal Aid solicitor, nor was there anyone from the hospital or any of the places Mr Mueller had contacted a few days earlier. In short, there was no one to represent Ms Cross' interests. Buried in an affidavit of service was a one sentence reference to the Psychiatric Unit of Sutherland Hospital. Even if the registrar had picked up that reference, its significance would not have been immediately apparent. 28 One can only assume that at the other end of the otherwise empty bar table was Mr Bentley of JS Mueller & Co, who knew full well Ms Cross' situation. In the end a sequestration order was made against Ms Cross' estate in her absence and on the first return date of the petition. Mr Bentley cannot recall what transpired at that hearing and there is no transcript. However the irresistible inference is that the registrar was not told about Ms Cross' situation, the attempt to comply with the special rules as to service which had been inexplicably abandoned or of the message left with Ms Gupta on 6 August 2004. If the registrar had been told of any of these matters he would have undoubtedly adjourned the hearing of the petition and made directions designed to inform those who cared for Ms Cross of the proceedings. 29 Mr Michael Gregory Jones of the accounting firm Jones Condon had consented to act as trustee of Ms Cross' estate if she were to become bankrupt and so became the Trustee on 9 August 2004. The 21 day period in which the registrar's decision might be reviewed also began to run and was set to expire on 31 August 2004. 30 The evidence does not go so far as to explain what occurred in relation to Ms Cross' appointment with Legal Aid on 12 August 2004 but a chronology handed up by counsel for Ms Cross indicates that the appointment was not kept. On 16 and 30 September 2004 Ms Cross attended Legal Aid appointments in the company of an employee of Sutherland Hospital. 32 On 4 March 2005 Ms Melissa De Rooy, who was Ms Cross' occupational therapist, made an application to the Guardianship Tribunal of NSW for a Financial Management Order in relation to Ms Cross. 33 On 23 March 2005 Ms Cross had a further appointment at Legal Aid but, by that time, Ms De Rooy's application for a Financial Management Order was already on foot and it appears that Legal Aid did not see its involvement continuing beyond that time. 34 On 11 April 2005 the Guardianship Tribunal made a Financial Management Order in relation to Ms Cross pursuant to the Guardianship Act 1987 (NSW). That order provided that Ms Cross' estate was to be subject to management under the Protected Estates Act 1983 (NSW) and management of the estate was committed to the Protective Commissioner. 35 On 5 May 2005 the Office of the Protective Commissioner ('the OPC') received a letter from the Trustee. The first part of the letter refers to a 'letter of 18 April 2005' from Legal Aid regarding Ms Cross. That letter is not in evidence. The second part of the letter informs the OPC that the Trustee's solicitors in the matter are J S Mueller & Co Solicitors and that he has instructed them to apply to the Supreme Court of NSW for a replacement certificate of title for Ms Cross' home. The Trustee then states his intention to sell the home (being a unit at Cronulla) and 'apply the proceeds to pay the creditors of the bankrupt and the fees and costs of the administration. ' Finally, the Trustee asks the OPC to prepare a Statement of Affairs. 36 On 10 May 2005 Westpac Banking Corporation wrote to the OPC to advise that the balance of an account held by Ms Cross was $118,767.38 in credit. On 16 May 2005 J S Mueller & Co wrote to the OPC indicating that 'the current levy arrears and owner invoices due amount to $8,724.49 together with $691.51 interest on levy arrears'. A copy of an 'Owner Ledger' which had been received from the Creditor was enclosed. 37 At this stage it seems reasonable to assume that J S Mueller & Co was acting for both the Creditor and the Trustee. In view of this we also requested that no action be taken in respect of our client's real property. Please would you arrange to forward it as a matter of some urgency. He estimated that the total amount required to 'obtain an annulment' was $35,088.23. That estimate was subject to all Ms Cross' creditors being identified and to her having no liability for unpaid taxes. Attached to the letter is a distribution plan which records that the remuneration of the Trustee to 3 June 2005 amounted to some $13,990 and that additional remuneration was expected to amount to $5,500. We are currently investigating the circumstances in which judgment was entered against our client including the validity of service of the Statement of Claim. We put you on notice that an application to set aside the judgment that has resulted in your appointment may be made depending on the outcome of our investigations. We therefore respectfully suggest that no further action be taken to realize our client's assets. 42 On 20 June 2005 the Trustee replied. He had forwarded the OPC's letter to the 'petitioning creditor's Solicitor, J S Mueller and Co.' since, he writes, the documents which had been requested should be in the possession of that firm. In my role as trustee I am an officer of the court and must execute my duties as quickly and diligently as possible to satisfy the bankrupt's creditors. I note that currently I am unaware of the bankrupt's financial position as a Statement of Affairs... has not been lodged. He had no reason to believe otherwise. Moreover, in the face of the information that had been provided to him orally by the OPC on 17 May 2005 and confirmed by letter dated 25 May 2005 (see [38] supra), the Trustee had no reason to think that Ms Cross' liquid funds were insufficient to meet her liabilities. 44 Statements relating to Ms Cross' bank account with Westpac indicate that a withdrawal of $115,000 was made on 21 June 2005. Ms Roslyn Nash, an Estate Manager employed by the OPC, deposed to that sum being deposited into the OPC's trust account on 22 June 2005. 45 On 23 June 2005 the OPC wrote to the Trustee confirming that the OPC held in excess of $100,000 on behalf of Ms Cross and requesting the Trustee refrain from taking any further action and incurring further costs until the OPC had had an opportunity to consider Ms Cross' position in respect of the proceedings which had led to her bankruptcy. 46 Between June 2005 and November 2005 the OPC carried out its investigations and began marshalling evidence in support of an application to set aside the sequestration order, which was ultimately filed on 7 November 2005. This issue relevantly involves the next issue. The Disability Issue : Whether Ms Cross was a person under a disability for the purposes of the FCR when the Creditor's petition was handed to her in the Psychiatric Unit of Sutherland Hospital on 13 July 2004. The Breach Issue: If there was a breach of the FCR as to service, what are the consequences? The Annulment Issue : Whether the bankruptcy should be annulled or the sequestration order set aside? What are to become of the costs of the administration of the bankruptcy? The FCR required a creditor's petition to be personally served on the debtor: O 77 r 18A; O 7 r 1(1). Order 7 r 2(1)(a) provides that personal service is effected on an individual by leaving a copy of the document with him. However, O 43 r 13, establishes a specific regime for the personal service of documents on persons who are under a disability, as defined. Prima facie , that regime expressly prohibits service in the manner mandated by O 7 r 2(1)(a): see O 43 r 13(2). 49 Counsel for Ms Cross, Ms Gormley, submitted that Ms Cross was at all material times a person under a disability for the purposes of the FCR and that the provisions of O 43 r 13 had not been complied with. Where it is said that the person is a 'mentally disabled person' rather than an infant or minor the relevant question is: Is the person concerned a person who, owing to mental illness, is incapable of managing his or her affairs in respect of the proceedings? The words 'in respect of the proceedings' are important because they focus upon the person's ability to bring or defend proceedings rather than whether the person is able to manage his or her affairs generally or in relation to some other transaction. Such an approach is consonant with the common law approach to capacity. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation. He was subsequently diagnosed as suffering from gangrene in the foot. Acting by his next friend he sought an injunction to restrain the hospital from amputating. Thorpe J held that C had the requisite mental capacity to make a decision to refuse treatment. Indeed, I am satisfied that he has understood and retained the relevant treatment information, that in his own way he believes it, and that in the same fashion he has arrived at a clear choice. There is no inconsistency between the requirement that a party to legal proceedings comply with Order 80 and a decision that he has an understanding of the nature, purpose and effects of the medical treatment which is under consideration in those proceedings. The test is issue specific; and, when applied to different issues, it may yield different answers. 56 Masterman's case provides much assistance in this regard. There the plaintiff brought an action for personal injuries compensation which he settled. Later the plaintiff sought to re-open the claim on the basis that it had never received the approval of the court as required by the rules in the case of a person under disability. It was therefore necessary to determine whether the plaintiff was such a person. The relevant test was whether the plaintiff was, by reason of mental disorder within the meaning of the Mental Health Act 1983 (UK), incapable of managing and administering his property and affairs. The Court of Appeal held that the test was addressed specifically to the plaintiff's capacity to conduct and compromise the proceedings: see 1521-1524 per Kennedy LJ; 1533-1535 per Chadwick LJ; Potter LJ agreeing. The Court of Appeal's interpretation of the test as being issue specific aligns it more closely to the test under the FCR which makes express provision in that regard. If he has capacity to understand that which he needs to understand in order to pursue or defend a claim, I can see no reason why the law whether substantive or procedural should require the interposition of a next friend or guardian ad litem (or, as such a person is now described in the Civil Procedure Rules, a litigation friend). It does not call for proof of complete incapacity. On the other hand, it is not enough to prove that the plaintiff is now substantially less capable of managing her own affairs and property than she would have been had the accident not occurred. I have no doubt that the plaintiff is quite incapable of managing unaided a large sum of money such as the sort of sum that would be appropriate compensation for her injuries. That, however, is not conclusive. Few people have the capacity to manage all their affairs unaided ... It may be that she would have chosen, and would choose now, not to take advice, but that is not the question. The question is: is she capable of doing so? To have that capacity she requires first the insight and understanding of the fact that she has a problem in respect of which she needs advice ... Secondly, having identified the problem, it will be necessary for her to seek an appropriate adviser and to instruct him with sufficient clarity to enable him to understand the problem and to advise her appropriately ... Finally, she needs sufficient mental capacity to understand and to make decisions based upon, or otherwise give effect to, such advice as she may receive . But he could not concentrate on it for any length of time: not long enough to be able to appreciate the nature and extent of any claim that he might have. In particular he had no insight at all into his own mental state. He was not capable of instructing a solicitor properly. He certainly was not capable of exercising any reasonable judgment upon a possible settlement. This submission is undoubtedly correct. 63 None of the parties adduced any expert evidence going to the issue of whether Ms Cross was a mentally disabled person for the purposes of the FCR at the time she was given the Creditor's petition nor, for that matter, at any other time. 64 Counsel for Ms Cross, over objection, tendered a copy of a report of Dr Janet Johnson, Staff Specialist Psychiatrist at Sutherland Hospital, Caringbah dated 8 April 2005 and a copy of a report of Melissa de Rooy, Occupational Therapist at that hospital, dated 6 April 2005. I allowed the tender subject to relevance. Dr Johnson's report referred to an application to the Mental Health Review Tribunal for a Protected Estate Order when Ms Cross was in hospital in July 2004. Apparently it was declined because of Ms Cross' refusal to disclose any details about her finances. Following this admission, Ms Cross has received services from a Primary Clinician within the Community Mental Health Team. I have been Ms Cross' Primary Clinician since December 2004. However Ms Cross' mental state improved as her illness began to respond to the medication (administered as per her Community Treatment Order) and thus Ms Cross is currently well engaged with myself. I have contact with Ms Cross approximately once a week, either at her home, at a community venue or within the community rooms at the hospital. At present Ms Cross willingly engages with myself and willingly attends reviews with a psychiatrist when required to. Ms Cross currently receives the anti-psychotic medication, Risperidone, in injection form, fortnightly. Ms Cross does not believe that she has schizophrenia however acknowledges that the medication helps her stay "cool, calm and collected". During her first admission Ms Cross displayed symptoms of thought disorder, paranoid and persecutory delusions about foreign people, the government and her neighbours (whom she wielded a knife at following their request that she move her car which was blocking a common driveway). Ms Cross was diagnosed with breast cancer during her admission and a mastectomy was consented [to] by the Mental Health Review Tribunal, as Ms Cross was too delusional to understand the seriousness of her condition. Ms Cross also had a preoccupation with the USA and believed that there were creatures like dragons in her garden. Ms Cross displayed similar psychotic symptoms during her second admission including persecutory delusions about the FBI and the British. Ms Cross refused to discuss her financial difficulties and held false beliefs that all the banks were closed and that the government did not pay single women. Ms Cross also believed that the body corporate of her home did not exist and thus refused to pay them any money. The first period of admission was from 1 March to 12 May during which time she was diagnosed with breast cancer and a mastectomy was consented to by the Mental Health Review Tribunal. The second was from 23 June until 15 July as an involuntary patient. During the second period of admission an application was made to the Mental Health Review Tribunal for a Protected Estates Order in respect of Ms Cross. Such an order was not made because Ms Cross would not disclose any details about her finances. Some months later, on 11 April 2005, the Protective Commissioner was appointed as financial manager of Ms Cross' estate pursuant to the Protected Estates Act 1983 (NSW). 66 It is a principle of long standing that the law presumes every person to be sane and, in modern times, the principle has been expressed as a presumption that a person of full age is capable of managing his or her affairs: Murphy v Doman [2003] NSWCA 249 ; (2003) 58 NSWLR 51 at [36] per Handley JA. It follows that the person who asserts incapacity must prove it. --- The presumption of law is in favour of sanity: and, therefore, if a person has never been subject to a commission of lunacy, nor has had an unsound state of mind imputed to him by his friends or relations, or even by common fame... the burthen of proof is cast upon those who impeach his understanding. And where a particular transaction is sought to be avoided on the ground of insanity, the evidence of it ought to apply to that particular period; and the question in such a case is, not whether the party had ever been insane before, but whether he was of sufficient sound mind on the day of the contract in question. On the other hand, as the law presumes the state of a man's mind to continue unchanged until the contrary be made manifest; if a person has ever been subject to a commission, or to any restraint permitted by law even a domestic restraint, clearly and plainly imposed upon him in consequence of undisputed insanity, the burthen of proof shewing sanity is thrown upon those who seek to establish a lucid interval, or the soundness of his understanding [citing White v Wilson , 13 Ves 88] But where there is satisfactory evidence of sanity of a party at the time of a contract, the antecedent state of his mind, and the causes of it, may be laid totally out of view [citing 1 Dow. P.C. 177]. Such a presumption is one application of the more general 'presumption of continuance', which Kirby P discussed in Mason v Tritton (1994) 34 NSWLR 572 at 587 --- 588. It is therefore proper, in order to ascertain the fact of its existence at a certain time, to consider its existence at a prior or subsequent time. The degree of continuity varies infinitely in various cases, and hence there can be little certainty in the inference from one period to another. Nevertheless, since it can never be known beforehand to what variety the case in question belongs in this respect, the facts of prior and subsequent existence cannot be absolutely known beforehand to be relevant. Much must depend on the type of insanity, as preliminarily indicated by the person's conduct at the time in question. There is also a further element of uncertainty in criminal cases, in that the accused has a strong motive to feign insanity after the act charged; and thus particular scrutiny is required in weighing the evidence of the accused person's subsequent insane conduct. The best way to discharge that burden would be by expert evidence in proper form directed to the test of capacity under the FCR, including the matters set out at [61] supra, and focussed upon Ms Cross' state of mind at the time of service. 71 However, that is not to say that the burden may not be discharged in other ways. One way in which that burden might be discharged is by establishing Ms Cross' incapacity at some other point in time and inviting the Court to infer that Ms Cross' state of capacity had remained unchanged between the time of such proven incapacity and the time of service of the Creditor's petition. A similar course was taken in Murphy v Doman [2003] NSWCA 249 ; (2003) 58 NSWLR 51. That case concerned a litigant in person who suffered the effects of mental illness during the course of the proceedings. He was required to file written submissions by a certain date, which was extended. At the expiration of the extended period he appeared before the court and behaved in a bizarre manner, refusing to tender the submissions he had brought that day (6 August 2001). On 18 September the matter was listed for judgment and that morning the trial judge received a letter from Mr Murphy explaining that he had been admitted to a psychiatric hospital shortly after 6 August and asking for leave to file and serve his submissions. 72 One of the questions which arose before the Court of Appeal was whether Mr Murphy was incompetent on 6 August 2001. There was evidence confirming Mr Murphy's assertion that a few days later he had been admitted as an involuntary psychiatric patient. In his judgment Handley JA held (at 57) that the later involuntary admission was evidence of Mr Murphy's previous psychiatric condition 'because of the retrospective presumption of continuance'. Attorney-General v Parthner (1792) 3 Bro CC 441 at 443; 29 ER 632 at 634; M'Naghten's Case (1843) 10 Cl & F 200 at 210; 8 ER 718 at 722. This means in modern terms, that there is a presumption that a person of full age is capable of managing his or her affairs. However, viewed in light of the evidence available on 18 September, it showed that on 6 August the plaintiff was incapable of managing his affairs and in particular the legal proceedings he was attempting to conduct on his own behalf. In particular, they may rely upon evidence of Ms Cross' previous admission to the Psychiatric Unit of Sutherland Hospital between 1 March and 12 May 2004 and, subsequently, her involuntary admission to that unit which occurred on 23 June 2004 and continued until 15 July 2004. 74 In his submissions, Mr Bentley argued that evidence of Ms Cross' admission did not show that she was, owing to mental illness, incapable of managing her affairs in respect of the proceedings. In support of his argument Mr Bentley referred to certain provisions of the Mental Health Act 1990 (NSW). Whether a person may be admitted or detained as an involuntary patient under that Act turns upon whether the person is a 'mentally ill person' or a 'mentally disordered person' as defined. The tests under the Mental Health Act differ from the test which falls to be applied under the FCR. However, evidence of involuntary admission is relevant to the question of capacity under the FCR because it could rationally affect the assessment of the probability of the existence or non-existence of that capacity: Evidence Act 1955 (Cth) s 55. For example, such evidence tends to suggest that Ms Cross was not capable of communicating with or instructing a solicitor or advisor at that time. 76 At its highest, Mr Bentley's submission is that it is possible for a person to be an involuntary patient at a psychiatric hospital or psychiatric unit of a hospital but nevertheless have the capacity to manage his or her affairs in respect of certain proceedings. Even if that is possible, the question which must be answered is: Is the Court satisfied, on the balance of probabilities, that Ms Cross was incapable of managing her affairs in respect of the proceedings when she was admitted as an involuntary patient? Ms Cross was due to be released from involuntary detention on 14 July 2004 and in fact was released on 15 July 2004. 2. Ms Cross was served in the presence of a social worker who arranged an appointment for her to see a Legal Aid solicitor to which appointment Ms Cross agreed. Clearly the social worker thought that Ms Cross could manage her affairs in respect of the proceedings otherwise why make an appointment for her to see a solicitor? 3. The Legal Aid solicitor saw her on 16 and 30 September 2004 and then again on 23 March 2005. The solicitor took instructions on an ongoing basis which can only give rise to the conclusion that he considered that Ms Cross could manage her affairs in respect of the proceedings. On 23 March 2005 he saw her with Ms de Rooy, an occupational therapist, at a time when an application had been made on 4 March 2005 for a Financial Management Order. Those circumstances seem not to have affected the view of either Ms de Rooy or the solicitor as to Ms Cross' ability to provide instructions for the carriage of proceedings. 4. Moreover, the Financial Management Order, which was given on 11 April 2005, is of no relevance as to Ms Cross' capacity as at 13 July 2004. The provisions of the Mental Health Act set in place a detailed regime which regulates the involuntary admission and detention of patients. Though it is possible that a person would be discharged under that Act because the person is no longer a mentally disordered person or a mentally ill person: see, for example, ss 29(2), 33(2), 35, 52 and 57, it is equally true that a person would be discharged where care of a less restrictive kind is appropriate and reasonably available to the person: see, for example, ss 20, 40, and 57. There is simply no evidence about why Ms Cross was discharged. It is very difficult to determine how the evidence of her discharge should be treated except to say that the fact that advance notice of it was given tends to show that consideration had been given to whether it was necessary to continue Ms Cross' detention at the hospital and that it had been determined that her detention was necessary until 14 July 2004. The fact that Ms Cross was not released on that day but was made to wait until 15 July also speaks against drawing any inference from these events favourable to the Creditor. 78 The second submission is not supported by the evidence. I also note that at the time Ms Cross did not appear to understand the serious nature of the documents she had been handed. Indeed, Ms Sanders took care to assist Ms Cross to make the appointment rather than leave Ms Cross to undertake that task herself which would tend to suggest incapacity rather than capacity. In any event, for the reasons in [24] and [25] supra, it was, with respect, a case of the 'blind leading the blind'. 80 The third submission focuses on evidence of what occurred at the earliest in September 2004 over a month after the proceedings, at least from the Creditor's point of view, had finished and over two months after the purported service of the Creditor's petition. 82 Even if any inference of the kind described by Mr Bentley could be drawn from this evidence, it has little weight in the scheme of the other evidence. 83 As to the submission that the financial management order is not relevant to the question of capacity, such a submission cannot be sustained in view of the test in s 55 of the Evidence Act and what has been set out above in relation to proving capacity. 84 A further submission was advanced on the basis of Ms Gupta's indication on 7 July 2004 that she could not respond to the Creditor's solicitor's enquires without Ms Cross' consent. It was submitted 'How could Ms Cross give that consent if she was incapable of managing her affairs in respect of the proceedings? ' One answer may be that Ms Gupta could not provide the information because Ms Cross could not, and in fact did not, give her consent. 85 I have come to the conclusion and am satisfied on the balance of probabilities that Ms Cross was incapable of managing her affairs in respect of the Creditor's petition when she was admitted as an involuntary psychiatric patient on 23 June 2004. The next question is whether an inference should be drawn that Ms Cross' incapacity continued up to and including the time that she was served with the Creditor's petition on 13 July 2004. I have concluded that the inference should be drawn in the present case and I do so. It follows that Ms Cross was a mentally disabled person for the purposes of the FCR when she was given the Creditor's petition and that the Creditor has failed to comply with the provisions of O 43 r 13. Absent the approval of the Court, what was done in this case was expressly forbidden by sub-rule 13(2). There was therefore a clear breach of the FCR in the way in which the Creditor's petition was served, which constituted a defect in the proceedings. What, therefore, is the effect of that defect upon the validity and effectiveness of the sequestration order? 87 The Federal Court is a superior court (FCA Act, s 5(2)) and therefore, whatever the nature of the defect or defects in the proceedings, the sequestration order is not void or a nullity in the sense that it is without legal effect: see Cameron v Cole [1944] HCA 5 ; (1944) 68 CLR 571 at 590 per Rich J; Emanuele v ASC [1997] HCA 20 ; (1997) 188 CLR 114 at 119, 120 per Brennan CJ and at 156 per Kirby J; Re Anasis; Ex parte Total Australia Ltd (1985) 63 ALR 493 at 496 and Re Fuller [1999] FCA 1811 at [13] --- [16] per Hill J. This principle applies to orders made by registrars of the Federal Court pursuant to the scheme of delegation of powers under s 35A of the FCA Act: Official Trustee v Nedlands [2000] FCA 599 ; (2000) 173 ALR 255 at [22] --- [25] per Finn J. The question of whether it can truly be seen to be voidable depends upon the applicability and operation of s 306. 90 Section 306 only applies to a formal defect or an irregularity but where that precondition is satisfied, it operates automatically: Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34 ; 165 CLR 71 at 81. As the High Court said in Adams v Lambert [2006] HCA 10 ; (2006) 225 ALR 396 at [24] , the composite expression 'a formal defect or an irregularity' conveys a meaning with elements of both inclusion and exclusion. It is similar to the question that, in former times, would be explained by asking whether a statutory requirement was mandatory or directory. In Project Blue Sky Inc v Australian Broadcasting Authority it was said: "A better test ... is to ask whether it was a purpose of the legislation that an act done in breach of [a] provision should be invalid ... In determining the question of purpose, regard must be had to 'the language of the relevant provision and the scope and object of the whole statute'". Ultimately, the characterisation of a defect as formal or substantive is a matter for judgment, however, it is first necessary to consider, as the High Court has indicated, the legislative regime in relation to, in this case, creditors' petitions. Sub-section 52(2) provides, among other things, that if the Court is not satisfied with the proof of the service of the petition, it may dismiss the petition. These provisions illustrate a unique prescription relating to a petition for a sequestration order. A sequestration order affects the status of a person. The Legislature, in recognition of this feature, has insisted that the petitioner must prove, among other things, service of the petition on the debtor. It is a peculiar feature of litigation under the Bankruptcy Act , upon a creditors petition, that the court is expressly required to hear proof of service of the petition, and is expressly required, if it is not satisfied with the proof (among other things) of that matter, to dismiss the petition. The requirements of s. 52 are essential requirements for the proof of the petition. They are made essential, no doubt, because the law recognises that proceedings in bankruptcy have an extraordinarily far reaching effect, not only upon the status of the debtor but also so as to convert, in some cases, actions and omissions of his in the past --- which at the time they were done or omitted did not constitute any offence --- into serious criminal offences. This analysis echoes what the High Court said in Adams v Lambert , namely that the kind or degree of the breach is relevant to a consideration of s 306. 95 In Re Ditfort; Ex Parte DCT (1988) 19 FCR 347, which was an application for annulment, Gummow J expressed agreement with the proposition, advanced by Walters J in Re Long; Ex parte Fraser Confirming Pty Ltd (1975) 12 SASR 130, that there is a necessity for strictness of proof in observance of the requirements for service of bankruptcy notices and bankruptcy petitions. The provisions of sub-rule 13(6) reflect the position in England as it became after Judicature: See, T Snow et a., The Annual Practice , 11 th edn, Sweet & Maxwell, London, 1893 at 248; T W Chitty, Chitty's Archbold's Practice of the Queen's Bench Division of the High Court of Justice 14 h edn, H Sweet & Son, London, 1885 at 1144. The practice in Chancery before Judicature was that 'service of a copy of the bill was effected in the ordinary manner' ( Annual Practice, supra, at 248). 97 The Rules of Court in the First Schedule to the Supreme Court of Judicature Act (1873) 38 & 39 Vict. 471 the writ had been served on the lunatic defendant's business manager. The manager of the lunatic's business might be ignorant of these matters. Where the writ is served in such a manner that it may probably never reach the lunatic, I do not think it can be valid and proper service. The plaintiffs may reasonably be required to go through the formalities which may give the friends of the lunatic a proper opportunity of appearing. The Rules of the Supreme Court of New South Wales, and in particular those which preceded the recent uniform civil procedure regime, are in a similar form to those which operate in this Court. They are designed, principally, to ensure that there is someone answerable to the court on behalf of the litigant, with a disability; that crucial decisions affecting that litigant can be properly and responsibly made; and that a person exists who can bear any costs as are ordered against the person with the disability at the end of the litigation. One can readily imagine a case where the Court would approve a particular person upon whom service could be effected. Indeed, it would be a prudent course to obtain such approval in advance of proceeding against a disabled person. On the other hand, where service has taken place in breach of the rule but those who care for the disabled person nevertheless appear at Court and no injustice has been occasioned by the breach of the rules, one appreciates how the Court might approve service which has already taken place. The discretion in sub-rule (4) is premised upon the mandatory nature of the rule, as reflected in the language of sub-rule (2). Where the objects of the rule have otherwise been achieved, it facilitates the proceedings moving forward by validating service which would have otherwise been prohibited. 103 It is also important to note that the rules expressly reject the idea that one might serve, perhaps out of an abundance of caution, both the person designated by sub-rule 13(6) and the mentally disabled person with an initiating process such as a creditor's petition. The course which is not only to be preferred but which appears to be required is to approach the Court for a grant of approval. Only in relation to the limited class of documents in sub-rule (8) is a different approach to be adopted. 104 Thus, in their general application the special rules as to service firmly ensure that their aim is attained, namely that an opportunity is afforded to those who care for a mentally disabled person to appear before the Court and to represent and protect that person's interests where by definition he or she does not have the capacity to do so alone. The existence of a facility for the proceedings to move forward once that aim has been achieved does not detract from the control which the Court maintains over this step in proceedings against mentally disabled persons. In bankruptcy proceedings the legislature has protected all debtors by requiring proof of service of the petition in every instance. In the case of mentally disabled persons that protection extends to the requirement to serve in accordance with the special rules designed to ensure that the opportunity is a real one. 105 In my judgment, strict compliance with the provisions of O 43 r 13 is necessary in bankruptcy proceedings. A breach of these rules could result in substantial injustice being visited upon the disabled respondent. Moreover, a serious breach could defeat the intention of the O 43 altogether and lead to a breach of the fundamental rules of natural justice. The FCR require service upon a particular person and that was not done. The FCR also prohibit service upon the disabled person and that was ignored. The conduct of the Creditor constituted a serious breach of the FCR and resulted in a defect in the proceedings which was not a formal one. Section 306 does not apply and the sequestration order is voidable. 106 The separate question of whether substantial injustice has been occasioned by the defect in these proceedings does not arise. In any event, I am of the opinion that in all the circumstances of this case substantial injustice has been occasioned by the defect which cannot be remedied by order of the Court save to set aside the sequestration order and dismiss the petition. She was solvent at the time. A creditor who issues a creditor's petition runs the risk that if the debtor is solvent, the likelihood is that the petition will be dismissed with costs. The evidence suggests that Ms Cross, due to her state of mind, may have thought that the body corporate of her home unit building did not exist and that she therefore did not owe it any money. Whether that be right or not, bankruptcy proceedings are not for debtors who won't pay debts. They are for debtors who can't pay debts. The avoidance of preferences, voluntary settlements and fraudulent dispositions of property by the bankrupt is intended to restore the property or money of the bankrupt to his estate to achieve a fair and rateable division of the bankrupt's property among his creditors. Bankruptcy involves a change of status and quasi-penal consequences. Upon discharge from bankruptcy, the bankrupt is released form his debts subject to certain exceptions. If a debtor is able to pay his debts but is recalcitrant, his creditors may resort to the remedies otherwise afforded by the law such as execution against his property and garnishee proceedings. The words "able to pay his debts" in s. 52(2) of the Act do not mean "willing and able" to do so . By her motion, Ms Cross seeks to have the sequestration order made by the registrar on 9 August 2004 set aside. In opposing the motion, the Creditor and the Trustee contend that the appropriate course is to make an order pursuant to s 153B(1) of the Act annulling the bankruptcy. In a normal case, annulment is undoubtedly the appropriate course; but this is anything but a normal case. 109 The matter which evokes the response on the part of the Trustee to oppose the motion is that in the case of annulment, the Trustee gets the benefit of s 154(1)(b) of the Act, namely, he may apply the property of Ms Cross still vested in him --- the home unit at 12/28 Tullimbar Road, Cronulla --- in payment of the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the Trustee; whereas, if the sequestration order is set aside, he has no such right of application. The Creditor's opposition to the setting aside of the sequestration order is no doubt sourced in the consequential orders I would make of dismissing the petition and revoking the costs order made by the registrar on 9 August 2004. 110 At the outset, it may be said that there is no longer any third course, for example, rescission of the sequestration order: See s 37(2) of the Act; Vaucluse Hospital Pty Ltd v Phillips & Anor [2006] FMCA 44 at [19] and [20]. On the other hand, reviews of registrar's orders, like appeals to the Full Court, are outside the intended ambit of s 37. 111 At the forefront of Ms Cross' case is that she was bankrupted on the first return date of a creditor's petition which was left with her while she was an involuntary patient in the Psychiatric Unit of Sutherland Hospital, but which I have found was not properly served, for a debt in respect of unpaid body corporate levies of $1,813.58, increased to approximately $2,400 by debt collection, legal and court costs of obtaining a default judgment in respect thereof; when, on the evidence before me, she owned assets in excess of half a million dollars including the home unit worth $375,000, money on deposit with major banks of more than $130,000 and shares and securities in major listed companies worth approximately $90,000. 112 Moreover, Ms Cross was not present when the sequestration order was made. Had she, or representatives on her behalf, been present on the day, or if her circumstances and the circumstances of service of the Creditor's petition had been ventilated with the registrar on 9 August 2004 rather than being left buried in some affidavit of service, I have no doubt that the sequestration order would not have been made. There is no hiding that, the documentation which was presented to the court clearly stated the fact. Now I presented that petition but unfortunately so long ago I can't remember what was said. I have a vague recollection that something may have been said about it but I can't recall and I am unable to assist the court or swear an affidavit so I haven't but there is no doubt that it is quite clear in evidence from Mr Wellmeela's affidavit what happened, where it happened and what was going on, so it is not as if anyone has tried to conceal this from the court or from the Registrar. He would not have been surprised at that. He certainly did not expect Ms Cross to be present. That he cannot remember what was said before the registrar on that day suggests to me that none of the relevant surrounding circumstances were brought to the registrar's attention because he, Mr Bentley, was blinded by an obsession to ensure that whatever else happened, Registrar Tesoriero made the sequestration order on that day. As an officer of the Court, he had an overriding duty to do more --- to draw to the Court's attention Ms Cross' circumstances and the circumstances under which she was purportedly served with the Creditor's petition. At least three things can be said about this, maybe more. First, there is no time limitation in which to bring a motion to set aside an order after it has been entered where the order has been made in the absence of a party: O35 r 7(2)(a) of the FCR, cf., s 35A(5) of the FCA Act and O 77 r 8 (now repealed) of the FCR. Second, there is a dearth of evidence as to what occurred in the period from 9 August 2004 until April 2005. It seems that the Trustee applied to become and became the registered proprietor of the home unit at Cronulla on or about 19 October 2004 but otherwise there was no administration of the bankrupt estate. The Legal Aid Commission became aware of Ms Cross' bankruptcy on or about 30 September 2004, nearly two months after she was made bankrupt. But otherwise there is no evidence as to what happened, if anything happened at all, in addition to the matters mentioned, during this period. In all the circumstances, I do not think this period should be counted as part of the effluxion of time. Third, on the evidence before me, the second period in the effluxion of time (from 11 April 2005 until 7 November 2005) was taken up by the OPC discovering the relevant evidence as to what took place, obtaining legal advice thereon and, on the basis of that advice, deciding what action was to be taken. In all the circumstances I do not find the second period so long as to militate against exercising my discretion to set aside the sequestration order rather than annul the bankruptcy. 114 In re Daskalavski (Applicant); Ex parte The Austral Brick co Pty Ltd [1998] FCA 782 , Emmett J (in a short ex tempore judgment) concluded that, in circumstances where his Honour was satisfied that the sequestration order ought not to have been made, it was appropriate to annul the bankruptcy rather than set it aside where the estate had already been administered in bankruptcy. But that is not the case here. Only one asset of Ms Cross, her home unit at Cronulla, has been vested in the Trustee and the debt on which she was bankrupted, together with subsequent unpaid strata levies, was paid out by the OPC, not the Trustee, following the Protective Commissioner being appointed the financial manager of Ms Cross' financial affairs by order of the Guardianship Tribunal dated 11 April 2003. Notwithstanding the Trustee's claim for remuneration to 3 June 2005 ($13,990) and his anticipated claim for additional remuneration ($5,500), there was no evidence that the Trustee had been actively involved in the administration of Ms Cross' bankrupt estate. 2) [2004] FCA 1338 at [43] per Weinberg J; followed in Capsalis v Ozdemir [2005] FMCA 1163 at [17] per Connolly FM; Hadjimouratis v Casanova [2005] FMCA 1468 at [13] and [16] per Connolly FM; and in Vaucluse Hospital Pty Ltd v Phillips at [70] and [71] per Riethmuller FM. The rights of the petitioning creditor have never been referred to as a relevant factor, and understandably so. 116 This is not a case where the pendulum of balance tilts in favour of Ms Cross (compare Kyriackou ) as against the Trustee; on the contrary, I have come to the firm conclusion that it would be totally unfair, indeed a miscarriage of justice, for Ms Cross to be saddled with any of the relatively considerable costs of the administration of her estate. While that may involve the invocation of some injustice on the Trustee, in the circumstances of this case it seems it must be tolerated in the face of an inability of the Court to order the petitioning creditor to bear such costs: Kyriackou at [39] per Weinberg J. For present purposes, I am prepared to accept that as being the correct position, however, I do not think it is free from doubt. The powers of the Court under s 30 of the Act are expressed in extremely wide terms. In the circumstances of this case, it seems unjust to me that the Creditor only has to pay the costs of the motion even though it also loses the registrar's order as to costs of the petition. 117 Because of the conclusion I have come to as expressed in [116] supra, I propose to exercise my discretion under O 35 r 7 of the FCR to set the sequestration order aside. The inappropriateness of bankruptcy proceedings as a debt collection remedy or mechanism. Such proceedings were never intended to operate against debtors who could, but would not, for whatever reason, pay. 2. The size of the debt --- originally less than $2,000. 3. The aggregate value (free of encumbrances) of Ms Cross' assets --- closer to $600,000 than $500,000, approximately $200,000 of which were in liquid form. 4. The size of the actual and anticipated costs and expense of administering the estate: In excess of $35,000, when, on the evidence, there was minimal administration. 5. The circumstances of Ms Cross' mental condition and her admissions (once involuntarily) to the Psychiatric Unit of Sutherland Hospital during 2004 --- for a total of over three months. 6. My finding that Ms Cross was not properly served with the Creditor's petition. 7. The fact that she was not present or represented at the hearing at which the sequestration order was made. 8. The fact that the circumstances referred to in 5 and those underlying my finding in 6 were not ventilated before the registrar on 9 August 2004 (the first return date of the petition) when the sequestration order was made. 9. The fact that those involved in ensuring that Ms Cross was bankrupted on 9 August 2004 --- Messrs Meuller and Bentley --- were officers of the Court. Michael Gregory Jones, trustee of the bankrupt estate of Isabell Jean Cross, be joined as a party (second respondent) to the proceeding, effective 6 December 2005. 2. The orders of Registrar Tesoriero made 9 August 2004 be set aside and the Creditor's petition dated 4 March 2004 and filed 23 March 2004 be dismissed. 3. The costs of Ms Cross and of the Trustee of the motion be paid by the Creditor on an indemnity basis. | proceedings in connection with sequestration petition and sequestration order where petition served personally on mentally disabled debtor where sequestration order made by registrar in absence of debtor where application for review out of time where alternative application based on debtor's absence whether service of petition defective whether sequestration order effective whether formal defect or irregularity whether sequestration order should be set aside or bankruptcy annulled whether costs, charges and expenses of bankruptcy to be borne by debtor burden of proof, presumptions, and weight and sufficiency of evidence mental capacity consideration of interaction between presumption of capacity and presumption of continuance evidence of involuntary admission to psychiatric hospital disability mentally disabled persons consideration of matters relevant to determining whether a person is, owing to mental illness, incapable of managing his or her affairs in respect of the proceedings bankruptcy evidence procedure |
Immediately before coming to Australia the appellant spent eight months in Thailand in a refugee camp administered by UNHCR. He entered Australia on a 'refugee' visa --- probably as a family member of a primary visa applicant. 2 Virtually all of the appellant's close relatives are now Australian citizens. He has a 15 year old Australian son. The appellant's failure to become an Australian citizen was described by the Refugee Review Tribunal as being 'as a result of a number of complex circumstances, including alienation, lack of parental guidance, and an unfortunate lapse into teenage crime' . 3 The appellant has a significant criminal record. He came to the attention of the Department of Immigration and Multicultural Affairs (as it is now known) when he sought a re-entry visa because he was contemplating an overseas holiday. Ultimately his substantive visa was cancelled on character grounds and he was detained. 4 The appellant thereupon sought a protection visa. His application was refused by the Minister's delegate and that decision was upheld by the Tribunal. The appellant's application to the Federal Magistrates Court for judicial review of the decision of the Tribunal failed. He has appealed to this Court from the decision of the Federal Magistrates Court. 5 The appellant was represented at the hearing of his appeal by counsel appointed under O 80 of the Federal Court Rules . Judgment on the appeal has been delayed pending the publication of the Full Court judgments in SZEEU v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCAFC 2 and NBGM v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCAFC 60. I now have supplementary written submissions from the parties concerning these judgments. 8 For the appellant to be entitled to a protection visa it was necessary for the Tribunal to be satisfied, relevantly, that he is a person in respect of whom Australia has protection obligations under the Convention (s 36(2)(a)). Ordinarily, Australia will have protection obligations in respect of an individual who, owing to a well-founded fear of persecution for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his or her nationality and is unable or, owing to such fear, is unwilling to avail himself or herself of the protection of that country (Art 1A of the Convention). 9 Article 1C(5) of the Convention has been described as a 'cessation provision' . It provides that the Convention shall cease to apply to any person falling under Art 1A if that person can no longer, because the circumstances giving rise to his or her recognition as a refugee have ceased to exist, continue to refuse to avail himself or herself of the protection of the country of his or her nationality. 10 The Tribunal, which made its decision before the publication of NBGM , concluded that Art 1C(5) had no relevance to the appellant's application for a protection visa because he had not, as an individual, been recognised as a refugee when he came to Australia. The Tribunal considered s 36(3) of the Act to be determinative of the appellant's application. The appellant submitted that the Tribunal ought to have proceeded on the basis that, because he was recognised as a refugee when he came to Australia, Australia owes protection obligations in respect of him unless those obligations have ceased because of Art 1C(5) of the Convention. As I do not accept the Tribunal erred in treating s 36(3) as determinative of the appellant's application, it is not necessary for me to reach a concluded view on whether he was recognised as a refugee when he entered Australia. 12 As mentioned above, the relevance of Art 1C(5) to a determination of whether an individual is entitled to a protection visa has recently been considered by a Full Court in NBGM . The Full Court was constituted by five judges. The differing views expressed by the members of the Full Court complicate the identification of guiding principles. 13 The appeal in NBGM was dismissed by a majority constituted by Black CJ and Mansfield and Stone JJ. Nonetheless, the appellant submits that I should follow the approach preferred by Allsop J, with whom Marshall J agreed, to the interaction of s 36(3) of the Act and Art 1C(5) of the Convention. Assuming the appellant to have been recognised as a refugee when he came to Australia, on the approach preferred by Allsop J, Australia will have protection obligations with respect to him unless Art 1C(5) applies to him. 14 I conclude that to accept the above submission would be to disregard [25] of the reasons for judgment of the Chief Justice in NBGM . Both Mansfield and Stone JJ expressed agreement with this paragraph. In [25] the Chief Justice noted that the majority of the Full Court agreed that, in considering an application for a protection visa, the decision-maker must be satisfied that, at the time the decision is made, the appellant then has a well-founded fear of persecution for a Convention reason. 15 The Tribunal was not satisfied that at the time of its decision the appellant had a well-founded fear of persecution for a Convention reason. It was therefore not open to the Tribunal to be satisfied that the appellant was entitled to a protection visa whatever the operation, if any, of Art 1C(5) of the Convention in respect of the appellant. The Tribunal did not accept that the political opinion of the appellant's father would lead to the appellant being persecuted in Vietnam. It shows that the state considered his debt discharged and atonement complete after six months in re-education. The Applicant's father was allowed to return to the community and operate a small private business, however unrewarding, and was later allowed by the state to depart Vietnam. The appellant had asked the Tribunal to take evidence from his father. However, the Minister contended that the evidence was information that the appellant gave for the purpose of his application so that s 424A had no application to it (s 424(3)(b)). I reject this contention. 20 The judgment of the Full Court in SZEEU does not support a narrow construction of s 424A. It does not, in my view, throw doubt on the approach taken later by Lee J, with whom Tamberlin J agreed, in Applicant M164/2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCAFC 16. In that case both the appellant and her husband indicated a wish to give evidence to the Tribunal. The Tribunal characterised the husband's evidence as 'significantly discrepant' from the appellant's evidence on an important issue. Lee J at [99] said that, if the Tribunal relied on the alleged discrepancy as the reason or part of the reason, for its decision, it was bound to comply with s 424A(1). 21 Although the observations of Lee J in Applicant M164/2002 were obiter , I do not accept that his Honour made them per incuriam . His Honour set out in his reasons for judgment the terms of s 424A in their entirety. Nor do I accept that Tamberlin J may have overlooked Lee J's observations and should be understood still to hold views expressed by him prior to the publication of SAAP v Minister for Immigration & Multicultural & Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162 in WABY v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 1091. Both Lee and Tamberlin JJ must be assumed to have read the reasons for judgment of Dowsett J who, in dissent, held that s 424A had no application because the evidence of the appellant's husband was evidence put before the Tribunal by the appellant and thus information that the appellant gave for the purpose of the application. 22 In any event, in the circumstances of this case, I doubt that it can be said that the appellant 'gave' the information implicit in his father's evidence. The hearing before the Tribunal was not an inter partes judicial hearing; it formed part of an administrative inquiry. The appellant did not call his father to give evidence but rather advised the Tribunal that he wanted it to take evidence from his father. In answer to the question 'What evidence will the witness give about your application? It may be the case (I express no view one way or the other) that specific information given to the Tribunal by a witness at the request of an applicant would be information given by the applicant for the purpose of the application. I have in mind a witness who gave evidence at the request of an applicant on a specific topic; for example, evidence as to the political affiliation of a particular politician or as to the political parties represented in a coalition government. However, I doubt that s 424A(3)(b) discloses an intention that every piece of information that the Tribunal gleans from the evidence of a witness called at the request of the applicant is to be treated as information given by the applicant for the purpose of the application. It is not necessary for me to reach a concluded view on this question. 24 The appellant additionally submitted that the Tribunal had failed to comply with s 424A in respect of information concerning whether he and his siblings had been the subject of individual determinations of refugee status when they came to Australia. This submission is linked to the contention that, because the appellant had earlier been recognised as a refugee, the Tribunal was obliged to assess his claim to be entitled to a protection visa by reference to Art 1C(5) of the Convention. The Tribunal adopted the approach that, irrespective of the operation of cessation clauses, it was s 36(3) of the Act which was determinative of the appellant's claim to be entitled to a protection visa. The information concerning whether the appellant and his siblings had earlier been the subject of individual determinations of refugee status was not information that the Tribunal considered would be the reason, or a part of the reason, for affirming the delegate's decision (s 424A(1)(a)). Section 424A did not apply to it. For the same reason it is unnecessary to determine whether the Tribunal breached any operative common law obligation to afford the appellant procedural fairness in this respect. Did the Tribunal review the decision of the delegate? The Federal Magistrate rejected the appellant's complaint that he, and members of his family, were prevented from giving evidence to the Tribunal as it was not supported by evidence. The transcript of the Tribunal hearing was not before him. 26 A transcript of the hearing was received on this appeal. It shows that the appellant was represented by an adviser. She did not protest that her client had been prevented from giving evidence. At the close of the hearing the Tribunal authorised the adviser to make a written submission to the Tribunal within a fortnight. The adviser wrote to the Tribunal member within that time. Her letter conveyed the gratitude of the applicant and his family for the opportunity of providing further information to the Tribunal. It indicated that the additional information that they wished the Tribunal to have was attached to the letter. The letter expressed no relevant complaint about the fairness of the Tribunal's hearing. I am not satisfied that the Tribunal denied the appellant a fair hearing or otherwise failed to conduct a review as required by the Act. The Tribunal, as I have found, did not comply with s 424A in respect of this information. Its decision is thus invalid ( SAAP ). 28 The appeal will be allowed and the orders of the Federal Magistrates Court will be set aside. In lieu thereof it will be ordered that the decision of the Tribunal be quashed and the appellant's application for a protection visa be remitted to the Tribunal to be determined according to law. The first respondent will be ordered to pay the appellant's costs thus giving his counsel an entitlement to recover fees and disbursements (O 80 r 9(2)). I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. | appeal relevance of art 1c(5) of the convention where tribunal not satisfied that at time of its decision appellant then had a well-founded fear of persecution for a convention reason application of s 424a(3)(b) of the migration act 1958 (cth) evidence given to the tribunal by a witness called at the request of the appellant whether evidence was information given by the appellant for the purposes of the application whether tribunal failed to conduct review as required by the act whether appellant and family members prevented from giving evidence held: tribunal failed to comply with s 424a. migration |
The first, third, fourth and fifth respondents have common representation. The second respondent is separately represented. 2 On 30 January 2007 I made an order that the applicant provide security for the costs of the first, third, fourth and fifth respondents. 3 No application was made by the second respondent for security for costs at the time that the other respondents made their application. The reason for this appears to emerge from a letter dated 13 November 2006 from the solicitors for the second respondent to the applicant's solicitors. It is apparent from that letter that the second respondent regarded its active involvement in the litigation as a respondent as unnecessary. The second respondent, it was said, had no knowledge of the factual basis of the applicant's claims regarding the origin of the disputed trade marks. If the applicant were successful in obtaining an injunction to restrain the second respondent from using the trade marks, the second respondent would look to the first respondent for indemnification in relation to any loss arising out of those orders. On the basis that our client will abide by any order the Court makes, we invite you to consider your respective clients' responses in an application to be made by HBCA, pursuant to order 6 rule 6, for an order that the proceedings be stayed against it or alternatively, an order excusing HBCA from participating in the litigation. On that date however the proceedings were stayed on account of the applicant's failure to comply with the order for security in relation to the other respondents which had been made on 30 January 2007. 4 In the event, the security order in relation to the other respondents was not complied with until shortly after 10 April 2007. On that date the applicant filed a substituted statement of claim. At a directions hearing on 11 April 2007 orders were made adjourning the directions hearing to 24 April 2007 to allow programming directions to be considered and discussed by the parties. An extension of time for the filing of the substituted statement of claim was allowed retrospectively. 5 At the directions hearing on 24 April 2007 orders were made including an order that the second respondent file and serve any motion for security for costs by 29 May 2007 in order to enable the parties to confer with respect to the question of security in the meantime. 6 Communications and correspondence ensued. On 29 May 2007 the applicant's solicitors proposed to the second respondent's solicitors that the time for the second respondent to file its motion for security for costs be extended to allow additional time to confer. This was done without reference to the Court. As I noted at the directions hearing on 22 June 2007, it is not for the parties by agreement to set aside the orders of the Court. If an extension of time is desired for compliance with a direction of the Court, then that can be done by application or by the filing of a consent order subject to the approval of the Court. The motion for security was ultimately filed on 21 June 2007. 7 The second respondent's solicitor relies upon the affidavit of Michael Anthony Graham sworn 12 January 2007 setting out an estimate of costs likely to be incurred by the other respondents in the proceedings. The second respondent's solicitor, Mr Hocking, said that he regarded this also as an accurate estimate of the costs likely to be incurred by the second respondent. Since the filing of that affidavit the applicant, as noted, has filed a substantial new statement of claim. In Mr Hocking's opinion the allegations made in the new statement of claim have substantially increased the costs that the second respondent is likely to incur in defending the proceedings. 8 In my opinion the second respondent is entitled to an order for security for costs on the same principles as those underpinning the order for security for costs made in favour of the other respondents. However I am not satisfied that the second respondent is likely to or would be justified in incurring the same level of costs as the other respondents. There is, in my opinion, substantial room for cooperation to ensure that in areas of their common interest work is not duplicated. Absent any detailed justification for making an order for security for costs at the same level as that made in favour of the other respondents, I propose to order that the applicant provide security for the costs of the second respondent up to the first day of trial in half the amount ordered in relation to the other respondents. That is to say the applicant will be required to provide security for the costs of the second respondent in the sum of $30,000. Having regard to the applicant's offer of $20,000 and the second respondent's claim for $60,000, the costs of the motion will be in the cause. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | security for costs natural person applicant outside jurisdiction security for costs in favour of particular respondent security already ordered in relation to other respondents substantial areas of common interest between respondents amount of security fixed having regard to opportunities to avoid duplication of legal work between respondents practice and procedure |
The plaintiff, eircom Holdings Limited (ERC --- this "ASX ticker" for the plaintiff was used in affidavits and other documents filed, in written submissions and in the form of orders submitted and made, so I will also use it rather than the acronym EHL) sought orders under s 411(1) of the Corporations Act 2001 (Cth) (the Act). Those orders were: that ERC convene a meeting of its shareholders, other than Emerald Communications (Cayman) SPC (ECC) and any person holding shares solely on behalf of ECC, (Scheme Participants) to consider, and if thought fit agree to, with or without modification, a proposed arrangement between ERC and the Scheme Participants (Scheme and Scheme Meeting); and that the Scheme Booklet in evidence be approved as the explanatory statement required by s 412(1)(a) of the Act to accompany the notice convening the Scheme Meeting (Scheme Booklet). As Mr T F Bathurst QC who appeared for ERC remarked, the application raised two issues calling for special note. The first is that while ERC's directors recommended that the Scheme Participants agree to the Scheme in so far as the offer made to them was for cash consideration (Cash Consideration), they did not recommend either in favour of or against an alternative form of consideration offered, namely, an issue to Scheme Participants of shares in ECC (Scrip Consideration). The second issue is that the Scheme Implementation Agreement (SIA) dated 13 September 2009 between ERC and ECC provided for payment of a break fee by ERC to ECC of $4 million, which was 1.9% of the equity value of ERC. That exceeds the 1% guideline established by the Takeovers Panel's Guidance Note 7: Lock-up Devices , para 7.17. I will address these two issues in due course. Its shares are on the official list of the Australian Securities Exchange (ASX). There are currently 167,904,914 ERC shares on issue. Prior to 27 April 2009, ERC was called "Babcock & Brown Capital Limited". In substance, ERC has two classes of asset: cash of approximately $32 million (which will be reduced to approximately $24 million if the Scheme becomes effective because certain contingent liabilities will become actual liabilities) and 57.1% of the shares in eircom Group Limited (eircom). In the Scheme Booklet, eircom is described as "Ireland's incumbent telecommunications provider" (para 7.1(b)). It is heavily indebted. The Scheme Booklet identifies several risks associated with ERC maintaining its shareholding in eircom. ERC's shareholding is subject to a shareholders' agreement with a Trust that indirectly holds approximately 35% of the shares in eircom, namely, the eircom Employee Share Ownership Trust (the ESOT). The beneficiaries in the ESOT are current and former employees of eircom. The shareholders' agreement imposes obligations and restrictions on both ERC and the ESOT in relation to eircom. The facts mentioned in the preceding paragraph form some of the special circumstances that are relevant to the break fee issue to be addressed below. ECC is a special purpose unlisted company that has been incorporated in the Cayman Islands for the purpose of acquiring the capital of ERC under the Scheme. ECC is a wholly owned subsidiary of STT Communications Ltd (STTC) which is a company incorporated in Singapore and which is wholly owned by Singapore Technologies Telemedia Pte Ltd. Under the Scheme, ECC will acquire all the shares in ERC that it does not already hold or which are not held on its behalf (Scheme Shares). Scheme Participants may elect to receive: If a Scheme Participant does not make a valid election, the Scheme Participant will be deemed to have elected to receive Cash Consideration for all Scheme Shares held. Scheme Participants who are (or who are acting on behalf of) citizens or residents of a jurisdiction other than Australia, Hong Kong, the United Kingdom and such other jurisdictions as ERC and ECC may agree in writing, or whose address in ERC's Share Register is outside of those jurisdictions (and outside of Australia's external territories) may not elect to receive the Scrip Consideration. They are deemed to have elected to receive the Cash Consideration. If elections for the Scrip Consideration are received from Scheme Participants in respect of less than 16,790,491 Scheme Shares, there will be no Scrip Consideration at all and all Scheme Participants will receive the Cash Consideration alone. If elections in favour of Scrip Consideration would result in more than 41,976,228 ECC Shares being required to be issued, a pro rata scale back will be implemented to ensure that that number is not exceeded (Scale Back). In that case, each Scheme Participant who has elected to receive Scrip Consideration will be entitled to receive only a reduced number of ECC Shares determined by the Scale Back formula, and Cash Consideration for the remaining Scheme Shares held. The amount to be returned is $0.145 per Scheme Share held (Capital Reduction Amount), and on the basis of 167,904,914 ERC shares on issue, the capital to be returned will be $24,346,213. The Record Date is the fifth business day following the date on which the Scheme becomes effective. The date on which the Scheme becomes effective (Effective Date) is the date when the order of the Court made under s 411(4)(b) of the Act (Approval Order) becomes effective under s 411(10) of the Act. The Approval Order becomes effective on the date when an office copy of the Approval Order is lodged with the Australian Securities and Investments Commission (ASIC) or such earlier date as the Court determines and specifies in the Approval Order. I note that I fixed the application for final approval of the Scheme for hearing on 16 December 2009. The Scheme and the Capital Reduction are inter-conditional. Neither can take effect unless the other is approved by the required voting majority of, as applicable, Scheme Participants and ERC shareholders, and in the former case, also by the Court. If the Scheme is not implemented, the capital that would otherwise have been returned to ERC shareholders will be needed for working capital. If the Scheme is implemented, the result of the Capital Reduction will be that in substance ECC will be acquiring ERC's shareholding in its debt laden subsidiary, eircom, but will not be acquiring any of ERC's cash reserves. The aggregate sum of $0.545 per ERC share (Cash Consideration of $0.40 plus the Capital Reduction Amount of $0.145) represents a premium of approximately 26.1% of the adjusted closing price of $0.43 per ERC share on 24 June 2009 (the last close prior to the announcement of STTC's initial proposal), and 36.4% to the adjusted three-month volume weighted average price of $0.40 per ERC share on that date. The closing price and the three-month volume weighted average price have been adjusted to account for a return of capital to ERC shareholders of $0.80 per ERC share that took place on 30 September 2009, that is, a return of capital which took place after 24 June 2009 (the date as at which the prices of $0.43 and $0.40 were determined). I was informed on the hearing that this condition has now been satisfied. Deloitte's opinion is that the Scheme is in the best interests of, and fair and reasonable to, ERC shareholders. In addition, cl 4.3 of the Scheme requires that five business days after the Record Date (Implementation Date), the Cash Consideration is to be deposited by ECC in a trust account in the name of ERC, to be held on trust for the relevant Scheme Participants before their ERC shares are transferred to ECC under the Scheme. On the Implementation Date, the ECC shares constituting the Scrip Consideration must be issued to each eligible Scheme Participant, and the names of the relevant Scheme Participants entered in the ECC share register. The transfer of the Scheme Shares to ECC is made subject to that payment and to that issue of ECC shares being made: cl 4.3(b). Finally, an affidavit of Stephen Geoffrey Miller, the Chief Executive Officer of STTC, confirms that STTC has the ability to fund the Cash Consideration. The ECC funding arrangements are also described in s 9.4(b) of the Scheme Booklet. The period of operation of those provisions is from the date of the SIA to the earliest of: There is evidence that the exclusivity provisions were agreed to following normal commercial negotiations of those terms by ERC, ECC and STTC, and that it was the view of the ERC Board that ECC and STTC would not have agreed to enter into the SIA without them. The evidence of the consideration given by the ERC's Board to the constraints sought by the bidder is generally in accordance with the approach that I discussed in Re APN News & Media Ltd [2007] FCA 770 ; (2007) 62 ACSR 400 ( APN ) at [55]. Clause 13.14 of the Scheme Booklet draws attention to this warranty. The warranty of freedom from encumbrances is consistent with the approach taken in APN at [59]-[62], which was followed by Barrett J in Macquarie Private Capital A Limited [2008] NSWSC 323 ; (2008) 26 ACLC 366 at [13] - [14] . ASIC has provided its customary form of letter confirming that based on the information provided, ASIC did not propose to appear or to intervene to oppose the Scheme at the first court hearing. I was satisfied that ASIC was given sufficient notice for the purposes of s 411(2)(a) of the Act. I note that ASIC has granted certain exemptions, modifications and consents in relation to the requirements of the Act and the Corporations Regulations 2001 (Cth), and that these are referred to at cl 13.15 of the Scheme Booklet. I turn now to the two issues mentioned at the outset of these reasons. The differences relate to, inter alia: the Australian continuous disclosure regime; the right to receive information about ECC; the takeover regime; and minority shareholder protection rights. Section 4.5 of the Scheme Booklet also points out that because ECC is not listed, a Scheme Participant who has elected to receive the Scrip Consideration would have difficulty in disposing of ECC Shares. For the above and other reasons, the directors of ERC inform Scheme Participants in the Scheme Booklet that they do not make any recommendation in relation to the Scrip Consideration, except that ERC shareholders considering electing to receive the Scrip Consideration for all or part of their ERC shares should consult their financial adviser, accountant or stockbroker about whether an investment in ECC suits their particular investment objectives. I did not consider that the absence of a recommendation from the ERC directors in relation to the Scrip Consideration alternative stood in the way of the making of an order for the convening of the meeting of Scheme Participants. I took into account the following facts: the directors recommended in favour of the Scheme in relation to the Cash Consideration and made clear their reasons for making no recommendation in respect of the Scrip Consideration; and in the absence of a positive election by a Scheme Participant in favour of the Scrip Consideration, the Scheme Participant is deemed to elect to receive the Cash Consideration. Clause 14.2 states that the sum of $4 million is a genuine pre-estimate of ECC's actual costs and expenses and those of its related bodies corporate incurred in respect of the proposed Scheme, including, but not limited to: The circumstances in which the break fee is payable can be summarised as falling into two classes: first, where a competing transaction, that is not recommended by ERC's board, emerges by 13 March 2010 and prevails within nine months of the date of the SIA in respect of more than 50% of all ERC shares; and, second, where any ERC director fails to recommend the Scheme or withdraws his or her recommendation in favour of it, except in certain defined circumstances. There are fiduciary and statutory duty and "unacceptable circumstances" "carve outs" from the circumstances in which the break fee is payable. This percentage has been determined in accordance with para 7.17 of the Takeovers Panel's Guidance Note 7: Lock-up Devices , which I discussed in APN at [55]. The "total consideration offered under the proposal" referred to in (b) above is arrived at by adding to the Cash Consideration of $0.40 per ERC share, the Capital Reduction Amount of $0.145 per ERC share. In such a case, as with every fee in excess of 1% of equity value, a party seeking to justify the fee must be prepared to show that the fee does not have an anti-competitive or coercive effect. ERC pointed to several circumstances, some (not all) of which make the present case unusual in relation to the break fee, and submitted that they either support an enterprise value approach or otherwise demonstrate that the break fee of $4 million does not have an anti-competitive or coercive effect. I took all of those circumstances into account, both individually and in the aggregate, when ordering the convening of the Scheme Meeting. First , ERC submits, and I accept, that regard should be had not only to the consideration that ECC will be providing under the Scheme and the equity value of ERC, but also to the nature of the underlying assets and liabilities of ERC that ECC will be acquiring if the Scheme is implemented. High gearing means risk, and may require an acquirer to contribute further equity capital or otherwise inject further funds. As set out in the consolidated pro forma balance sheet of ERC in s 10.5(e) of the Scheme Booklet, ERC has net consolidated debt of $6,637.8 million (borrowings of $7,232 million less cash of $594.2 million). The enterprise value of ERC is calculated by adding its equity value and the ERC Group's net debt ($91.5 million + $6,637.8 million), which equates to $6,729.3 million. The $4 million break fee represents 0.06% of this enterprise value --- well below the 1% guideline. Second, an estimate of ECC's costs of pursuing the Scheme was in evidence in the order of $10 million. If, for any reason, the Proposed Scheme were not to proceed, those costs will have been thrown away. Accordingly, the SIA includes a provision that ERC will pay ECC A$4 million in the event that the Proposed Scheme does not proceed in certain limited circumstances (" Break Fee "). To the best of my information and belief, the Break Fee is a genuine pre-estimate of ECC's costs thrown away if the Proposed Scheme were not to go ahead. The SIA was dated 13 September 2009 and there was a further announcement to the ASX on 14 September 2009. As part of the review, several third parties engaged in "due diligence" investigations of ERC, but at the conclusion of the process in September 2009 only STTC remained interested in the acqusition. Despite the market being aware of the detail of an indicative offer made by STTC, no competing offer was made or proposed by a third party to ERC at any time before the SIA was executed on 13 September 2009. Fourth , the break fee is payable only "for cause", not simply because the Scheme Participants vote down the Scheme, and it is highly unlikely that a superior offer will emerge given that the result of the public strategic review was the emergence of only one interested party. Fifth , the amount of the break fee was heavily negotiated. STTC "sought more extensive triggers for its payment than those finally agreed in cl 14.2 of the SIA". ECC insisted on the inclusion of the break free provision as condition of making its offer to the ERC shareholders. Sixth , there is evidence that by agreeing to the break fee, ERC was able to negotiate a $2 million limit on its liability for breach of the SIA. The cap originally proposed by ECC was $10 million, including the break fee of $4 million. It should be noted that the $2 million cap is mutual: it also applies to ECC's liability in damages to ERC and does so in circumstances in which its major asset is attended by certain risks, as mentioned earlier (see [7] above). Damages are recoverable from ERC only where ECC terminates the SIA for specified reasons. In some of those circumstances ERC is liable to pay ECC liquidated damages of $2 million. According to the evidence, ERC's directors viewed the result achieved as being in the best interests of ERC shareholders, in particular because of ERC's lack of control over its major asset, its shareholding in eircom. ERC has followed a practice of returning surplus capital to its shareholders. Its directors wished to have cash available to meet ERC's future working capital requirements (assuming the non-implementation of the Scheme) and did not want to expose ERC's cash reserves to substantial damages claims. Seventh , the offer represents a substantial premium to Scheme Participants. I note that in Re Ausdoc Group Ltd (2002) 42 ACSR 629 ( Ausdoc ) the Takeovers Panel found that a break fee of $3.5 million, that was 1.86% of the equity value and 1.1% of the enterprise value of the target company, was unobjectionable in the circumstances of that case. Those circumstances included the facts that: a six-month tender process had been conducted by the target company before it entered into the scheme implementation deed, yet no other bids had emerged; the bidder had made it clear to the board of the target company that it would not bid unless, relevantly, the break fee provision was agreed to; and the bid would give a substantial premium to the target company's shareholders. In this case, I concluded that the existence of the provision for payment of a break fee of nearly twice the "1% of the equity value of the target" should not, in the unusual circumstances, stand in the way of the making of an order for the convening of a meeting at which the proposed Scheme can be considered and voted upon by Scheme Participants. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | application under s 411(1) of corporations act 2001 (cth) for order for convening of meeting of shareholders of target company to consider scheme under which their shares would be acquired scheme implementation agreement between offeror company and target company providing for payment of "break fee" of 1.9% of equity value of target company break fee exceeding 1% guideline of takeovers panel special circumstances held: orders made for convening of meeting corporations |
Paul's says that it has complied with the order, has provided the further particular discovery and there is no proper basis for challenging the further affidavit of discovery. It says that Paul's has acquired from an unknown third party a quantity of footwear originally manufactured for Betts but which it had returned to the manufacturer because it was faulty. Betts complains that Paul's has been selling that footwear in various places in Australia. It asserts that intending purchasers of the footwear are likely to be misled and deceived as they will be induced to believe that the footwear is of the same quality or workmanship as that sold by Betts and that there is a business connection between the two companies. It is said that neither of these impressions would be correct. In addition to this claim which is based on s 52 of the Trade Practices Act 1974 (Cth), Betts has pursued a claim against Paul's for passing off. 3 In December last year, Paul's gave an undertaking to the Court not to sell or accept further deliveries of footwear bearing Betts' Airflex registered trademarks. It undertook to immediately store in safe keeping in its warehouse all footwear of that type which was in its custody, possession or power. 4 Paul's has raised defences and cross-claims which, apart from admitting various sales, do not presently call for any detailed analysis. 5 As part of its claim, Betts wishes to establish from Paul's discovered documents, how many items of footwear were sold by Paul's to the public and at what price. On 26 September 2007, Betts then moved for particular discovery orders pursuant to O 15 r 8 of the Federal Court Rules . The complaint was that despite requests, Paul's had not discovered any internal or business records relating to the sale of Airflex footwear. In doing so they noticed that at those Paul's retail outlets there were sophisticated computerised point of sales systems. It was assumed that these systems were capable of producing duplicate receipt rolls. The sales receipts produced to them could only be produced, it was said, by a sophisticated computerised point of sale system. It was suggested that the system was similar to that installed in Betts and other retail stores. It was also said to be standard practice in the retail industry to retain duplicate receipts rolls for up to five years to aid future stock purchase. Many more documents were discovered under the categories. The list accompanying the affidavit is in the standard form provided for by Form 22 to the Federal Court Rules . Betts seeks a springing order based on Paul's' failure to comply with the orders for particular discovery. It is said that all Paul's has done is to have a director swear an affidavit 'to the best of his knowledge, information or belief'. It is said that by merely verifying the company's knowledge, information and belief without identifying who on behalf of the company held that knowledge, information and belief or what inquiries were made to reach that conclusion, no proper affidavit has been sworn. By failing to state the source of information and the grounds of belief, the affidavit, it is said, is inadmissible. Reliance is placed on Re JL Young Manufacturing Co Ltd [1900] 2 Ch 753 at 754 and Westpoint Management Pty Ltd v Goakes [2002] WASCA 317 at [14] per Wheeler J. 14 Paul's on the other hand says that the verifying affidavit complies with Form 22 of the Federal Court Rules and O 15 r 6(1). That sub-rule provides that the list of documents required by or under O 15 (the inter parties discovery order) shall, unless the Court otherwise orders, be in accordance with Form 22 and conform to the requirements of this Rule. Paragraph 5 of Form 22 has been replicated in par 5 of the second affidavit and list of discovery. No other specific order of the Court was sought or made in relation to the particular discovery. 15 It is well known that a discovery affidavit is 'conclusive' including on the question of whether a party has or has had in its possession, custody or power any relevant documents other than those discovered ( Mulley v Manifold [1959] HCA 23 ; (1959) 103 CLR 341). Generally speaking there have been two narrow qualifications observed to that general position. The first qualification is that a party may seek further discovery where it appears in the face of the list already served or on the face of disclosed documents or in some other admission that in all probability the party has or has had other relevant documents beyond those disclosed in the list of discovery. A party may also seek discovery of specific documents supported by an affidavit when a prima facie case identified can be made out that the other party has or has had certain specific documents or classes of documents that relate to the matter in question. 16 Betts avoided attempting to rely upon a contentious affidavit to challenge the discovery. Rather, it is said, the second affidavit of discovery is inadmissible. Betts has not pointed to any other material which can displace the conclusive nature of the discovery affidavit and has relied upon the admissibility argument. 17 Counsel for the applicant conceded that the interesting effect of her submission if correct, would be that all discovery affidavits and lists sworn for corporations and government etc, in accordance with the Form 22 would be inadmissible. I do not consider that the further affidavit which conforms with the requirements of the Rules and which has been provided by consent on terms crafted by the applicant itself can be said to be deficient. In my view what sets affidavits of discovery (governed by O 15) apart from other interlocutory affidavits (governed by O 14) is not just that the form prescribed for a discovery affidavit sets out specific words. The distinction is that the Rules themselves together with a body of substantive law, spell out the nature of the obligations with which a deponent must comply. They include the obligation to make 'reasonable search' as provided for by O 15 r 2(3). What is a reasonable search, in turn is governed by the considerations in O 15 r 2(5). The provision of an affidavit of discovery is a very important part of the process of litigation and the nature of the search should not be treated lightly. As the cases point out, a failure to give proper discovery, especially given the reduced burden now imposed under modern rules, is likely to be visited with significant consequences. 18 In these proceedings further particular discovery was sought and the orders made for that further discovery were by consent so that the testing of whether a prima facie case had been made out did not fall for consideration, but I will assume, for present purposes that such a case was made out. Alternatively, it can be assumed that one or more of the four possible pre-conditions for the exercise of discretion under O 15 r 8 has been made out. The question then in those circumstances is whether the usual rules as to information and belief in an interlocutory affidavit, give way to specific rules specifying the manner in which a discovery affidavit is to be sworn. 19 Two things might be noted. First, there is no suggestion that the form and method of swearing an affidavit and list of documents for further particular discovery should necessarily be different from the primary or general discovery. (O 15 r 6(1) applies to O 15 generally). Secondly, for both forms of discovery there is provision for the Court to make special orders that may be adapted to the circumstances. No such orders were sought or obtained in relation to the consent minute of 18 October 2007. 20 While it might be said that giving a consent to discover documents in a particular category may suggest that some such documents exist or have existed in the possession, custody or power of the party, that may not always be so. The consent may be an acceptance that if, after further search, such documents do or have so existed, they must be discovered. 21 The applicant drew on a comparison with the obligation to inquire arising in relation to answering interrogatories: Sharpe v Smail (1975) 5 ALR 377 at 390. Again, I would agree that there is such an obligation in both circumstances to inquire. It does not state that proper --- or indeed any --- inquiries have been made and it is quite consistent with the answer given that if the defendant had made inquiries he could have obtained further information which he might have believed to be true. It is well established that a party interrogated must answer to the best of his knowledge, information and belief (unless he objects to answer) and that to use the words of Bankes LJ, in Douglas v. Morning Post Ltd (1923) 39 TLR 402 at 403, if he affirms as to one of these elements he must affirm as to all three. It is not enough to say that he has no knowledge, because he is bound also to answer according to information acquired from servants or agents who have gained it in that capacity, and where appropriate his answer must show that he has made all proper inquiries and that having made them he has no information enabling him to answer further: cf Bank of Russian Trade Ltd v. British Screen Productions Ltd [1930] 2KB 90; Ormond v. Gunnersen [1920] VLR 402. 23 Finally, as a discretionary consideration, Betts submits that it is inherently incredible to suggest that a business of Paul's size would operate without sale software capable of tracking sales of individual lines and capable of producing a summary of the sales in relation to such lines. It is said that such a failure would constitute non-compliance with s 286 of the Corporations Act 2001 (Cth) which requires corporations to keep financial reports that record and explain its transactions, financial position and performance and which would enable its financial statements to be prepared and audited. 24 One may well expect that a company would have summaries of the nature suggested at some date after the sales. But in relation to the sales which took place in late last year, Paul's has produced the primary transactional records. The suggestion that an absence of summaries of them at the date of swearing the further affidavit of discovery was a breach of the Corporations Act was not developed in argument. There was no specific evidence on the point other than the speculation of Betts. While there would be some circumstances in which legal obligations to maintain certain records would be a relevant consideration, I am not presently persuaded this is one such situation. 25 Accordingly, the grounds for Betts' motion are not made out and the motion will be dismissed with costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | particular discovery springing order for alleged failure to provide particular discovery challenge to admissibility of affidavit and list of discovery completed in accordance with court rules and form alleged failure to identify sources and bases of information and belief practice and procedure |
I further ordered that the costs of the proceeding to set aside the statutory demand be reserved with written submissions in relation to the question of costs to be forwarded to the court for determination on the papers. 2 The plaintiff sought to set aside the demand on three grounds. 3 First, that the demand contained a defect and substantial injustice would arise should the demand not be set aside. 4 Secondly, apart from any question of injustice arising out of effect being given to a demand contended to be defective, the plaintiff contended that the failure to recite correctly the total amount of the debt due and payable (rather than the lesser sum reflected in the demand) constituted a failure to comply with a mandatory obligation going to the validity of the demand. Thus, the demand ought to be set aside per se . 5 Thirdly, the plaintiff contended that based upon the affidavit evidence of Robert McInnes, a genuine dispute subsisted between the plaintiff and the defendant as to the 'existence of a debt to which the demand relates' for the purposes of s 459H(1)(a) of the Act on two bases. First, that the goods supplied by the defendant to the plaintiff and identified in one of the tax invoices in question, are not fit for the relevant purpose and secondly, that goods listed in two other tax invoices making up the amount of the statutory demand were not ordered by the plaintiff from the defendant and were not supplied by the defendant. 6 In the result, the plaintiff failed to establish the first two grounds of the application. 7 The defendant, apart from responding to all three grounds relied upon by the plaintiff, also contended that the plaintiff had failed to comply with s 459G(3) of the Act, compliance with which goes to jurisdiction. The defendant contended that as a result, the jurisdiction of the court had not been enlivened and the court could not make an order setting aside the demand either pursuant to s 459H(3) or s 459J(1)(a) or (b). The merits of that contention are dealt with at [16] to [37] of the reasons for judgment ( Kortz Ltd v Data Acquisition Pty Ltd [2006] FCA 1722). 8 I have had the benefit of receiving and considering submissions from both the plaintiff and the defendant in relation to the principles governing the exercise of the discretion as to costs in the light of the judgment and urging the exercise of the discretion in a particular way. 9 Since the plaintiff failed to establish the first two grounds of challenge to the statutory demand and the defendant was unsuccessful in relation to the contention going to s 459G(3) , the final question to be determined was whether the plaintiff's material adequately demonstrated the subsistence of a genuine dispute between the parties as to the existence or amount of a debt to which the demand related. 10 In the result, the affidavit material of the plaintiff by reason of the contentions contained in a letter written by Mr Ian Williams, a director of the plaintiff, to the solicitors for the defendant dated 23 October 2006 and exhibited to the affidavit of Robert McInnes sworn 26 October 2006 together with an email [54], in the context of the exchanges, established contentions of fact giving rise to a controversy of fact as to the basis upon which the parts were to be procured for each board, a controversy as to the relevance and consequences of correct or incorrect voltage ratings for at least one of the boards and questions going to the approval of the prototypes. 11 The defendant contends that there are special circumstances which justify an order other than an order that the plaintiff receive its costs of the application. As at the date of service of the statutory demand the defendant was unaware of any genuine dispute. This is deposes to by David Swinnerton relying in particular on the email from Terry Priest exhibit "DLS13" which is totally inconsistent with the assertion that any dispute existed. Ian Williams had no dealings with the defendant and gave no basis in his letter of 23 October 2006 for his knowledge of the existence of and the nature of the alleged dispute. Terry Priest, who exclusively dealt with the defendant on behalf of the plaintiff and who was the person with knowledge of these dealings, has neither written to the defendant regarding the existence of any dispute nor has he gone on the record in the proceeding as to any aspect of the matter. The defendant says that had Mr McInnes clearly and fully stated the content of the grounds for a genuine dispute, the defendant would have been afforded the opportunity to withdraw the statutory demand prior to the filing of the application. 13 In the course of the judgment, I expressed some reservations about the adequacy generally of the affidavit of Robert McInnes sworn 26 October 2006 as the affidavit failed to engage directly and precisely with the content of the contentions of the defendant. Perhaps some of the costs in this application might have been avoided had Mr McInnes focused upon a precise identification of the central matters which might have demonstrated the subsistence of a genuine dispute at an earlier time and with more transparency. The defendant may well have been unaware of a genuine dispute at the date of service of the demand and whilst it is true that the affidavit of Robert McInnes fails to deal adequately with the content of the grounds of dispute, I have found that the letter from Mr Williams exhibited to that affidavit raises the basis for a dispute as to particular matters. In addition, the defendant was strongly of the view that the application to set aside the statutory demand was fatally flawed irrespective of any question going to a genuine dispute and sought to resist the application on that ground. 14 In terms of the real burden of the grounds of the application, the first two grounds unsuccessfully advanced by the plaintiff in challenging the statutory demand were less significant than the unsuccessful argument of the defendant going to s 459G(3) and the question of whether having regard to a consideration of the affidavit material, the plaintiff had established a genuine dispute between the parties. 15 Although the plaintiff established a genuine controversy of fact, some of the affidavit material put on by the plaintiff was unsatisfactory and failed to properly address the central contentions of the defendant and simply expressed denials or assertions at a high level of abstraction. Nevertheless, the plaintiff ultimately established a basis upon which the statutory demand ought to be set aside. 16 In the ordinary course, for the purposes of the Federal Court Rules , reserved costs would follow the event unless the court otherwise orders. Having regard to the above matters and the reasons for the orders made on 11 December 2006, it seems to me that the proper exercise of the discretion involves making an order that the defendant pay 70% of the plaintiff's costs of and incidental to the application to be taxed. I do not propose to examine a quantification of the costs as suggested by the plaintiff or fix the amount of the costs. Rather, the taxation or assessment processes for determining the quantum of the costs within the court ought to be applied in resolving the quantum of the costs in the absence of any agreement between the parties. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of the exercise of discretion in awarding costs in the light of the judgment in kortz ltd v data acquisition pty ltd [2006] fca 1722. corporations law |
Since neither a notice of appeal nor an application to extend time for the filing of a notice of appeal was filed within 21 days of 19 January 2006, the applicant must satisfy the court that 'special reasons' exist for the grant of leave to file and serve a notice of appeal. The application was filed on 6 March 2006 and supported by a short affidavit of the applicant sworn on 6 March 2006 attached to which is a draft notice of appeal. 2 The affidavit fails to provide any explanation for the delay in filing either a notice of appeal or an application to extend time as contemplated by Order 52, rules 15(1)(a) and (b) or for the delay in taking any step to seek leave between 9 February 2006 and 6 March 2006. 3 The applicant, a citizen of the People's Republic of China, was self-represented before me and assisted by an interpreter of the Mandarin language, spoken by the applicant. 4 I invited the applicant to explain to me the reason for the failure to file a notice of appeal within time or otherwise take steps to apply for an extension of time prior to 6 March 2006. The applicant says that the delay occurred by reason of 'language problems'. 5 The applicant arrived in Australia in March 2003 and applied for a Protection Visa on 17 April 2003. In making that application, the applicant was assisted by a migration agent (Jack Meng, Immigration and Translation). The application for the Protection Visa was supported by a statement in English setting out the applicant's claims of a well-founded fear of persecution on the basis of his adherence within China to the dogma and practices of the Roman Catholic Church rather than a State sponsored form of Roman Catholicism. 6 The application for a Protection Visa was refused by a delegate of the respondent on 3 June 2003. On 3 July 2003, the applicant lodged an application for a review with the Tribunal. On 21 October 2003, the Tribunal wrote to the applicant at each of the addresses nominated in the review application namely, a home address for the applicant, a mailing address and the address of the applicant's authorised recipient. That letter advised the applicant that the Tribunal had considered the material put before it but was unable to make a decision in favour of the applicant on that information alone. The Tribunal invited the applicant to attend a Tribunal hearing at a date and time specified in the notice and advised the applicant that if he did not attend the hearing (and the Tribunal elected not to postpone the hearing), the Tribunal could make a decision on the case without further reference to him. The Tribunal received a response to the hearing invitation on 28 October 2003 by which the applicant advised the Tribunal that he would attend the Tribunal hearing. An interpreter of the Mandarin language, Ms Melina Su, was made available for the hearing. However, the applicant elected not to attend the Tribunal hearing. Further, the applicant failed to further contact the Tribunal either directly or through his authorised agent. 7 On 7 January 2004, the Tribunal pronounced its decision (made on 9 December 2003) affirming the decision of the respondent's delegate not to grant the applicant a Protection Visa. 8 An application for review was filed in the Federal Court of Australia on 10 February 2004 and transferred to the Federal Magistrates Court by order of Gyles J made on 7 May 2004. An amended application was filed on 8 June 2004. The applicant appeared before Federal Magistrate Barnes assisted by an interpreter at a directions hearing and at the final hearing. The applicant made no written submissions nor any oral submissions in support of the grounds of review notwithstanding an opportunity to do so. The applicant contended before Federal Magistrate Barnes that his English was poor and as a result the applicant did not understand what material he should provide in support of the grounds of review. 9 In the application before me, the applicant said that he was assisted by a friend who had helped him to formulate the draft notice of appeal. The applicant told me that he understood the document prepared by his friend and that he had nothing further to add to it. 10 The respondent says that the applicant was present (as the judgment reveals) in court when Federal Magistrate Barnes delivered judgment on 19 January 2006 at the conclusion of the hearing. 11 Having regard to these events, I am not satisfied that the explanation for the delay is to be found in 'language problems'. The applicant has received assistance from an interpreter and has participated in exchanges and communication in relation to the issues. The applicant was present in court before Federal Magistrate Barnes when the decision was pronounced. Certainly, the affidavit material does not attempt to explain the delay in any way nor demonstrate the particular burden confronting the applicant in all the circumstances by reason of any difficulty with the English language. The only explanation offered is that made briefly in a submission on the hearing of the application that the delay is a function of language problems. 12 Notwithstanding the failure to explain the delay, the court might nevertheless be satisfied that 'special reasons' exist which would justify granting leave to file and serve a notice of appeal. Special reasons might be made out if upon an assessment of the identified grounds of appeal the court is persuaded that prima facie a ground of appeal of substance is identified with a sufficient prospect of success that it is just and appropriate to provide the proposed appellant with an opportunity to enliven the appellate jurisdiction of the court to test dispositively the merits of the appeal ( W105/99A v Minister for Immigration and Multicultural Affairs [2001] FCA 1786). The primary ground of appeal is contained in paragraphs 2, 3, 4 and 5 of the draft notice of appeal at pages 1-5 of the document. 13 Although the proposition is not put in these terms in the draft notice of appeal, the essential contention is that Federal Magistrate Barnes erred by failing to find that the Tribunal fell into error by conducting or purporting to conduct a review for the purposes of s 424 of the Act of the decision of the respondent's delegate in circumstances where the respondent had failed to provide the Tribunal with documents described as the Part B documents considered by the respondent's delegate in rejecting the application for a Protection Visa. The applicant contends that the respondent had a statutory duty pursuant to s 418(3) of the Act to provide the Registrar of the Tribunal with a copy of each and every document in the possession of the respondent and considered by the respondent's delegate in assessing and determining the application for a Protection Visa. The applicant contends that as no or no substantial Part B documents were delivered by the respondent to the Tribunal, the review on the merits based upon an assessment of the documents initially miscarried. Further, the applicant contends that when the Tribunal further assessed the claims of the applicant consequent upon the proposed hearing at which the applicant failed to appear, the review miscarried because the documents were not available to the Tribunal for consideration at this next phase of the review process. The applicant says that he held a legitimate expectation that the Part B documents would be available to the Tribunal and that the Tribunal would act consistently with its practice directions published on 6 July 1994, 7 October 1994, 27 June 1995, 17 October 1995 and 25 June 1997 which involve an acceptance of the notion that the Tribunal will deal with all material and any material adverse to the applicant in reaching its decision in review of the delegate's decision. 14 Section 418 casts an obligation upon the Secretary of the Department to provide the Registrar of the Tribunal with the prescribed number of copies of a particular statement contemplated by s 418(2) and 'as soon as is practicable after being notified of the application (to the Tribunal) , give to the Registrar each other document, or part of a document, that is in the Secretary's possession or control and is considered by the Secretary to be relevant to the review of the decision' (s 418(3)). Section 424(1) provides that in conducting the review, 'The Tribunal may get any information that it considers relevant. However, if the Tribunal gets such information, the Tribunal must have regard to that information in making the decision on the review' . 15 The difficulty with these contentions is that in formulating and advancing the application for review before Federal Magistrate Barnes, the applicant relied upon three grounds. The first was that the Tribunal failed to comply with s 426A of the Act in making a decision on the review in the absence of the applicant consequent upon the invitation pursuant to s 425 of the Act to the applicant to appear. The second ground was that the Tribunal failed to conduct a real rather than a purported exercise of its jurisdiction to review the delegate's decision in that the Tribunal failed to determine whether the applicant was a practising adherent of the Roman Catholic faith in China. A second aspect of the second ground was that the Tribunal constructively failed to exercise its jurisdiction because it improperly precluded itself from considering contentions that the applicant had assisted other practitioners in China of the Roman Catholic faith. The third ground was that the Tribunal reached its decision in the absence of probative material or by an application of logical reasoning and therefore the decision was not rationally formed. None of these contentions involve any suggestion that the Tribunal had failed to consider the Part B documents or, more particularly, that the Part B documents were not available to the Tribunal. The Appeal Book demonstrates that the Department's file was available to the Tribunal. There is no suggestion that the Part B documents were not available to the Tribunal. Accordingly, there is no prospect of the applicant succeeding on any ground deriving from the contentions concerning the Part B documents. 16 The remaining grounds in the draft notice of appeal are these. First, the practice directions previously mentioned emphasise that the applicant will be given an opportunity to respond to any relevant and significant material which is or may be adverse to the applicant's case. The applicant contends that the most effective setting for dealing with adverse material is a hearing and that all adverse material ought to have been brought to the attention of the applicant before the hearing. Because adverse material in the sense contemplated by the practice directions was not, it is said, brought to the applicant's attention, the Tribunal failed to comply with its practice directions and thus the review miscarried. The second further ground is that the Tribunal conducted an oral hearing on or about 4 December 2003 in the absence of the applicant. The third further ground is that the Tribunal determined that the applicant was not a refugee and thus affirmed the delegate's decision. The fourth further ground is that the Tribunal reached its decision without advising the applicant of the effect of ss 418(3) and 424 (1) of the Act and thus the decision reached by the Tribunal involves '(a) procedural ultra vires; and (b) a breach of procedural fairness' . The fifth further ground is that the applicant was '... not aware that the residential address in the review application form was not his real address' . The applicant says that the migration agent completed the mailing address and that the applicant was not aware that anything had happened with his application to the Tribunal. The applicant says that the Tribunal failed to comply with s 426A of the Act. 17 As to these additional grounds, the position is this. On 21 October 2003, the Tribunal wrote to the applicant advising the applicant that the Tribunal had considered the material before it and was unable to reach a decision in favour of the applicant and that information alone. The Tribunal, pursuant to s 425 of the Act invited the applicant to attend a Tribunal hearing at a date and time specified in a notice of hearing and advised the applicant that if he did not attend the hearing the Tribunal could make a decision on the case without further reference to him. Apart from the fact of the procedural step itself, two further things are important. First, the Tribunal wrote to the applicant at each of three addresses nominated in the review application namely, the home address for the applicant, a mailing address and the address of the applicant's authorised recipient. Secondly, the applicant responded to the hearing invitation on 28 October 2003. There can be no suggestion therefore that the applicant was not in receipt of relevant material. The applicant notified the Tribunal that he wished to attend but elected not to do so. Accordingly, the contention that the applicant was deprived of the most efficacious setting for dealing with adverse material, namely a hearing, is without any merit. 18 As to the contention concerning adverse material generally, there is no material which suggests that the Tribunal failed to deal with material properly or failed to consider contentions and submissions put to it concerning claims made by the applicant. 19 As to the contention that the Tribunal determined that the applicant was not a refugee and thus affirmed the delegate's decision, this contention seems simply to be conclusionary rather than an additional ground. If it is intended to convey a further ground of appeal, it lacks any content. 20 As to the contention that the Tribunal made a decision on the review in the absence of the applicant and thus contravened s 426A , the position is this. The Tribunal, pursuant to s 425 of the Act invited the applicant to appear before the Tribunal on a nominated date at a particular time. The applicant did not appear before the Tribunal on the day, at the time and at the nominated place. The pre-conditions having been satisfied, the Tribunal was entitled to make a decision on the review without taking any further action to allow or enable the applicant to appear before it. The Tribunal exercised that power and made a decision on the review. No demonstrated failure or imperfection in the exercise of the power is made out or a failure of any of the pre-conditions to the exercise of the power. 21 As to the contention that the Tribunal engaged in conduct which might be characterised as 'procedural ultra vires or a breach of procedural fairness' based upon a failure to explain the effect of ss 418(3) and 424 (1), there is no obligation upon the Tribunal to explain the operation of those sections to the applicant. 22 As to the contention that the applicant was not aware that the residential address in the review application form was not his real address and that the applicant was not aware that anything had happened with his application to the Tribunal, the chronology reveals that the applicant was aware of the outcome of the application to the Tribunal because he filed an application for review of the Tribunal's decision in the Federal Court which was transferred to the Federal Magistrates Court. The applicant filed an amended application on 8 June 2004 and was present in court on 19 January 2006 when Federal Magistrate Barnes pronounced judgment. The applicant appeared before Federal Magistrate Barnes and was assisted by an interpreter. 23 Accordingly, there is no prospect of any ground advanced by the applicant in the draft notice of appeal succeeding. 24 Having regard to the failure to explain the delay and the failure to demonstrate any 'special reasons', the application must be dismissed with costs. The application for an extension of time to file and serve a notice of appeal is dismissed. 2. The applicant shall pay the respondent's costs of and incidental to the application. | application for leave to file and serve a notice of appeal order 52, r 15(2) consideration of failure to explain delay consideration of whether 'special reasons' made out consideration of conduct of review consequent upon a hearing at which the applicant for review failed to appear. migration |
The applicants seek orders restraining the respondent from selling or offering for sale copies of digital versatile discs ('DVDs') embodying certain films, an inquiry into damages and consequential relief. The statement of claim alleges that the respondent has infringed the copyright or exclusive right to import held by the various applicants in relation to particular cinematograph films. 2 The statement of claim alleges that the respondent has offered for sale imported DVD copies of films, in respect of which various applicants hold the copyright, without the licence of any of the applicants. It is further alleged that he has done so in circumstances where he knew or ought reasonably to have known that the making of copies in Australia by the importer would have constituted a breach of copyright. Alternatively, the statement of claim pleads that each of the imported copies of the applicants' films was an 'infringing copy' for the purposes of s 10 of the Copyright Act 1968 (Cth) (' Copyright Act '). The applicants plead that they fear that unless the respondent is restrained, he will continue to import and sell imported copies of the films without the licence of the applicants. Accordingly, the applicants say that they are entitled to the relief claimed by them, including injunctive relief: see Copyright Act , s 115(2). 3 The respondent, despite being served with the originating process, failed to enter an appearance by the required date (10 March 2006) or at any time. The respondent also failed to comply with a direction made by the Court on 10 March 2006 to file his defence no later than 12 May 2006. 4 By a motion filed on 11 May 2006, the applicants seek judgment on default, pursuant to the Federal Court Rules (' FCR '), O 35A r 3(2). I am also satisfied that the respondent has been duly served with the originating process and other documentation in the proceedings and has failed either to enter an appearance or to file a defence in accordance with the Court's directions. 7 Until O 35A was introduced into the FCR in 2004, it was not open to the Court to make an order for a default judgment, except on a motion supported by evidence as to the merits of the application: Luna Park Sydney Pty Limited v Bose [2006] FCA 94 , at [17], per Jacobson J and cases cited there. 8 Order 35A has been interpreted as dispensing with the invariable requirement that the applicant prove by evidence that the pleaded claim is well-founded. Under the new O 35A r 3, it now seems that reliance may be placed on the allegations in the relevant statement of claim. Judges of the Court have held that the rule does not require proof by way of evidence of the applicant's claim, but that on the face of the statement of claim there is a claim for the relief sought and that the court has jurisdiction to grant that relief: see Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 , at [3], per Heerey J; Australian Competition and Consumer Commission v 1 CellNet LLC [2005] FCA 856 , at [14], per Nicholson J; Australian Competition and Consumer Commission v Albert [2005] FCA 1311 , at [6]-[7], per Jackson J and Deisel Spa v Hwang [2005] FCA 1619 , at [2], per Tamberlin J. Order 35A r 3 has been applied where an applicant seeks relief of this kind (as distinct, for example, from damages), in consequence of default by a respondent: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433. 10 For myself, I am inclined to think that some caution should be exercised before granting default relief of the kind sought in this case simply on the basis of the pleadings. In particular, the sanctions that can be invoked where a respondent contravenes a restraining order should be borne in mind. Order 35A r 3 vests a discretion in the Court. Depending on the circumstances, it may be appropriate for the Court to require some evidence, for example, that the respondent has infringed an applicant's copyright as alleged in the statement of claim before making restraining orders or orders requiring a respondent to deliver up on oath infringing copies of copyright material (as the applicants seek here). 11 In the present case, Mr Cobden SC, who appeared with Ms Richardson for the applicants, read a number of affidavits in support of the motion. These satisfy me that the respondent has infringed the copyright of the various applicants in the identified films by selling or offering for sale DVDs that constitute copies of the films. The evidence also satisfies me that, unless restrained, the respondent is likely to continue his infringing activities. The evidence also supports the other relief sought by the applicants. There is therefore no need to consider whether it would have been appropriate, in the absence of such evidence, to grant the restraining orders sought by the applicants on the basis of the pleadings alone. 12 The restraining orders the applicants seek have been carefully drawn and follow the form approved by the Full Court of the Supreme Court of Victoria in Chappell & Co Ltd v Associated Radio Co of Australia Ltd [1925] VLR 350, at 362-363. Indeed, the orders proposed in the present case are somewhat narrower than those made in Chappell v Associated Radio . 14 Accordingly, I propose to make the orders sought by the applicants in the motion. These include restraining orders, an order for delivery up on oath of the infringing copies of the applicants' films and an inquiry as to damages. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. | proceedings for infringement of copyright no appearance or defence filed by the respondent orders sought pursuant to o 35a of the federal court rules by reason of default whether restraining orders and other relief should be granted practice and procedure |
Capital is a wholly owned subsidiary of Green Pacific. The Liquidator has now formed the view that it would be in the interests of the creditors of both companies for a deed of company arrangement to be approved. Accordingly, he now seeks orders of the Court granting leave for him to be appointed, together with his partner Philip Patrick Carter, as administrators of Green Pacific and Capital. The Liquidator also seeks ancillary orders concerning the operation of the Corporations Act 2001 (Cth) (the Act) requiring meetings of creditors to be convened. Unless the Court is satisfied that there would be some utility in acceding to the Liquidator's application, there would be no point in doing so. It is, therefore, necessary to say something about the proposal that the Liquidator wishes to have put to the creditors. 2 At present, the issued capital of Green Pacific is some 377 million shares. Of those shares, 8.7% are held by entities associated with Mr Alfred Wong, who was the managing director of Green Pacific until the winding up orders were made. According to a draft report by the Liquidator, Green Pacific has trade creditors totalling $50,107. Capital has debts totalling $1,490,000 under promissory notes issued by Capital in connection with the raising of funds. In addition, the two companies together have liabilities totalling $13,135,452 owing to various entities associated with Mr Wong (the related party creditors). The related party creditors include Richland Pty Limited (Richland), the trustee of Mr Wong's family trust, in the sum of $8,020,048. 3 The Liquidator wishes to propound a deed of company arrangement which involves a number of interrelated transactions. It is contemplated that a fund in the sum of $750,000 will be established for the purposes of the deed of company arrangement. That fund will be applied in payment of the costs of the administration and in payment of the unsecured creditors of the two companies, other than the related party creditors. That sum is to be provided as to $510,000 by Mr Wong. 4 It is proposed that Green Pacific will continue to operate following the deed of company arrangement as a subsidiary of BMI 2 Pty Limited. BMI 2 will subscribe $450,000 for shares in the capital of Green Pacific and will take a transfer of the issued shares held by Mr Wong's interests. As a consequence of that subscription and transfer, BMI 2 will hold 83.5% of the issued capital. Other shareholders, who are unconnected with Mr Wong's interests, will hold 16.5% of the shares. Of the $450,000 to be subscribed by BMI 2, $240,000 will be transferred to the proposed deed fund. The balance of $210,000 will be retained as working capital of Green Pacific. 5 Green Pacific has been engaged in the development of new technology for the generation of electricity and is the owner of certain intellectual property. It also owns shares in two subsidiaries engaged in that technology. It is proposed that that intellectual property and the shares in the two subsidiaries will be transferred for a nominal sum to BMI 1 Pty Limited, a related company of BMI 2. 6 It is contemplated that all of the debts of Green Pacific and Capital will be extinguished in exchange for a payment equal to approximately 83 cents in the dollar. The related party liabilities will be extinguished entirely. However, BMI 1 will assume the liability for all of the related party liabilities. At the moment, BMI 1 has a nominal share capital and will have the assets that will be transferred by Green Pacific. The terms of the assumption of liability by BMI 1 are that there will be a moratorium of 12 months on proceeding for any of the related party liabilities. 7 At the end of 12 months, BMI 1 will have various options. If they are exercised, it will be because BMI Group is satisfied that the technology has some value. It is possible, therefore, that the related party creditors will receive payment of a substantial part, or perhaps the whole, of their debts. On the other hand, it is conceivable that they will receive nothing, depending upon whether the technology turns out to be a success. 8 Whether the deed of company arrangement is approved will be a matter for the creditors of the two companies. Insofar as there is an unequal treatment of creditors, that would be a matter for the creditors to complain about, if they are so advised, by making an application to the Court on the basis that they have been unfairly discriminated against. That of course is a matter for the creditors. 9 One concern that has been raised by the Liquidator follows from the interest of the Commission in this application. The Commission was the plaintiff in the proceeding in which the Liquidator was appointed and the companies were ordered to be wound up. The Commission has raised a concern that Richland has outside creditors and that, as a consequence of the extinguishment of the debt owing to Richland by the two companies, those creditors may be prejudiced. That of course is a matter for those creditors. Whether they will ever become aware of the proposal for the deed of company arrangement, whereby Richland's debt will be extinguished, would be a matter for Richland. 10 It would of course be open to the Commission, if it was concerned with the administration of any company, as it was with these two companies, to intervene and, if need be, notify creditors of Richland, or require Richland to notify its creditors, of the steps that Richland is proposing to take in relation to the deed of company arrangement. Short of being aware of that possibility, it seems to me that there is not a great deal that the Court can do about it. Bearing in mind, however, that this application will involve several stages so far as the deed of company arrangement is concerned, involving the Court, it is a matter over which the Court can exercise some supervision. 11 Initially, the Liquidator seeks an order that he have leave to appoint himself and his partner as administrators under s 436B(2) of the Act. Under s 436B(1) , a liquidator of a company may appoint an administrator of the company if he thinks that the company is insolvent, or is likely to become insolvent at some future time. Under s 436B(2) , a liquidator may, with the leave of the Court, appoint himself under s 436B(1). While the directors of Green Pacific and Capital do not accept that they are insolvent, the Liquidator has deposed to his belief that both of the companies are insolvent. The book value of the assets of the companies indicates that it has surplus assets. The Liquidator's belief, however, is that the assets will not achieve on winding up anything like their book value. I am satisfied that the Liquidator has no interest in the outcome of the proceeding that would make it inappropriate for him to appoint himself and his partner as administrators. 12 The Liquidator asks for orders, under s 447A of the Act, varying the operation of the Act in relation to the proposed administration in two respects. Under s 447A(1) the Court may make such orders it thinks appropriate about how Part 5.3A is to operate in relation to a particular company. Under s 436E of the Act, the administrator of a company under administration must convene a meeting of the Company's creditors in order to determine whether to appoint a committee of creditors and, if so, who are to be the committee's members. The meeting must be held within five business days after the administration beings. 13 Having regard to the small number of creditors of the companies and having regard to the consultation that has already occurred between the Liquidator and the creditors, including the Commission, which is the biggest creditor of Green Pacific, other than the related party creditors, the Liquidator contends that there is no need to have the meeting that is contemplated by s 436E. Having regard to what the Liquidator has said concerning the consultations and his intention to continue to consult with the creditors, I see no need to insist upon that meeting being convened. 14 The Liquidator also seeks an order in relation to the second meeting of creditors. Under s 439A(1) of the Act, the administrator of a company under administration must convene a meeting of creditors within the convening period as fixed by s 439A(5) or s 493A(6). Under s 439A(2) the meeting must be held within five business days after the end of the convening period. Assuming the orders are made today, the Liquidator intends to appoint himself and his partner as administrators today and to convene the meeting of creditors contemplated by s 439A , for the purpose of considering the deed of company arrangement, to be held on 14 June 2007. 15 The meeting contemplated by s 439A(1) must be convened at least five business days before the meeting. The convening period, by the operation of s 439A(5)(b) is 21 days beginning on the day when the administration begins. The Liquidator is concerned that the effect of s 439A(2) is that the meeting cannot be held before the end of the convening period. I am by no means persuaded that that is the effect of s 439A(2). On one view, it seems to me, it does no more than require that the meeting be held no later than five business days after the end of the convening period. The section does not say that the meeting may not be held before the end of the convening period. I am not persuaded, therefore, that the second variation is entirely necessary. However, it will avoid any possible argument. The Liquidator asks that the order under s 447A provide that the administrators may convene the meeting under s 439A during the convening period, so long as the period of notice contemplated by s 439A(3) is given. 16 As I have indicated, in connection with the deed of company arrangement, various transactions are contemplated that would fall foul of s 468 of the Act, which provides that certain transactions of a company in liquidation are void, unless the Court otherwise orders. The Liquidator also asked for orders under s 468 that the proposed allotments of shares and dispositions of assets by Green Pacific not be void. I consider that it would be preferable to await the outcome of the meeting of creditors to consider the deed of company arrangement before considering making orders under s 468. 17 Finally, the Liquidator asks for an order under s 556(1)(dd) of the Act that his costs of this application be expenses in the liquidation of the companies. Having regard to the Liquidator's view that the proposed deed of company arrangement and other transactions are in the interests of creditors as a whole, it appears to me not unreasonable that those orders should be made. 18 There are other orders contemplated in the interlocutory process. If the deed of company arrangement is approved, it is contemplated that in due course the winding up be terminated. It is premature, however, to make an order along those lines. Accordingly, it will be necessary for the liquidator to come back to the Court in due course for such an order, if the deed of company arrangement is approved. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | appointment of administrators whether appropriate to appoint liquidator convening of meeting of creditors under s 436e of the corporations act 2001 (cth) corporations |
There were also orders made for the despatch of the scheme booklet and for the advertising of the meetings. On 22 October 2009, White Energy despatched the scheme booklet. Mr John Atkinson, a director of White Energy, in his affidavit of 16 November 2009, deposed to certain developments which have occurred since the making of the orders. The developments have a dramatic effect upon the implementation of the proposed scheme. The major agreement which underpins the implementation of the proposed scheme is the merger implementation agreement between White Energy Company Limited and Asia Special Situation Acquisition Corp (ASSAC), the company which would, pursuant to the scheme, effectively "merge" with White Energy. Mr Atkinson deposed that he had attended meetings in Canada in October 2009 where it emerged that representatives of the banks advising ASSAC made it clear that it was unlikely that ASSAC would be able to raise sufficient funds to satisfy the requirements of cl 3.1(d) of the merger implementation agreement unless White Energy made significant financial concessions regarding the merger consideration. Those concessions, said Mr Atkinson, were not able to be made. There were also other issues which arose in relation to the satisfaction of conditions precedent in the merger implementation agreement. As a consequence, said Mr Atkinson, an agreement has been entered into between ASSAC and White Energy terminating the merger implementation agreement and releasing each other from any obligations and liabilities arising under that agreement. The consequence is, therefore, that the condition which underpins the whole of the proposed scheme has ceased to exist. The application before me today is for orders that the meetings, which are due to be held on 23 November 2009, to consider the resolutions for the approval of the schemes, not be held. Mr Pendlebury has submitted that there would be no utility in holding the meetings in light of the fact that there is no further intention or obligation on behalf of ASSAC to proceed with the merger which was contemplated in the scheme. Mr Pendlebury has referred me to a number of authorities which deal with the power of the Court to order that the orders for the convening of the meetings which were made on 15 October 2009, be revoked. One of the cases which Mr Pendlebury referred me to is Re Australian Gas Light Co (2006) 57 ACSR 67 ( Australian Gas Light ) where Emmett J considered the power of the Court to make orders of the kind sought today. In that case Emmett J referred to the case of Re North Flinders Mines Ltd [1996] SASC 5520 ; (1996) 66 SASR 437 , where Debelle J held that the court did not have the power to make orders to the effect sought by White Energy today. However, Emmett J also referred to another case CMPS&F Pty Limited v Crooks Mitchell Limited (1997) 76 FCR 366 ( CMPS&F ) where Burchett J held that s 1319 of the Corporations Law which is the equivalent of s 1319 of the Corporations Act 2001 (Cth) did provide the Court with the power to cancel the holding of the meetings. Emmett J relied upon CMPS&F to make orders terminating the holding of meetings which had not yet been held in order to consider resolutions for the approval of schemes. Since then the Australian Gas Light decision has been followed by Robson J in Re Symbion Health Limited [2007] VSC 571 ( Symbion ) and by Lindgren J in Re Anzon Energy Limited (No 2) (2008) 66 ACSR 355 ( Anzon Energy ). There is a similarity between the facts in Anzon Energy and the facts in this case because in that case, Anzon Energy and Nexus, which had intended to proceed under a merger implementation agreement, agreed not to proceed with the agreement. Lindgren J found that, in those circumstances, there was no utility in reconvening the meetings to approve the scheme, which, at that time, stood adjourned. Lindgren J determined that the meetings be dissolved and not be resumed. I would follow the decisions in Australian Gas Light , Symbion and Anzon Energy . Accordingly, I am content that the Court does have the power to make the orders which are sought here today. As I have said, there is a similarity between the facts in this case and those in Anzon Energy - the main difference being that the meetings in this case have not yet been held. However, in Australian Gas Light , the meetings had not yet been held and the Court order, in effect, revoked the orders for holding the meetings. Accordingly, I am quite satisfied that the Court has the power to make the orders sought and that it should exercise the power on the basis that there would be no utility in proceeding with the meetings. In those circumstances, I will make the orders which have been handed to me in the proposed minute of orders by Mr Pendlebury. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | scheme of arrangement proposed merger parties to merger implementation agreement terminated the agreement application for orders that proposed meetings of members and option holders to approve scheme of arrangement not be held. corporations |
One is brought by the first, second and third applicants in the substantive case ('the first notice of motion'), the other by the first and second respondents in the substantive case ('the second notice of motion'). For convenience, I shall refer to the first notice of motion in this case as that brought by 'the applicants', and the second notice of motion as that brought by 'the respondents', and I propose to deal with them in that order. 2 On 15 February 2006 I ordered the parties to make discovery by verified List of Documents and file and serve such List of Documents on or before 4.00 pm on 29 March 2006. 3 The applicants filed and served their List of Documents on 13 April 2006 and provided inspection of the documents contained in the applicants' List of Documents to the respondents on 4, 8 and 9 May 2006. On 11 May the respondents requested the provision of certain documents contained in the applicants' List of Documents and these were provided on 16 May 2006. 4 The respondents filed and served their List of Documents on 29 March 2006 on the applicants on 28 April 2006. On 19 April 2006 the applicants requested the provision of certain documents contained in the respondents' List of Documents and these documents were provided on 28 April 2006. 5 Solicitors for both the applicants and the respondents depose that on 28 June 2006, McCullough Robertson, acting on behalf of the respondents, wrote to Lynch & Co, acting on behalf of the applicants, and noted that they intended to raise with them 'the issue of the inadequacy of the applicants' discovery' (affidavit of Paul Hardman of 20 July 2006 par 4). 6 (Reference to this letter of 28 June 2006 and this specific statement was repeated in par 8 of the affidavit of Mr Paul Lynch filed 27 July 2006. At the hearing of these notices of motion last Friday the respondents objected to certain evidence of the applicants, including par 8 of Mr Lynch's affidavit. This objection is somewhat surprising, given that Mr Hardman deposes to the same facts in his affidavit par 4. ) 7 The immediate history of this matter is set out in (2006) FCA 920. The hearing of the substantive case was scheduled to commence on Monday 17 July 2006 for two weeks. On the application of the applicants I adjourned the hearing of this matter for reasons including that a considerable volume of material was put before the applicants in the days before the trial. 8 The notices of motion represent claims by each party in respect of documents for which they are seeking discovery. The parties in particular have referred me to O 15 rr 2(3), 3, 6 and 8, and Practice Note 14. 16 On the other hand, the respondents claim that a significant amount of material remains to be discovered by the applicants. 17 The adjournment of the hearing of this case, because of issues involving relevant documents which both parties claim require disclosure, requires questions of further discovery to be resolved without delay. Without doubt, it is in the interests of the litigants that discovery be concluded, to ensure this matter be progressed to trial in November this calendar year. 18 Both the written and oral submissions of counsel in this hearing focused on two composite documents, both of which were prepared by the solicitors for the respondents for the purposes of the hearing. These composite documents contained comments from each party, and were headed: • Response to page 4 of fax dated 14 July 2006 and further response to fax dated 20 July 2006 . This table of responses refers specifically to some of the documents listed in the schedule attached to the applicants' notice of motion and sought by the applicants, and summarises pre-hearing communications between the legal representatives of the applicants and the respondents as to those documents. • Schedule of applicants' undiscovered documents . This schedule contains a list of documents sought by the respondents, and summarises pre-hearing communications betweens the legal representatives of the applicants and the respondents as to those documents. 19 During the hearing I noted that a considerable volume of material had been filed by the parties by way of affidavit, both in the lead up to and during the hearing itself. I asked the parties to consider whether they had any additional submissions to direct my attention to specific aspects of those affidavits. It was clear however, both from the written and oral submissions, and the responses of counsel, that the key documents for both parties are the two composite documents I note above. The first and second respondents file an affidavit stating whether any of the documents or classes of documents referred to in the schedule to this application is or has been in their possession, custody or power and, if it has been but is not then in their possession, custody or power when they parted with it, such affidavit to be filed and served within 7 days of the date of this order. 2. The first and second respondents file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with O 15 r 6 of the Federal Court Rules within 14 days of the date of this order discovering any document annexed to the affidavits of the respondents' witnesses filed in this action which are not already listed in the first and second respondents' List of Documents filed 29 March 2006 and the documents referred to in the affidavit required to be filed by par 1 of this order. 3. The first and second respondents pay the first, second and third applicants' costs of this motion to be taxed. 23 Prior to the hearing there were communications between the parties as to documents for which the applicants now seek an order for discovery. On 14 July 2006 Lynch & Co on behalf of the applicants faxed a letter to McCullough Robertson on behalf of the respondents, inter alia , asking for further discovery of documents which Lynch & Co had identified as relevant from the affidavit of Mr Andrew Strahley. There was further correspondence between the parties, including facsimile transmissions between the parties on 20 July 2006. 24 A table of responses was prepared headed 'Response to page 4 of fax dated 14 July 2006 & further response to fax dated 20 July 2006', and handed to me in Court. The submissions of the parties, to the extent that they dealt with this notice of motion, referred to this table. 25 I note however that the documents referred to in the Schedule to the notice of motion, and the documents referred to in the table of responses handed to me in Court, are not identical. The Schedule to the notice of motion includes additional documents which, to the extent I can ascertain, have not been previously discussed by the parties. They are: • Agreement for purchase of remaining 20% held by vendors (par 14 Strahley affidavit) • Reports provided by Davidson and Sims (par 18(g) Strahley affidavit) • Records detailing rejection by juice producers (par 32 Strahley affidavit) • Employment contract --- Matthew Burns • Notice of resignation --- Matthew Burns to Sunstate Orchards • Copies of material provided by Andrew Strahley to Hancock Board from May 2004 concerning historical yields and packout percentages for Bundaberg and Tiaro Orchards • Copies of any minutes of the Hancock Board containing resolutions or evidencing discussion of the material provided to it by Mr Strahley from May 2004 concerning historical yields and packout percentages for Bundaberg and Tiaro Orchards. However, as submitted by the applicants, inclusion of a document as an annexure to an affidavit is not, in itself, proper discovery of the document. In my view it is clear that simply annexing a document to an affidavit is not in itself 'discovery' of that document within O 15. 30 The applicants have submitted further that this document is relied on by the respondents as part of their evidence-in-chief in this action. This submission is not disputed by the respondents. 31 Accordingly it appears that this document is discoverable within the terms of O 15 r 2. Paragraph 14 of Mr Strahley's affidavit sheds little additional light on the document description, and indeed no document of this description is referred to in that paragraph. My attention has not been directed elsewhere to any other reference to this document. Further, the relevance of the document is not immediately clear. 33 I do not have sufficient evidence before me at this stage to make an order for discovery under O 15. Indeed, while Mr Strahley in par 18(g) of his affidavit refers to Messrs Davidson and Sims, there is no reference in this paragraph to any reports they may have prepared. My attention has not been directed to any other reference to these documents, and the nature of their contents and the relevance thereof is not immediately clear. 35 I do not have sufficient evidence before me at this stage to make an order for discovery under O 15. The years in question were clarified after correspondence between the parties. 37 Although in their table of responses addressed by the parties in Court, the respondents disputed that these documents are relevant, they also submit that the documents have already been discovered by the applicants. At the hearing, Mr McQuade for the respondents drew my attention to the List of Documents filed by the applicants on 13 April 2006, p 8 item 53, which states 'December 2001-February 2005, Hancock Farm Company --- Farm Management Reports'. The respondents therefore submit that discovery by them of these documents is unnecessary, on the basis that the applicants already have them (O 15 r 2(4)). 38 The applicants however submit that the documents are relevant, and that they should be discovered by the respondents. It appears that they already have these records. In the absence of evidence to the contrary, O 15 r 2(4) applies. The respondents claim however that all relevant documents have been discovered in accordance with O 15. In the table of responses, the respondents invited the applicants to identify any specific budget or budgetary summary they considered should be discovered. 42 The applicants made specific requests, namely that: • the respondents identify by reference to discovery number the Budgets referred to in par 20 of Mr Strahley's affidavit which they assert have been discovered • the respondents identify by reference to discovery number the Budget summaries referred to in par 20 of Mr Strahley's affidavit which they assert have been discovered. 43 The respondents repeated their previous response. 44 In my view the further response of the respondents is unsatisfactory. These documents should be discovered. There is no reference in this paragraph to any records as sought by the applicants. My attention has not been directed to any other reference to such records. 46 I do not have sufficient evidence before me at this stage to make an order for discovery under O 15. 48 It is common ground that: • the 'SmartPak' and 'TotalPak' records are data files located on a computer • the computer is located in the packing shed which is currently on property controlled by the respondents. 49 However, each party claims that: • they do not have the documents in their possession, custody or power; rather • the other party has the documents in their possession, custody or power. 50 The applicants have submitted that, as the computer is on the property of the respondents, the respondents should return the computer to the applicants. In turn, the respondents have submitted that they would, if requested, allow the applicants access to the packing shed to obtain the records. 51 In light of this apparent consensus, it is somewhat surprising that these records continue to require a ruling by this Court. 52 The parties have not sought an order, nor do I propose to make any order giving rise to any inference, that operates as a final adjudication upon any entitlement, by way of right, in either party to the property in question, in terms of proprietary or possessory title to the relevant computer or its contents. The question arises however as to whether the documents are in the 'possession, custody or power' of either party. 53 The terms 'possession, custody or power' in O 15 represent three alternative states. With respect to 'possession' and 'custody' see also Santow J in Horsley v Phillips Fine Art Auctioneers Pty Ltd (1995) 7 BPR [97557] at 14,371-14,372; Stephen J in Federal Commissioner of Taxation v ANZ Banking Group Ltd [1977] HCA 57 ; (1979) 143 CLR 499 at 504-505; and S Fisher Commercial and Personal Property Law, Butterworths, Australia, 1997 ch 3; and with respect to the meaning of 'power' see also Beaumont J in Australian Independent Newspapers Ltd v John Fairfax Holdings Ltd (Federal Court of Australia, 22 June 1994) par 12 and Lord Diplock in Lonrho Limited v Shell Petroleum (1980) 1 WLR 627 at 635-6. 55 Although from the submissions of the parties it appears that the applicants may have an enforceable legal right to obtain the documents from the respondents, the applicants do not, in the words of Lord Diplock in Lonrho Limited v Shell Petroleum (1980) 1 WLR 627 at 635-636, have 'power' over the documents. They do not have the enforceable legal right to obtain the documents from the respondents without the need to obtain the consent of anyone else . The submissions of both parties indicate that the applicants would need to obtain the consent of the respondents to access the computer and therefore obtain the documents. Even if the respondents are likely to comply voluntarily with a request of the applicants to access their property, and in turn the computer and the documents, it does not mean that the documents are currently 'in the power of' the applicants (cf comments of Lord Diplock in Lonrho at 636H). 56 As the respondents have offered to allow the applicants access to the computer containing the records, in my view it is appropriate in relation to these documents that, once the respondents allow the applicants access to the computer and its contents, the applicants discover the records sought by the respondents. Accordingly, at this stage, I make no order for discovery of these documents by the respondents. 58 In my view no order for discovery should be made. 60 In my view no order for discovery should be made. 62 In my view no order for discovery should be made. 64 In my view no order for discovery should be made. By this stage, the Board of Hancock had reached the view that the Property was not performing in accordance with its return criteria. The respondents also stated that they had no further such documents in their possession, custody or power. 68 The applicants submit that the document titled 'Sunstate Orchards Pty Ltd Position Report April/May 2004' is a report to the Board, not a Board paper. 69 The applicants in the table of responses claimed that the Hancock Board paper evidencing the decision to sell the orchards, together with all material upon which that decision was made, is relevant to proof of the reasonableness of the respondents' predictions as to the orchards' performance made to the applicants some months later. In their written submissions, the applicants claimed that documents of this kind at Board level fall within O 15. 70 In my view, Board papers, including minutes of meeting, as sought by the applicants fall within the criteria in O 15 rule 2(3) and are discoverable. 72 The respondents stated that they provided a copy of the document by facsimile on 20 July 2006 and by letter on 26 July 2006. 73 At this stage I do not consider an order for discovery to be necessary. It appears that the applicants did not press this claim in correspondence with the respondents. 75 In my view no order for discovery should be made. 77 In my view no order for discovery should be made. 79 In my view no order for discovery should be made. 81 In my view no order for discovery should be made. There does not appear to have been proper discovery of this document within O 15. 83 For reasons I outlined earlier in this judgment as to the need for proper discovery of documents by litigants, this document should be discovered by the respondents. 85 In my view no order for discovery should be made. They believe this document is in the possession of the second applicant. I note that the applicants did not press this claim in correspondence with the respondents. 87 In my view no order for discovery should be made. 89 At this stage, I do not propose to make any order for discovery in relation to this document. They claim however that it is an interrogatory rather than a request for discovery. 91 The respondents indicated in the table of responses that a hard copy of this file is in Mr Strahley's affidavit. The applicants press for a computerised version to determine the provenance of the document. 92 On the basis that a hard copy of the document has already been provided by the respondents, their claim that the request of the applicants is an interrogatory is not sustainable. 93 The document in electronic form should be discovered by the respondents. My attention has not been directed to any reference to these documents in the affidavit of Mr Strahley or elsewhere. 95 I do not have sufficient evidence before me at this stage to make an order for discovery under O 15. In my view it is clear that proper discovery has not been made by the respondents in this matter. Indeed, following the production of a significant quantity of material in the days leading to trial, an unidentified proportion of which had not been previously discovered, the trial was adjourned, with resultant considerable inconvenience to all parties and this Court. 97 It is appropriate that the applicants be in a position where they can properly prosecute their claim. Fairness requires that the respondents produce documentation in accordance with the Federal Court Rules , which includes a Supplementary List of Documents in Form 22 in the terms sought. Accordingly, I am prepared to make the order in substantially the terms sought by the applicants. I note that this order will also address the document referred to as 'the First Budget' in the Schedule to the applicants' notice of motion, to which I have already referred. 99 As I have already indicated, I have concerns about the approach taken by the respondents towards discovery in this case. However, in my view it is important that the parties concentrate on preparation for trial. Little can be achieved at this point from requiring the respondents to depose on oath why they did not discover these documents earlier, and I agree with Mr McQuade that, at this point, it would not produce an effective result for the course of the trial. 100 This is an issue which may however be relevant to costs in due course. In my view, it is best dealt with then. The applicants within 7 days provide discovery by list of the documents described in the attached schedule and inspection of those documents be provided within 14 days. 2. In the alternative, the applicants file an affidavit stating whether the document or any of the documents of that class is or has been in their possession, custody or power, when it was parted with and what has become of it. 3. The affidavit referred to in par 2 above be served on the first and second respondents within 14 days. 4. The time for service of the Notice of motion be abridged until a time no later than 4.00 pm, 20 July 2006. 5. Any other Orders that this Honourable Court deems appropriate. 6. Costs. 103 In my view it is appropriate to deal with the subject of the first three orders sought by the respondents together, before turning to the remaining orders in their notice of motion. Mr McQuade on behalf of the respondents handed me a modified version of the Schedule during the hearing ('Schedule of Applicants' Undiscovered Documents'), indicating --- by bold font --- a number of documents for which the respondents no longer press. The documents for which the respondents no longer press are, using the numbering in the schedule as follows: • Item 11. Income Tax Returns for both first and second applicants for year ended 30 June 2006 • Item 23. Trend line data constructed by second applicant • Item 24. Email from David Breed to second applicant dated 28 February 2005 • Item 29. Weekly reports for performance, picking, packing, dispatch and pricing, payments received and debtors listing for period from 21 March 2005 to 23 June 2005 • documents or categories of documents identified by the first and second respondents from documents discovered by the National Australia Bank Limited pursuant to Order dated 28 June 2006 and identified by the following numbers: 32, 35, 36, 38, 40, 42, 43, 44, 45. 104 The balance of the Schedule is useful because it groups documents for which the respondents seek discovery. At the commencement of the meeting Mr Tracy, in my presence, signed a copy of the Confidentiality Agreement that I had previously sent to Mr Douglas on 6 December 2004. I also signed the agreement. It was signed in duplicate. I have undertaken an extensive search for the signed agreement and it cannot be located. 108 The applicants further acknowledged that the confidentiality agreement may become relevant to the question of reliance because the document may contain an acknowledgment as to reliance. 109 In the circumstances, it is discoverable by the applicants. As a general rule the administrator has control of the company's business, property and affairs (s 437A(1)(a)) , the powers of other officers of the company are suspended (s 437C) , and the administrator is entitled to all books and records of the company (s 438C). If the company becomes subject to a deed of company arrangement, the affairs of the company are conducted according to the deed (s 444G). 111 In relation to the financial documents of the third applicant, the applicants state that these documents were seized by the administrator on his appointment on 23 June 2005. Accordingly, the applicants submit that the documents are not in their possession, but are in the possession of the administrator, and they cannot discover them. 112 The respondents submitted that a number of the applicants' responses to requests concerning the documents simply state that the documents are not in their possession. The respondents further submit that if the applicants do not have the documents in their custody or power they should say so. The respondents also submit that if documents were in the applicants' possession, custody or power and no longer are, the applicants need to say so in the list of documents. 113 I do not understand the respondents to be submitting that all relevant financial records of the third applicant are not in the possession of the administrator. In other words, I understand that the respondents are not claiming that the applicants have financial records, other than those in the possession of the administrator. 114 However the respondents also submit that, in performing a function of the company under administration, the administrator is taken to be acting as the company's agent. Accordingly, notwithstanding that the records have been seized by the administrator, they do not cease to be records of the company. The respondents therefore submit that those documents are discoverable by the third applicant and should be included in the list of documents. 115 There is no question that the administrator is the agent of the company to which he or she is appointed: s 437B. However, as made clear by s 437A(1) , administrators have very extensive powers over all aspects of the company's business, property and affairs. Indeed as the High Court noted in Australasian Memory Pty Ltd v Brien [2000] HCA 30 ; (2000) 172 ALR 28 at 30, Div 3 of Pt 5.3A Corporations Act 2001 (Cth) provides that the administrator of a company under administration is to assume control of the company's affairs. On the basis that the administrator had possession of the documents, the relationship of administrator and company as contemplated by Pt 5.3A Corporations Act does not permit the company other than with the consent of the administrator to have 'power' over documents retained by the administrator: s 438C (cf Lord Diplock's comments in Lonrho at 636H discussed earlier in this judgment). 116 Notwithstanding a submission by the respondents that 'Mr Tracy is responsible for the day to day management of the company', I note that the financial records were produced to the Court by the administrator by subpoena on 21 July 2006. From this event, it is clear that the applicants do not have possession, custody or power over the records, other than as determined by the administrator in the exercise of his powers. In circumstances where a company is under administration, an order for non-party discovery or subpoena is the appropriate order to require the production of documents in the possession of the administrator (cf Beach J in Hore-Lacy v David Syme and Co unreported Supreme Court of Victoria, 5 September 1996, BC9604308 p 4). 119 It follows that the answer of the applicants in relation to this request of the respondents, namely that they cannot make discovery of these documents, is the correct one. 121 The applicants and the respondents each claim that they are not in possession of these records. 122 The respondents however submit that the applicants plead that certain matters were revealed by the spray records which were not disclosed to the applicants; that the records have not been discovered; and that on settlement of the sale of the property the records remained at the property. The respondents submit further that the applicants must have the documents as they have relied on information from them to plead the allegations in pars 17A(c) and (d) of the Statement of Claim. 123 In summary, the response of the applicants (other than that they do not have the documents in their possession) is that these are documents generated by the respondents. 124 In my view, the submissions of the respondents have merit. The applicants have relied on these records --- if they were ever in their possession, custody or power but are no longer, it is appropriate for the applicants to state when this occurred and why. 125 However, as noted by the applicants, the respondents have also submitted that the records subsequent to settlement 'will also lead to a train of inquiry which would advance the respondents case or damage the applicants' case'. The applicants submit that this submission, which is replicated throughout the Schedule, relates to a test of disclosure obsolete since 1999. 126 In my view it is not necessary to consider this issue in the context of these records, for reasons I have already explained. However, this issue is more relevant in respect of other documents for which discovery is sought, and I shall deal with it later in this judgment. The respondents submit that, for this reason, they should be discovered by the applicants. 128 I note that item 22, which is grouped with the other TotalPak records, is addressed somewhat differently in the Schedule. I also note that the applicants state that they currently do not have the documents in their possession, and that they are conducting searches at the orchards in an effort to locate any such documents. 129 In relation to the documents comprised in item 22, which do not appear to have the same access issues as the documents in items 2, 17 and 30, it is appropriate that the documents be discovered. 130 I have already discussed the SmartPak and TotalPak records, which appear to be in items 2 and 17, in this judgment. 131 The respondents have also submitted that the records subsequent to settlement 'will also lead to a train of inquiry which would advance the respondents' case or damage the applicants' case'. In light of the view I take of these documents it is unnecessary to consider this issue. 132 The packout documents in item 30 are also on the computer. These should be dealt with in the same way as the SmartPak and TotalPak records. 134 The respondents however submit that the document described by the applicants as the '100 day plan' is not those documents, for two reasons: 1. A witness, Mr James Palfreeman, deposed in his affidavit sworn 6 July 2006 that he was specifically shown a document described as a 100 day plan by the second applicant, and that the document consisted of a number of items. I note in particular paragraphs 14 and 15 of that affidavit. 2. The documents which the applicants have identified as the 100 day plan refer in turn to: • in the case of the Sunstate Orchards Acquisition Implementation Plan --- 'develop and implement 100 day plan' • in the case of Sunstate Citrus Pty Ltd kick off meeting Maryborough --- there are two references in the Action Items to (in relation to the Advisory Board visit) "100 day plan" and (in relation to the Management Meeting Process and content) 'Implementation of 100 day plan'. 135 The clear inference which may be drawn, in particular from the second reason (given that those documents actually refer to a document described as the '100 day plan'), is that there is a separate document which is the '100 day plan'. 136 Accordingly, it is necessary for the applicants to discover this document. 137 The respondents have also submitted that the records subsequent to settlement 'will also lead to a train of inquiry which would advance the respondents' case or damage the applicants' case'. The applicants submit that this submission of the respondents, which is replicated throughout the Schedule, relates to a test of disclosure obsolete since 1999. In my view however it is not necessary to consider this issue in the context of this document. Leaving aside the issue of exact identification, there does not appear to be any contest by the applicants that the '100 day plan' should be discovered. 138 Before turning to consider other documents in the Schedule which were not the subject of written submissions, it is appropriate to deal with the issue of discovery sought on the grounds that the document 'will also lead to a train of inquiry which would advance the respondents' case or damage the applicants' case'. In relation to these items however, it was unnecessary to consider this issue on the basis that: • in relation to item 14, the issue was not whether the document should be discovered, but whether it had been discovered • in relation to items 19, 20, 22 and 30 in my view it was clear that the documents fell within O 15 r 2(3). 140 The other documents listed however, namely those referred to in items 13, 15, 21, 27, 28, 50, 55, 56 and 58, also refer to this test. 141 During the hearing this issue was the subject of some contention. Counsel for both parties have since filed supplementary submissions. 142 In essence, the submissions of the applicants are as follows: 1. Order 15 r 2(3) sets out the criteria by which the obligation to disclose might be tested. 2. Those criteria do not include documents leading to a train of inquiry. That was the test before the rules were amended in 1999. 3. Order 15 r 2 should be interpreted according to its terms; and the 'train of inquiry' test (as articulated in the leading case of The Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Company (1882) 11 QBD 55 per Brett LJ at 63, note also Menzies J in Mulley v Manifold [1959] HCA 23 ; (1959) 103 CLR 341 at 345) has no place in that context. 4. General discovery is that which occurs under O 15 r 2. 5. Order 15 r 8 entitles a court to make an order wider than that apprehended under O 15 r 2, however only where an application is made under O 15 r 8. 6. In terms of the Federal Court Rules and Practice Note 14, the order made by the Court on 15 February 2006 was an order apprehended under O 15 r 2(3). 143 The submissions of the respondents may be summarised as: 1. The order of 15 February 2006 was 'The applicants and the respondents make discovery by verified List of Documents and file and serve such List of documents on or before 4.00 pm on 29 March 2006'. 2. The order did not limit discovery to the categories of documents in O 15 r 2, O 15 r 2(3) or otherwise. 3. Order 15 r 2 continues to authorise orders for general discovery, and although the court would not ordinarily make an order for general discovery it may consider it appropriate to do so, in which case the traditional obligations to discovery any document relating to a matter in question in the proceeding continues to apply. 4. Pursuant to O 15 r 8 the court may make orders requiring discovery of a document or class of documents 'relating to a matter in question in the proceeding' that may be or may have been in the possession, custody or power of a party. 5. An order of the court that the parties give discovery, without any further limitation , is a general order or direction for discovery. To limit the ambit of discovery the order, by its terms, should limit the extent of the discovery to be made by a party. 6. As there was no limitation appearing in the orders/directions the direction was for general discovery and the train of inquiry test applies. 7. Alternatively, the court may order a document or class of documents be discovered by affidavit in terms of O 15 r 8. 144 The current version of O 15 r 2 was introduced into the Rules by SR 295 of 1999 Schedule 1, and became effective 3 December 1999. On the same day Practice Note 14 was issued by the Chief Justice. This Practice Note states, inter alia , that: • the general position is that the Court will not order general discovery as a matter of course • the Court will mould any order for discovery to suit the facts of a particular case • in determining whether to order discovery the Court will have regard to the issues in the case and the order in which they are likely to be resolved, the resources and circumstances of the parties, the likely cost of the discovery and its likely benefit • to prevent orders for discovery requiring production of more documents than are necessary for the fair conduct of the case, orders for discovery will ordinarily be limited to the documents required to be disclosed by O 15 r 2(3). 145 There seems no doubt that, as a result of the 1999 amendments to O 15 r 2, the criteria in O 15 r 2(3) superseded the 'train of inquiry' test as the usual requirements for discovery. His Honour in that case also observed that the broader test of 'relating to any matter in question in the proceeding', which derives from the Peruvian Guano case, continues to be used in the context of O 15 r 8 (par 6 of Spyer ), and that in this respect there is a disconformity between the tests of discoverability as between O 15 r 2(3) and r 8 (par 7 of Spyer ). 147 In Aveling v UBS Australia Capital Markets Holdings Ltd [2005] FCA 415 , Lindgren J considered the principles which should guide the parties in identifying categories of documents. Alternatively, of course, the categories may be defined so as to incorporate expressly the terms of the subrule. Whatever approach is taken, it is important to understand that when, as happened in the present case, the Court orders discovery by categories to be notified by one party to another, the Court does not intend that the notifying party be at liberty to widen the discovery obligation beyond the four classes of documents referred to in O 15 r 2(3). The Explanatory Memorandum which accompanied the Federal Court Amendments Rules 1999 (No 6) (SR 1999 No 295) stated of the new subrule 2(3) that '[t]he aim of the rule is to limit the documents that must be discovered to those which are directly relevant to the proceedings. This refers to discovery of any document which may fairly lead to a train of inquiry, as per the Peruvian Guano test, and is consistent with the submissions of the respondent; or • as submitted by the applicants, 'general discovery' as is now contemplated by O 15 r 2(3) (The court may make an order for particular discovery in broader terms under O 15 r 8). 150 In my view, in the absence of qualifications or limitations to an order for discovery, the correct interpretation is that the discovery ordered by the Federal Court pursuant to O 15 is that contemplated by O 15 r 2(3), as submitted by the applicants. Clearly this will not be the case if the Court makes an order pursuant to O 15 r 8, which, as pointed out by Lindgren J in Spyer v Cuddles 'N' Mum (Franchise) Pty Ltd (No 3) (2002) FCA 1563 , seems to countenance a continuation of the broader test of discoverability. 152 The respondents have referred to comments of Beaumont J in Reading Entertainment at par 70 concerning the court ordering general discovery following the 1999 amendments, however in my view his Honour's observations were referable to extraordinary circumstances where the courts may order discovery in accordance with the Peruvian Guano test. Although his Honour did not give the example, an order pursuant to O 15 r 8 would be an instance of such a circumstance. 153 The consent order made on 15 February 2006 was in my view an unqualified order for general discovery, as contemplated by O 15 r 5, and requiring discovery of documents as contemplated by O 15 r 2, in particular subrule 2(3). Accordingly, the 'train of inquiry' test as posed by the respondents in this case is not applicable. 154 It is appropriate to consider the remaining documents in the Schedule where this test is sought to be applied, in that light. The Schedule does however provide a summary of the communications between the applicants and the respondents on the issue of discovery of these documents. 157 In support of this contention the respondents rely on statements of Sheppard and Pincus JJ in Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 at 494. This case also involved an application under s 52 Trade Practices Act 1974 (Cth) for misleading and deceptive conduct in relation to the sale of a business. It is not the law that in every such case the party held to have been engaged in misleading conduct (who may have acted quite innocently) becomes the insurer of the other's success and prima facie liable to indemnify him against the consequences of the purchase. 159 The applicants state that: • records up to 22 March 2005 are in the possession of the respondents already and are not required to be discovered by the applicants • the applicants do not have records after 22 March 2005, but they may be with the Administrator. 160 Unfortunately the respondents have not specifically indicated how these documents satisfy the criteria under by O 15 r 2(3). To the extent that the applicants are required to prove their case --- as explained by the Full Court in Netaf --- the rain data records appear to be documents which fall within r 2(3). The response of the applicants does not suggest a dispute that the documents are discoverable. 161 However, the applicants have stated that these documents up to 22 March 2005 are already in the possession of the respondents. This is not denied by the respondents. In my view, O 15 r 2(4) applies in this case. It is difficult to know what further could be achieved by requiring the applicants to discover the documents. 162 Unless there is some further reason why the applicants should provide discovery of those documents, it is unnecessary to make an order requiring them to do so (note recent similar comments of Bennett J in Telstra Corporation Ltd v Australian Competition & Consumer Commission [2006] FCA 737 at par 31). 163 In relation to the documents after 22 March 2005, on the basis that the documents are in the possession, custody or power of the administrator, in my view the applicants are not required to discover them for the reasons I have already explained in relation to documents held by the administrator. I have already held that this test is not applicable in this case. 165 The respondents state that the documents are relevant to reliance, and point to par 18 of the amended Statement of Claim and par 17 of the Defence. 166 In my view the documents sought fall within O 15 r 2(3) and should be discovered. I have already held that this test is not applicable in this case. 168 However the applicants in their letter of 5 July 2006 offered to provide the documents to the respondent if the respondents identified any relevant contested matter. The respondents have identified par 18 of the amended Statement of Claim and par 17 of the Defence. I do not understand that the applicants are disputing the discoverability of the documents in relation to the contested allegations identified by the respondents. 169 Accordingly, these documents should be discovered. The applicants have not disputed the discoverability of the documents in relation to the contested allegations identified by the respondents. 171 Accordingly, I order the documents to be discovered. The applicants submit that it has been discovered, however the respondents submit that the document cannot be identified in the applicants' List of Documents filed 13 April 2006, and they are unable to identify whether this document has been discovered. 173 Otherwise, there does not appear to be any dispute as to whether this document should be discovered. 174 In the circumstances, the appropriate order is that the applicants discover the document. This is not denied by the respondents. Accordingly, in my view it is unnecessary to order discovery of those documents (O 14 r 2(4)). 176 In relation to the management reports between 22 March 2005 and 23 June 2005, the respondents claimed they would lead to a train of inquiry which would advance their case or damage the applicants' case. I have already held that this test is inappropriate in this case. 177 However, the respondents in relation to documents between 22 March 2005 and 23 June 2005 also claim that the documents are relevant to loss or damage claimed by the second and third applicants as to causation and measure of loss. The respondents rely on the Netaf case. In my view these documents fall within the scope of O 15 r 2(3) and should be discovered by the applicants. The applicants claim however that they do not possess the document. On the basis that, as submitted by the respondents, documents of that class are referred to in other documents discovered by the applicants in the circumstances, the appropriate order is that the applicants advise the respondents whether the document is in their custody or power, and if it is, the applicants should discover it. On 5 July 2006 the applicants indicated that they were searching their records and would revert to the respondents shortly. As at the hearing date of this matter, it appears that they had not been discovered. 180 The appropriate order is that, if the applicants have the documents in their possession, custody or power, they should discover them. Documents or categories of documents identified by the first and second respondents from documents discovered by the National Australia Bank Limited pursuant to Order dated 28 June 2006. This list comprises items 33,34, 37, 41 and 46. 2. Documents or categories of documents identified by the first and second respondents from documents discovered by Herron Todd White pursuant to Order dated 28 June 2006. This list comprises items 47, 48, and 49. 3. Documents or categories of documents identified by the first and second respondents from the email from the second applicant to David Breed dated 7 February 2005, part of discovered document no 149 of the first and second respondents' List of Documents dated 29 March 2006. This list comprises items 50, 51, 52 and 53. 4. Further documents or categories of documents identified by the first and second respondents. This list comprises items 54, 55 and 56. 5. Documents or categories of documents identified by the first and second respondents from the email from the second applicant to David Breed dated 11 April 2005 (part of email from David Breed to Peter Nichols, copied to the second applicant, on 12 April 2005). This list comprises item 57. 6. Documents or categories of documents identified by the first and second respondents from the applicants' discovered document titled 'Sunstate Citrus Pty Ltd Kick Off Meeting'. This list comprises item 58. 183 It is not clear to me whether the respondents have these documents already as a result of previous discovery, although the applicants suggested at the hearing that that was the case. 184 Mr Perry for the applicants submitted that it is a matter of concern that, at least in respect of some of the documents it appears that the respondents may have had them since 29 March 2006. Alternatively, if the respondents do not have the documents, it seems that in relation to such documents the respondents have had the opportunity since 29 March 2006 to seek discovery. 185 It does not appear that these items have been the subject of previous correspondence between the parties. As a consequence of this, there are few grounds submitted by the respondents as the basis of discovery, and no responses from the applicants in relation to discovery of these documents. To the extent that I can interpret the Schedule, the only grounds submitted as a basis for discovery of these documents are: • in relation to items 33, 34, 37, 41 and 46: they are relevant to allegations in issue and reliance. They will also lead to a train of inquiry which would advance the respondents' case or damage the applicants' case • there are no grounds asserted in relation to items 47, 48 and 49 • in relation to items 50, 51, 52, 53: these classes of documents are relevant to allegations in issue as to reliance and loss or damage. They will also lead to a train of inquiry which would advance the respondents' case or damage the applicants' case; also see Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 at 494 • in relation to items 54 and 55: these classes of documents are relevant to allegations in issue as to reliance. They will also lead to a train of inquiry which would advance the respondents' case or damage the applicants' case • in relation to item 56: these classes of documents are relevant to allegations in issue as to reliance. They will also lead to a train of inquiry which would advance the respondents' case or damage the applicants' case. Also see Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 at 494 • there are no grounds asserted in relation to item 57 • in relation to item 58: these classes of documents are relevant to allegations in issue as to loss or damage. They will also lead to a train of inquiry which would advance the respondents' case or damage the applicants' case. Also see Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 at 494. 186 Other than in relation to the '100 day plan' referred to in item 58, and in relation to which an order will be made, it is not possible to identify whose documents these documents are. I also note there is some duplication, for example '2005 business plan' in items 53 and 56, 'SHE plan' in items 53 and 58, 'marketing plan' in items 53, 56 and 58, and 'communications plan' in items 53 and 56. 187 Although the respondents have referred to the Netaf case in relation to a number of the items, the relevance of the principle is not substantiated in relation to these items. Further, the 'train of inquiry' test is applied in relation to all documents with the exception of items 47, 48, 49 and 57. 188 On the basis of the evidence before me I am not satisfied that an order for discovery is necessary in relation to any of these documents. 190 I propose to make an order that costs be reserved. The history of this case indicates that supplementary discovery is clearly necessary, particularly, it appears, by the respondents. It is important however, in the interests of the parties and the conduct of this matter, to allow the parties a realistic time frame in which to comply with their obligations under the Federal Court Rules . 192 It is also in my view important to ensure that the parties, so far as possible, are on an even footing in relation to available evidence, their obligations to discover relevant material, and to paraphrase Tamberlin J in KC v Shiley Inc , are not surprised by new material unexpectedly appearing. The first and second respondents file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with Order 15 Rule 6 of the Federal Court Rules within 14 days of the date of this order discovering any document annexed to the affidavits of the respondents' witnesses filed in this action which are not already listed in the first and second respondents' List of Documents filed 29 March 2006 and the documents referred to in the affidavit required to be discovered by paragraph 1 of this order. 3. Inspection of those documents in the supplementary list of documents is to be provided within 21 days of the date of this order. 4. The time for service of the notice of motion be abridged until a time no later than 4.00 pm, 20 July 2006. 5. Costs be reserved. The applicants file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with Order 15 Rule 6 of the Federal Court Rules within 14 days of the date of this order discovering any document referred to in the affidavit required to be discovered by par 1 of this order. 3. Inspection of those documents in the supplementary list of documents is to be provided within 21 days of the date of this order. 4. Once the respondents allow the applicants to have access to the computer in the packing shed for the purpose of accessing the SmartPak, TotalPak and packout records the applicants are to, within 7 days of the date of access being provided, file and serve a Supplementary List of Documents in Form 22 and otherwise in compliance with O 15 r 6 of the Federal Court Rules discovering the SmartPak, TotalPak and packout records referred to in items 2, 17 and 30 of the Schedule provided in support of this notice of motion. Inspection of such documents is to be provided within 14 days of the date of access being provided. 5. The time for service of the notice of motion be abridged until a time no later than 4.00 pm, 20 July 2006. 6. Costs be reserved. | discovery whether inclusion of a document as an annexure to an affidavit is in itself proper discovery of the document whether discovery is necessary when documents are already in the hands of the other party whether various documents satisfy the criteria required by o15 r 2(3) federal court rules meaning of possession, custody or power whether documents in the possession, custody or control of a company in administration under pt 5.3a corporations act 2001 (cth) meaning of 'general discovery' under o 15 federal court rules whether an order for general discovery under o 15 includes documents discoverable pursuant to the 'train of inquiry' test. practice and procedure |
The motion is supported by an affidavit sworn on 29 October 2009 by Mr PJL Moran, who is a senior associate in the law firm representing the respondents. The proceeding, which was instituted on 6 July this year, primarily seeks injunctive and declaratory relief, damages and, in the alternative in respect of copyright and trade mark claims, an account of profits. The applicant sues as the licensor under a number of license agreements in respect of a number of allegedly licensed trade marks. The licensees were the first or second respondents. Mr Bakkar is alleged, amongst other things, to be in effective control of the other two respondents, although his control of the second respondent is denied by the respondents. Amongst other things, the applicant alleges that the first and second respondents breached various terms of the licenses by not reporting financial information on sales germane to the calculation of royalties; purchasing and importing products displaying the licensed trade marks or adaptations of them from the applicant's Chinese supplier; and misusing confidential information. The applicant further pleads that the first or second respondents wrongfully repudiated the licence agreements, which are now at an end. The applicant also further pleads breach on the respondents' part of duties of trust and confidence, misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) and ss 9 and 12 of the Fair Trading Act 1999 (Vic), passing off, copyright infringement and trade mark infringement. In some instances, accessorial liability is pleaded against Mr Bakkar. On 14 September 2009, the first respondent and Mr Bakkar filed a Defence (the second respondent having not yet been joined) effectively denying the allegations against them. On 18 November 2009, the second respondent (which by then had been joined) filed a Defence and Counterclaim (claiming damages for defamation and misleading and deceptive conduct against the applicant, Four Seasons Design, Inc). Also on 18 November 2009, the first respondent and Mr Bakker filed an amended Defence. These pleadings raise various issues, including the existence of a contested third licence agreement, the status of alleged assurances made by the Chinese supplier as to its ownership of the intellectual property in question, the calculation and payment of royalties and, by the counterclaim, the effect of Four Seasons alleged communications with one of the respondents' customers. On 29 October 2009, the first respondent (and apparently Mr Bakkar) filed the motion for security, with which the Court is presently concerned. Section 56 of the Act provides that the Court may order an applicant in a proceeding to give security for the payment of costs that may be awarded against the applicant, in such manner and form as the Court directs. Subsection 56(4) further provides that if security is not given as ordered, then the Court may order that the proceeding be dismissed. Order 28 of the Rules also provides for orders as to security. In particular, without limiting the statutory power, O 28 r 3(1) sets out various factors that the Court may take into account when considering an application by a respondent for an order under s 56 of the Act, including that the applicant is ordinarily resident outside Australia. There are numerous other factors that may be relevant to the Court's exercise of discretion, including the nature of the risk that the applicant will not be able to satisfy a costs order; the nature of the applicant's claim, including the chances of success; whether an order for the giving of security would operate to prevent the applicant from pursuing the claim; whether the applicant's impecuniosity arises from the conduct the subject of the proceeding; and the existence of other discretionary matters, as for example, delay, that arise when considering the particular facts of the case at hand. The respondents bear the onus of satisfying the Court that security ought to be granted. The fact that a party bringing proceedings is resident (in the relevant sense) out of the jurisdiction and that it has no assets within the jurisdiction has been treated as a weighty consideration in favour of granting security: see PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36 ; (1991) 102 ALR 321 at 323 per McHugh J. It is sometimes said that in this circumstance an order for security for costs will be made unless the party against whom the order is sought can point to some other countervailing circumstance: PS Chellaram & Co Ltd 102 ALR at 323 and BW Offshore Ltd v Anzon Australia Limited [2009] FCA 1133 at [31] - [33] per Ryan J. Of course, this result is not fixed. The overarching question is: how can justice best be served in all the circumstances of the case? Mr Weston, who appeared for Four Seasons Design, Inc, argued that, first, the respondents were bound to satisfy s 1335 of the Corporations Act before an order for security for costs could be made against the company. Mr Weston noted that this provision requires "credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful". Reference was made to Worldwide Enterprises Pty Ltd v Silberman [2009] VSC 165. In so far as Mr Weston sought to argue that it was not open to the respondents to rely on s 56 of the Act and O 28 r 3 of the Rules, his argument must be rejected. Section 1335 of the Corporations Act does not prevent the respondents from relying on s 56 of the Act and O 28 r 3 of the Rules. Further, s 1335 of the Corporations Act does not modify, qualify or otherwise cut down the broad discretionary power conferred by s 56 of the Act: see Pegasus Gold Inc v Bateman Project Engineering [1999] FCA 1734 at [17] - [18] . Mr Weston also submitted that Four Seasons Design, Inc was a solid company that had done business with Mr Bakkar for many years and, in effect, the respondents' challenge to its financial strength had to be considered in light of this history. Further, so Mr Weston argued, the recognition and enforcement of any Australian judgment in the State of Washington would be uncontroversial by virtue of the Uniform Foreign Money Judgments Recognition Act , which applies there. For the reasons stated below, these arguments failed to meet the respondents' case for security. Four Seasons Design, Inc is registered in the State of Washington in the United States of America. There is no evidence that the company carries on business within Australia, or has any presence here (other than as a party to this proceeding). Land title searches in the Australian States of Victoria, New South Wales, Tasmania, Western Australia, Queensland and South Australia have revealed no property held by Four Seasons in these States. Other searches have revealed no assets held by the company in Australia and no active trading in Australia. Four Seasons Design, Inc has not filed any material in opposition, including any material that might indicate a presence in, or assets within, the jurisdiction. Oral and written requests for security made by the respondents' legal representatives have met with no response from the company's legal representative. In these circumstances, it does not appear to me that Mr Weston's assertion that the parties have had a business relationship since 2001 provides any answer to the respondents' evidence concerning its lack of assets or residence (or other real presence) within the jurisdiction. I would conclude from the evidence and submissions that Four Seasons Design, Inc is ordinarily resident outside the jurisdiction and has insufficient assets in Australia from which to meet the first respondent's costs if ordered to do so. Absent other countervailing circumstances, the risk must be regarded as real that the first respondent may not, if judgment is given for it, be reimbursed for its costs as taxed. Mr Weston's assertion that the parties have had a business relationship since 2001 not only fails to meet the evidence as to lack of assets within the jurisdiction, it also fails to provide any assurance that Four Seasons, Inc would, in any event, have assets elsewhere sufficient to meet an order for costs in the first respondent's favour. Not only is there no evidence that the company holds assets in Australia, there is also no evidence that it holds any significant assets elsewhere. Further, the fact that the first respondent may be able to enforce an order made by an Australian court in the state of Washington provides an insufficient answer in the present circumstances. There was no evidence here of the foreign law to which Mr Weston referred but, assuming that it covered the present case, its existence is insufficient to meet the respondents' case: compare Farmitalia Carlo Erba SrL v Delta West Pty Ltd [1994] FCA 950 ; (1994) 28 IPR 336 at 342 per Heerey J, rejecting a similar argument in similar circumstances. Further, I note that, by his affidavit, Mr Moran has given uncontested evidence that enforcing judgment in the State of Washington would be unlikely to be straightforward and might well prove costly. It apparently discloses a number causes of action. As noted, the respondents have denied the allegations against them. At this stage, it is impossible to estimate the parties' prospects of success on these pleadings. Similarly, it is at this stage impossible to evaluate the significance and likely success of counterclaim, which, in the circumstances, I do not consider has any particular bearing on the respondents' entitlement to security (although it could impinge upon the calculation of any quantum to be ordered). They can be put to one side. The application for security for costs was made a little over three months after the institution of the proceeding and after the issue had been raised both orally and in writing with Four Seasons' legal representatives. The litigation is not yet far advanced. In these circumstances, it was properly not suggested that delay was a factor militating against an order for security for costs. In all the circumstances, I consider that justice is served by an order for security for costs in favour of the first respondent. Security must be sufficient in the circumstances disclosed --- an approach that requires consideration of the whole of the case. The principles are well-known. I do not repeat them. As Heerey J said in Farmitalia 28 IPR at 345, the fixing of quantum is a discretionary exercise in which numerous factors fall for consideration. These factors include the chance of the case not proceeding to trial. Where, as here, an application for security for costs is made comparatively early in the litigation, this appears to be a relatively important factor. Secondly, the order for security should not effectively prevent the party against whom it is made from pursuing its claim. The prospects of success might also be relevant at this stage in the Court's deliberations. As already indicated, these are impossible to ascertain in this case at this stage. Another factor, which I consider important in this case, is the quality of the information put before the court to allow it to estimate the amount of costs. As Heerey J said in Farmitalia 28 IPR at 345, "if very little information is put before the court on which it can estimate the amount of costs, ... it might be reasonable to make a large discount, particularly since if security proves inadequate as the litigation progresses, a further application may be made for more security". Additionally, and possibly relevant in this case, to the extent that the costs of the party seeking security relate to a case that is not purely defensive, a reduction should be made. Finally, even if there is acceptable evidence of an estimate of costs, there is the likelihood that the amount would be reduced by a taxing officer: see Farmitalia 28 IPR at 346. As indicated, the respondents seek an order for security in the amount of $40,000. Ms Bennett, for the respondents, argued that this was a modest sum in the context of contemporary litigation in this Court. Mr Weston, for Four Seasons, argued, on the other hand, that there was no proper apportionment of costs, and that the amount in question should not include the costs attributable to the counterclaim. Further, as Mr Weston noted, there was no attempt by the respondents to relate their estimate to scale costs. Ms Bennett said that the costs attributable to the counterclaim were not included. According to Mr Moran, a cost consultant with the Law Institute of Victoria advised him that the party-party costs of each respondent from 29 October 2009 (when he swore his affidavit) until the first day of the trial would be at least $20,000 (excluding counsel's fees). Mr Moran deposed that party-party costs to that date were approximately $10,000. Some of Mr Weston's criticisms of the respondents' evidence were justified, since there was little breakdown of the costs and none referable to any scale. Further, save for Mr Moran's assertion of the costs consultant's generalised and unparticularised advice, there was nothing in evidence showing how the consultant had come up with the amount of $20,000 for each respondent. Further, the respondents' evidence was unclear in certain other respects. The assessment of $10,000 apparently related to the undifferentiated costs incurred to 29 October 2009 by the first respondent and Mr Bakkar. I doubt that this is satisfactory, notwithstanding Ms Bennett's submission to the contrary. The quantum of counsel's fees was undisclosed. There is necessarily an element of imprecision in determining the quantum of security. It seems to me that, in all the circumstances, I should fix the amount of $20,000 as security for the first respondent's costs. I would reserve to the respondents liberty to apply to the Court for the provision of further security by Four Seasons, Inc should this seem to them appropriate. (2) The security for costs referred to in paragraph (1) above will be security for the first respondent's costs up to the first day of the trial. (3) Unless the applicant provides the security by 16 December 2009 in conformity with paragraph (1), the proceeding be stayed. (4) The respondents have liberty to apply to the Court for the provision by the applicant of further security for costs. I would also order that the applicant pay the first respondent's costs of the motion for security, notice of which is dated 29 October 2009. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | application granted security for costs |
The hearing of QUD 389/2005 is currently scheduled to commence in Mt Isa on Monday 28 August 2006. 2 The respondent opposes the notice of motion. 3 As a general rule Courts are reluctant to vacate trial dates for a number of reasons, including that the parties are entitled to rely on trial dates which have been set, and that serious inconvenience to the parties, the Courts, and other litigants can arise because of the need to identify later trial dates. However, the justice of the case is the paramount concern in considering this issue. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim. The applicants also submit that a comparison of the applications and the statements of claim in the two cases clearly illustrates this. 5 In both Baird and this case before me, the primary proceedings involve an application pursuant to s 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) for compensation for loss and damage suffered by the applicants as a result of the respondent breaching the Racial Discrimination Act 1975 (Cth). 6 Clear possible alternatives are that the hearing proceed, but judgment in this matter be reserved until the Baird appeal decision has been delivered, and/or the parties be given leave to make additional submissions after the hearing and in light of principles which may emerge from the Baird appeal. As the respondent has submitted, many of the applicants and the witnesses are elderly, and postponing the hearing of the matter will potentially exacerbate an issue of availability of witnesses which has already arisen. However in this case the applicants have submitted that: • awaiting the appeal decision in Baird could result in the settlement of the present proceedings because it could clarify the application of the law relating to the events in question • awaiting the appeal decision in Baird could result in reduced hearing days in the present proceedings because it could narrow the issues in dispute • if the proceedings are not adjourned, it is possible that the proceeding will have to be reopened after the appeal decision in Baird , or, alternatively, there may be an appeal in the present proceedings which would have been avoided if the present proceedings awaited the appeal decision in Baird . 7 In my view it is appropriate that the trial date be vacated. I am persuaded that it would be in the interests of justice to do so. In my view, proceeding in late August in light of the aforementioned possibilities canvassed by the applicants could cause additional and unnecessary expense and inconvenience to the parties, the witnesses and the Court that would outweigh the inconvenience of rescheduling the trial date in these circumstances. Further, I am conscious that many of the applicants and witnesses are elderly, and requiring them to attend a hearing to give evidence, when, as postulated by the applicants, the matter may actually not proceed depending on the outcome of Baird , is an issue which in my view it is appropriate to take into account in deciding whether adjournment of this matter is appropriate. 8 Accordingly, I order that the hearing be adjourned to a date to be fixed and costs be reserved. | vacation of trial date inconvenience to the parties interests of justice practice and procedure |
On 28 September 2005 she secured a passport from the People's Republic of China. On 8 December 2005 she obtained a three month visitor's visa from the Commonwealth of Australia. She travelled to Australia on that passport and using that visa, arriving in Sydney on 27 December 2005. 2 She lodged an application for a Protection (Class XA) visa which was dated 6 February 2006. On 8 May 2006 the delegate of the Minister decided that her application for a Protection (Class XA) visa should be refused. 3 On 7 June 2006 the appellant applied to the Refugee Review Tribunal ('the Tribunal') for review of the Minister's delegate's decision. A hearing took place which was followed by the delivery of a decision by a Tribunal member who had conducted the hearing which affirmed the decision of the Minister's delegate to refuse the application for a protection visa. That decision was handed down on 26 September 2006. 4 However, on 6 March 2007 the decision was set aside by consent with constitutional writ relief being granted. Thereupon the appellant was invited to attend a further hearing before the Tribunal differently constituted. 5 A hearing took place before the Tribunal constituted by Mr Ted Delofski between about 2.30 pm and 3.25 pm on 17 May 2007. Thereupon the Tribunal reached the decision that the decision of the Minister's delegate not to grant the applicant a Protection (Class XA) visa should be affirmed. That decision was handed down on 31 May 2007. 6 In the Statement of Decision and Reasons of the Tribunal considerable reference was made to country information. Reference was made to the appellant's written statement setting out her reasons for claiming to be a refugee and reference was made to answers provided by the appellant at the Tribunal hearing. 7 On 28 June 2007 the appellant applied to the Federal Magistrates Court of Australia for constitutional writ relief in respect of the decision of the Tribunal constituted by Mr Delofski. On 10 September 2007 an Amended Application for review was filed. Due to the difficulties in obtaining the services of an interpreter who could interpret from Fuqingnese into English the hearing did not, apparently, proceed before the Federal Magistrates Court when originally scheduled. Ultimately the matter was dealt with with the assistance of an appropriate interpreter and on 9 May 2008 the learned Federal Magistrate ordered that the Application be dismissed and that the appellant pay the respondent Minister's costs fixed in the sum of $5,000. 8 From that decision a Notice of Appeal was filed in this Court on 30 May 2008. In particular, the Tribunal failed to consider my fear of being persecuted on return on Conventional grounds. As a matter of fact, the Tribunal's finding has, apparently, based on unwarranted assumption; and the Tribunal has misstated or misunderstood the information or evidences given by me. In particular, the Tribunal failed to comply with its obligation under s.424A(1) of the Act. 10 The learned Federal Magistrate was unable to discern any jurisdictional error on the part of the Tribunal and accordingly dismissed the application. I have looked at the Tribunal decision and supporting material in order to ascertain whether any arguable case of jurisdictional error could be made to which the Applicant has not referred. I am unable to discern any arguable case of jurisdictional error and I am of the belief that there is none. 13 In support of the Notice of Appeal the appellant was invited to address the Court, which she did in an unusual way. She had the advantage of having in Court before me an interpreter who was able to translate both from Fuqingnese and also from Mandarin into English and vice versa. The submission which was made by the appellant took the form of a written document apparently in Mandarin which the interpreter interpreted into English for my benefit. I did not invite the interpreter to interpret that submission into Fuqingnese in circumstances where the appellant had said that it was what she wished to rely upon. 14 If I understood the submission correctly, it urged that the Tribunal had failed to comply with an obligation cast upon it by s 424A(1) of the Migration Act 1958 (Cth) ('the Act'), namely, to give to an applicant particulars of any information that the Tribunal considers would be the reason or a part of the reason for affirming the decision that was under review and inviting the applicant to comment on same. I also understood the appellant to be suggesting that further questions should have been asked by the Tribunal of the appellant referable to the reasoning of the Tribunal as ultimately recorded in its Statement of Decision and Reasons. 15 As Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ said in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 228 CLR 152 at [48] , procedural fairness does not require the Tribunal to give an applicant a running commentary upon what it thinks about the evidence that is given. 16 In relation to country information there is an express exclusion in s 424A(3)(a) of the Act which relieves the Tribunal of an obligation to give an applicant particulars of such information with a view to inviting comment on it. In the light of the decision of the High Court in SZBYR v Minister for Immigration and Citizenship [2007] FCA 26 ; (2007) 235 ALR 609 it seems clear to me that there has been no failure on the part of the Tribunal to comply with s 424A of the Act in the circumstances of this case having regard to the submissions that were advanced by the appellant. 17 In my opinion none of the grounds of appeal in this case have been made out, with perhaps one exception, that is to say, the assertion in ground 1 that the learned Federal Magistrate failed to consider that the decision of the Tribunal had 'constituted a jurisdictional error'. In this case there was plainly both written material before the Tribunal and also country information to which it had access and an oral hearing at which evidence was given, which is not available to the Court as no transcript was tendered in the Federal Magistrates Court of what had been said at the second Tribunal hearing, or indeed at the first Tribunal hearing. 20 Nevertheless, it is important to bear in mind what Gleeson CJ said in Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [10] which was repeated in generally similar terms in the joint judgment of McHugh, Gummow and Hayne JJ in the same case at [69]. It is impossible to read the expression "the findings" as meaning anything other than the findings which the Tribunal has made. 24 Whether under s 36(2) Australia has protection obligations to a particular person depends upon whether that person satisfies the definition of a refugee in Article 1A of the Convention in the context of the other relevant Articles (per Gummow A-CJ, Callinan, Heydon and Crennan JJ in Minister for Immigration and Multicultural and Indigenous Affairs v QAAH of 2004 [2006] HCA 53 ; (2006) 231 CLR 1 ('QAAH') [37]. The first condition is that a person be outside their country of nationality 'owing to' fear of persecution for a relevant convention reason which is well-founded both in an objective and a subjective sense. 26 The second condition is met if the person who satisfies the first condition is unable to avail himself or herself 'of the protection' of the country of nationality. This includes persons who find themselves outside the country of their nationality and in a country where the country of nationality has no representation to which the refugee may have recourse to obtain protection. The second condition is also satisfied by a person who meets the requirements of the first condition and who, for a particular reason, is unwilling to avail himself or herself of the protection of the country of nationality, that particular reason being well-founded fear of persecution in the country of nationality which is identified in the first condition (per McHugh and Gummow JJ in Minister for Immigration and Multicultural Affairs v Khawar [2002] HCA 14 ; (2002) 210 CLR 1 ('Khawar') [61], cited with approval by Gummow, Hayne and Crennan JJ in SZATV v Minister for Immigration and Citizenship [2007] HCA 40 ; (2007) 237 ALR 634 ('SZATV') [16]. See also Chan Yee Kin v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379 ("Chan"), Applicant A v Minister for Immigration and Ethnic Affairs [1997] HCA 4 ; (1997) 190 CLR 225 ('Applicant A') at 283 and Minister for Immigration for Immigration and Multicultural Affairs v Respondents S152/2003 (2004) [2004] HCA 18 ; 222 CLR 1 (' S152 ') [19]). 27 It seems to me that on a consideration of the Statement of Decision and Reasons of the Tribunal in this case and in the context of the principles enunciated above, a failure by the Tribunal as constituted by Mr Delofski to properly address s 65(1) has been disclosed. ... Degrees of understanding and commitment of those practising any particular faith will vary. To ascribe to all who are, or claim to be, adherents to a particular religion a required minimum standard of practice or a required and consistent minimum understanding of its tenets may be erroneous. On the fourth and fifth pages of its Statement of Decision and Reasons the Tribunal proceeded to summarise that statement. The statement was recorded in English and contained within a statutory declaration made by the appellant on 6 February 2006. It contained 11 numbered paragraphs. The appellant claimed to be a Christian (see paragraphs 9 and 11). The appellant claimed to have attended some religious gatherings organised by a family church in her home village from around 2002 (see paragraph 3). She claimed to have been impressed by the kindness of 'religious sisters and brothers' (see paragraph 3). She claimed to have participated in weekly worship on a regular basis (see paragraph 3) and she claimed that in July 2003 she was baptised at a 'religious sister's home in my village' (see paragraph 3). 30 The appellant claimed that the Public Security Bureau ('PSB') took action in respect of religious observance in the area in which the appellant lived (see paragraphs 4, 5, 6, 8 and 9 of the statement). The appellant claimed that she had been detained for one day in December 2003, that she had been detained for one week in April 2004 and that she was detained for one month from May to June 2005 (see paragraphs 4, 5 and 8). The appellant claimed that to secure her release from detention, she made payments of RMB 1000 yuan, 3000 yuan and 10,000 yuan (see paragraphs 4, 5 and 9). 31 The appellant claimed that she had been warned not to get involved in illegal religious gatherings and despite the warning, allowed a religious gathering of her brothers and sisters to take place at her own duck farm where she lived and from which she supplied ducks and eggs to the local market. The appellant claimed that she had been denounced for organising the illegal religious gathering that took place at her farm and as punishment, detained for the one-month period mentioned (see paragraph 8). 32 The appellant claimed that to escape persecution by the PRC authorities she had to leave the country and that she was not willing to return, believing that she would be subjected to persecution again were she to do so. 33 The Tribunal had access to country information in relation to the observance of their religion by Christians in Fujian province. The latest US State Department's International Religious Freedom Report has cited no recent incidents of the persecution of Christians in Fujian Province. 37 The manner in which the Tribunal expressed itself suggests to me that it failed to address the appellant's religion. While in her written submission and at the hearing the applicant was unable to articulate clearly the nature of her Christian beliefs --- for example, at the hearing she was unable to tell the Tribunal whether the religious activities in which she participated in China were related either to the Protestant or Catholic faiths --- the Tribunal is willing to accept that the applicant may have participated in Christian activities in Fujian Province. I have some difficulty with the proposition that a person's religion, when claiming to be a Christian, should be evaluated by reference to a person's knowledge of whether the practices of the denomination in which they worshipped were different from the practices of other Christian denominations. 40 In the result, the Tribunal did not address whether the appellant was a Christian at all, what it was willing to accept was that the appellant 'may have' participated in Christian activities in Fujian Province. The Tribunal was unable to record that it was satisfied that she did so participate or that it was not so satisfied. 41 The next matter which the Tribunal took into account was the degree of involvement of the appellant in her 'religious activities'. The Tribunal latched on to an 'admission' that the appellant 'did not have a leadership or preaching role in her religious activities'. It failed to address the appellant's involvement in organising gatherings and her claim that she shared her beliefs with others. Without addressing these matters, including the fact that the third claimed detention resulted from a gathering which took place at the appellant's own duck farm, the Tribunal said 'the Tribunal does not accept that the applicant had a sufficiently prominent role in unauthorised church activities to have caused the persecution by the PSB which she claims to have experienced, or to lead to persecution should she return to China'. 42 It seems to me that the Tribunal failed to address the issues which it was required to address and thereby fell into jurisdictional error. In my opinion the appeal should be allowed and appropriate constitutional writ relief should be ordered. 43 No submissions have been put to me to the effect that the Court should in its discretion decline to order relief and on the facts of this case there would seem to be no basis upon which the Court could properly exercise its discretion in a way which would deprive the appellant of the appropriate relief. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | jurisdictional error whether claimed fear of persecution for reason of religion properly addressed ascertainment of an applicant's religious convictions degree of applicant's involvement in religious observance migration |
It appears that Australian investors have been induced into purchasing non-existent "heating oil options", "gasoline options" and "gold bullion options" on non-existent foreign commodities exchanges. All in all, investors have been cheated into paying around $8 million dollars for these bogus investments. The money investors have paid was transferred into three foreign bank accounts, one in the name of Capital Marketing Services, another in the name of Universal Trading, both with the Hong Kong branch of the Bank of China, and a third in the name of AM Global Management with the Kuala Lumpur branch of the AmBank (M) Berhad. A small portion of the money found its way (by transfer) into Australian bank accounts maintained by each defendant. On 17 November 2006, on the ex parte application of ASIC, I made orders freezing the Australian bank accounts. Four days later the orders were continued and an additional order was made freezing other accounts and restraining any dealing with an asset one defendant had purchased with the money. The orders were again extended on 19 December 2006. Following a hearing on 29 January 2007, the orders were continued pending trial. What follows are my reasons for making the last order. 2 First, the factual background. Not much is known about the defendants. The first defendant, Mr Lee, lives in Malaysia, at least according to the records of his Australian bankers, Westpac and ANZ. He may have travelled to Australia on one or two occasions in the past. Mr Lee maintains several accounts with ANZ and Westpac. In the period February to September 2006, over $2 million was transferred into his Westpac accounts. The money came in by electronic funds transfer of amounts not exceeding $100,000. Most transfers were effected by a "cash dealer located in Singapore known as the Colombo Exchange". A small sum, $48,964.94, has been traced back to the Universal account with the Bank of China. Over a similar period (March to November 2006) around $1.6 million was transferred into Mr Lee's accounts with the ANZ. This amount was also paid by regular deposits of less than $100,000 in most instances. An amount of approximately $90,000 came from the Capital Marketing Services account with the Bank of China. 3 Following the ex parte orders, the court papers were sent by ASIC to Mr Lee at his address in Malaysia. A few days later Mr Lee (or someone who purported to be Mr Lee) responded to ASIC by email. The person said that the information in the papers was "totally new and shocking to me". He said that ASIC "can be assured that I will contact you within the next 24 hours after I have go [sic] through all the attachments and probably seek a legal representative in Australia to represent my interest. " This was followed up a few days later by a second email in which Mr Lee (or the person purporting to be Mr Lee) said that he was in the process "of engaging a top firm in Melbourne to represent [him] in this case. " He went on to say: "Also I asked you to properly investigate this case especially in Malaysia, Hong Kong and Australia (cold calling as mentioned in those attachments). Please do not simply jump to conclusion about myself / 1 st defendant in this case. Myself runs an IT company in Malaysia. The solicitors took up with ASIC its investigation into Mr Lee. In a letter dated 20 December 2006 the solicitors informed ASIC that they would not advise their client "to participate in [ASIC's] investigations in any way unless ASIC [could] confirm in writing that [Mr Lee was] not and [would] not be a subject in any criminal or civil penalty investigation and unless and until [ASIC gave] undertakings to that effect. " ASIC was not willing to give the undertaking. Accordingly, Mr Lee has not provided ASIC with any information concerning the money in his accounts. 5 Mr Lee took much the same attitude on the interlocutory application. That is, he elected to remain silent, filing no affidavit or other material explaining how he came to have in his accounts funds some of which it would seem had been stolen from Australian investors. 6 ASIC is continuing its investigation into Mr Lee. The investigation has disclosed that Mr Lee has several foreign bank accounts. The accounts that have been tracked down so far are in Vietnam, Hong Kong and the United States of America. Large sums of money (in the millions of dollars) have been deposited into the accounts. In all more than $A7.5 million has been deposited. ASIC's inquiries suggest that the source of the funds is the same Singaporean cash dealer who deposited money into Mr Lee's accounts with Westpac and ANZ. More information is likely to be discovered about Mr Lee as the investigation progresses. 7 The second defendant, Mr Jugraj, lives in Australia. He came here as a student. Mr Jugraj has an account with the Commonwealth Bank. Between 23 October and 1 November 2006, three deposits, totalling approximately $90,000, were made into the account. The source of the funds was the Bank of China account maintained by Capital Marketing Services. Mr Jugraj informed ASIC that the deposits were arranged by his father, an Indian citizen who lives in Chennai. He told ASIC that the purpose of the funds was to support his application for permanent residence in Australia. He said that he believes his father used the services of a finance broker in Chennai to arrange for the funds to be deposited. The money has been used by Mr Jugraj to purchase Northern Territory Treasury Corporation bonds in the amount of $100,000. The bonds are still in his name and the orders I made on 21 November 2006 included an order that Mr Jugraj not deal with the bonds pending the trial. By that subsection the court is given power to make an interim order under s 1323(1) if "in the opinion of the court it is desirable to do so. " The orders I made, for which these are the reasons, were interim orders made under s 1323(3). 10 Before explaining the reasons for making the orders, I will make some preliminary observations. First, the evidence, which is unlikely to be contradicted when this case comes on for final hearing, is that there have been serious breaches of the Corporations Act , the ASIC Act and both Commonwealth and State Crimes Acts. This is not surprising given the nature of the fraud that has been perpetrated. The principal (although, I accept, not the only) purpose for the investigation is to identify the perpetrators so that they may be prosecuted and track down the money that investors have been cheated into parting with so that it may be returned to them. 11 Second, one of the several objects of s 1323 is to assist people who have lost money, as a result of breaches of the Corporations Act or ASIC Act, to recover what they have lost either in specie (which will often be impossible) or by way of damages. The section achieves this object by permitting, by way of injunction or the appointment of a receiver, the preservation of property against which the person who has lost money (the aggrieved person) can have recourse if he has a good personal or proprietary claim against the person who has taken his money (the relevant person). 12 Nevertheless, and this is the third observation, the remedies available under s 1323 are dramatic and the court should exercise care before making any order. While it is not necessary to show that the aggrieved person in fact has a case against the relevant person in order to obtain an interim injunction, the strength of the case is important. If the investigation is in its early stages it may be enough to show a possible case against the relevant person or the person on whose behalf the relevant person holds property. If the investigation is in late stages, or has been completed, probably no order should be made (or continued) unless the evidence suggests a prime facie case of liability: see generally Corporate Affairs Commission (NSW) v Walker (1987) 11 ACLR 884; Corporate Affairs Commission (SA) v Lone Star Exploration NL (No 2) (1988) 14 ACLR 499; Australian Securities Commission v A S Nominees Ltd (1995) 18 ACSR 459, 511-512. 13 The final observation concerns the "jurisdictional pre-conditions" that are imposed by s 1323. Here I am not referring simply to the three conditions referred to in s 1323(1) that were commented upon in Corporate Affairs Commission v United International Technologies Pty Ltd (1987) 6 ACLC 637, 642. I have in mind what might also be described as a "jurisdictional pre-condition" namely the requirements in paras (d) (e) and (f) that a protective order can only be made in respect of "[indebtedness]... to the relevant person or [his] associate" (para (d)), "[any] money, financial or products or other property [held] on behalf of the relevant person or [his] associate" (para (e)) and "money of the relevant person [or his associate]" (para (f)). At a final hearing of an application under s 1323 it will be necessary for ASIC to prove on the civil standard that one of these conditions exist. When an interim order is sought this is not a requirement. All the court need do is decide whether it is "desirable" that an interim order be made. And it may be desirable even if ASIC is not able to tender proof that will establish the existence of any one of the conditions. By analogy with cases on interlocutory injunctions, if ASIC can show something like a possible or prima facie case that will usually be enough. 14 Returning to the case at hand, the interim orders were made for the following reasons: As I have said, it appears not to be in dispute that some of the money paid by investors has found its way into each defendant's account. I infer from this that each defendant was either involved in the fraud or holds money on behalf of a person who was involved. The inference is more readily drawn by the fact that neither defendant has gone into evidence to explain how he came by money from the Universal or Capital Marketing Services accounts in Hong Kong. In these circumstances the investors might have good claims against each defendant, or in respect of the funds in each defendant's possession, and are entitled to a protective order to preserve those funds until the matter is more fully investigated at the trial. | investigation by asic application for orders under s 1323 of the corporations act 2001 principles to be applied corporations |
2 In the course of his naval service, Mr Bryant sustained the following injuries, each of which has been accepted by what is known as the Military Rehabilitation and Compensation Commission ("the Commission") as a compensable injury for the purposes of the Safety Rehabilitation and Compensation Act 1988 ("SRC Act"). 3 By a determination dated 16 March 2006 a delegate of the Commission determined that Mr Bryant was not entitled to permanent impairment compensation under the SRC Act for his muscle tension headaches condition. That decision was affirmed on internal review by the Commission on 24 July 2006. The basis for the affirmation of the decision was that, assessed by reference to Table 13.1 of the Guide to the Assessment of Permanent Impairment, Mr Bryant's degree of permanent impairment was 0%, not 10% as he had contended. 4 Mr Bryant then sought the review of the Commission's internal review decision by the Administrative Appeals Tribunal ("the Tribunal"). On 2 August 2007, for reasons which it then published, the Tribunal decided to affirm that decision. 5 Mr Bryant has now appealed to this Court from the Tribunal's decision. Such an appeal lies only on a question of law: s 44 Administrative Appeals Tribunal Act 1975 (AAT Act). (b) Whether the decision of the Tribunal in finding that sleep apnoea and/or psychological factors could equally account for his headache symptoms was so manifestly unreasonable as to amount to an error of law? (c) Whether the Tribunal in taking account of psychological factors failed to consider that such factors were a sequelae of headaches and therefore compensable under Section 24 in light of the admissions and findings that had already made? (d) Whether in reviewing the determination under Section 24 and 27 the Tribunal should have considered psychological factors or sleep apnoea as causes of the Applicant's headaches in the absence of any expert to that effect? (e) Whether the Tribunal applied Table 13.1 correctly when considering what constituted minor interference with activities of daily living? (f) Whether the manner of assessment of headaches under Table 13.1 in O'Rourke v Comcare (1997) AATA 11720 was the correct test to be applied? (g) Whether, in assessing the level of impairment under Table 13.1, the Tribunal must be satisfied on medical evidence of the criteria in the Table or whether the Applicant's evidence alone, if accepted, would be sufficient? (4) The amount assessed by Comcare shall be an amount that is the same percentage of the maximum amount as the percentage determined by Comcare under subsection (5). (5) Comcare shall determine the degree of permanent impairment of the employee resulting from an injury under the provisions of the approved Guide. (6) The degree of permanent impairment shall be expressed as a percentage. (3) A Guide prepared under subsection (1), and a variation or revocation under subsection (2) of such a Guide, must be approved by the Minister. (5) The percentage of permanent impairment or non-economic loss suffered by an employee as a result of an injury ascertained under the methods referred to in paragraph (1)(c) may be 0%. (6) In preparing criteria for the purposes of paragraphs (1)(a) and (b), or in varying those criteria, Comcare shall have regard to medical opinion concerning the nature and effect (including possible effect) of the injury and the extent (if any) to which impairment resulting from the injury, or non-economic loss resulting from the injury or impairment, may reasonably be capable of being reduced or removed. A "reviewable decision" is defined by s 60(2) of the SRC Act to be one which, materially, has been made pursuant to s 62 of the SRC Act . Section 62 of the SRC Act provides, inter alia, for the reconsideration on request of a determination which has been made under s 24 of the SRC Act (see also the definition of "determination" in s 60(1) of the SRC Act ). (5) Where a person reconsiders a determination, the person may make a decision affirming or revoking the determination or varying the determination in such manner as the person thinks fit. The Tribunal was not constituted only by laypersons so far as medical knowledge was concerned. Though the presiding member is a member of the Bar, his title "Doctor" is referable to his holding an earned doctorate in psychology. The other member of the Tribunal is a specialist neurologist. As the post-nominal "RFD" (Reserve Force Decoration) of each attests, each tribunal member also has served efficiently for a lengthy period in the Defence Force Reserves. That the Tribunal was able to bring to the task of the external merits review of this type of decision a multi-disciplinary membership of this kind with experience of Defence Force service and conditions was an advantage, but it did not absolve the Tribunal from making the correct or preferable decision in respect of that under review according to law. What the composition of the Tribunal undoubtedly underscores though is the deference to be afforded by this Court to the Tribunal's findings of fact, made within jurisdiction, which the character of an appeal on a question of law counsels in any event. 12 There were two principal sources of expert medical evidence concerning Mr Bryant's accepted muscle tension type headaches condition before the Tribunal, Dr J Rowe, an occupational physician and Dr K Lethlean, a neurologist. Dr Rowe had examined and reported upon Mr Bryant at the request of his solicitors while Dr Lethlean had done so at the request of the Commission. Each of these gentlemen gave oral evidence in the course of the Tribunal proceedings. The Tribunal's reasons evince a thorough rehearsal not only of their evidence but also of salient features, as the Tribunal saw them, of the other medical evidence as well as Mr Bryant's own evidence and that of an officer who had, for a short time, been his supervisor during his latter period of Defence Force service. 13 The Tribunal came to give particular weight to the opinions expressed by Dr Lethlean. Rightly, it is no part of Mr Bryant's case on the appeal that a question of law is to be found in the mere preference of one body of medical evidence over another for reasons which are fully exposed. Rather, the nature of the challenge made to the Tribunal's decision is that the Tribunal directed itself to the answering of perceived controversies in respect of subjects which it is said were, for it, givens, misconstrued Table 13.1 of the Approved Guide, failed to appreciate by what evidence the conditions in that table might be satisfied and decided the degree of permanent impairment unreasonably, i.e. acted on speculative rather than reasonably probative material. There are conflicting medical opinions on the cause of the applicant's headaches, either that they are derived from his service related rugby neck injury, or that they are due to tension headaches. Neurologists Dr Beran (Exhibit 3 folio 157) and Dr Lethlean (Exhibit 1 folio 70) both diagnosed tension headaches. 40. The Tribunal finds that the evidence for a cervical spinal cause for the applicant's headaches is inconclusive. On balance it favours the diagnosis of tension headaches made by both Neurologists. 41. However, further to this, the Tribunal finds that the diagnosis of the nature of the headache is incidental. Both Dr Rowe (Exhibit 1 folio 42) and Dr Lethlean ( ibid folio 71), the only doctors asked if the applicant's headaches are due to his Navy service, have determined that they are. 2. Both Dr Rowe (Exhibit 1 folio 42) and Dr Lethlean ( ibid folio 83) have concluded that the applicant's headache condition is permanent. The other medical witnesses have provided no opinion. 3. Again there is conflicting medical opinion on this. Dr Rowe has assessed that the applicant suffers 10% whole person impairment from his headache condition, whereas Dr Lethlean assessed this at 0%. 44. Based on the reports by the various medical specialists together with the oral evidence provided, results in our placing greater weight on the evidence of Dr Lethlean in preference to the evidence of Dr Rowe. While both these specialists have provided more recent reports, Dr Rowe conceded that his opinion is based essentially on the applicant's statements. However, of greater importance and weight was the fact that Dr Lethlean, while agreeing with Mr King-Scott (Counsel for the applicant) that it is possible to regard the factual evidence as affecting the activities of daily living of the applicant, he did not resile from his opinion that the applicant has a 0% whole person impairment and did so on the basis of the principle that such an assessment should only be altered following a re-assessment. He emphasised if a clinical re-assessment was to occur, that a psychiatric assessment should also be included, as he formed the view that Mr Bryant's symptoms were multi-factorial. He further stated that sleep apnoea could also account for the present level of impairment and if that was found to be so, then it would not be compensable under Table 13.1. If sleep apnoea was a major cause of the applicant's headaches, then, not only would it be non-compensable under Table 13.1, but it would explain the condition as being not stabilised and that there may be potential for a reduction in the level of headaches by further medical treatment. We therefore regarded Dr Lethlean's report as providing greater cogency or weight of evidence. In relation to the above conditions, it is essentially a contest as to whether or not the applicant satisfies the 10% whole person impairment criteria. If he does not, then the 0% whole person impairment criteria is more appropriate. In relation to the 10% criteria, the applicant has described to Dr Rowe and in his other evidence, that he has attacks which occur 12 times or more per year. Of importance is whether they cause "minor interference with activities of daily living" or are readily reversed by medication. In relation to the evidence provided to Dr Lethlean, the frequency of headaches seems to have reduced from 1994 to October 2005 when the applicant was examined by Dr Lethlean. But the activities described do not require any particular functions of daily living to be satisfied although "due weight must be given to the psychosocial aspect of the function i.e. the ability to stand may be impaired because one cannot stand straight, or stand still or stand around or even stand by without some supervision or direction": Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees v Emery [1993] FCA 601 ; (1993) 32 ALD 147 at 151). 48. That principle must be read in the context that all the attacks must be considered in making the assessment of frequency, not merely those of relevant severity ( McKenna v Repatriation Commission (1995) 39 ALD 254). Of direct relevance is the case of Re O'Rourke and Comcare (AAT 12152, 26 August 1997) which was a case involving an assessment of severe headaches on the activities of daily living as required by Table 13.1. The decision in that case noted that the 10% level of impairment requires "minor interferences with activities of daily living". Activities of daily living refers to primary biological and psychosocial functions. "Minor interference" it was said must be greater than "no" interference but less than "most" interference. The Tribunal there held that a global view or assessment is more appropriate; that on some occasions, one activity of daily living may be so affected in both biological and psychosocial terms as to constitute a minor interference with activities of daily living, whereas in another case there could be multiple activities of daily living which are affected at such a low level but which could still be described as constituting a "minor interference" with activities of daily living. It was said however, '[i]t is highly unlikely, when taking a global approach to this assessment, that a small infraction of one [activity of daily living] could properly be described as "minor interference with activities of daily living'. 49. In assessing the evidence presented against these criteria and their interpretations as outlined above, we have also kept in mind the underlying principles which inform Table 13.1. In O'Rourke's case it was found that the frequency of headaches suffered by the applicant there was approximately 25 per year (greater than the standard in the criteria of 12 or more) and that the duration of the headaches involved several hours and the severity at the upper level. However, the Tribunal there found that the level of impairment under Table 13.1 was 0% as the attacks did not interfere with activities of daily living as defined in the glossary of the Guide. In the present case, the applicant has to rest or stretch and sometimes even double checks his work. These responses to stimuli could be regarded as being on the one hand, part of the ordinary incidence of life which results from tiredness, stress in the workplace or other influencing factors. There is the possibility however, that those activities of daily living may be experiencing a "minor interference" as defined. However, we have concluded on the balance of probabilities that the likelihood of the latter conclusion is far outweighed by the factors raised by Dr Lethlean that sleep apnoea, for example, could equally account for the symptoms described. On that basis, the headaches reported could not then be attributable to service life and therefore be compensable under Table 13.1. That is not to detract from the acceptance of liability for the original injury or even that headaches may be related to the original injury. However, the doubt raised by Dr Lethlean that some psychological factors may be involved lends credence to the requirement for clinical re-assessment including psychiatric assessment. The time lapse between Dr Lethlean's original and more recent reports, his observation of apparent inconsistencies as specified in his latest report should not be viewed lightly and his suggestion of a clinical re-assessment would accord with the best evidence rule in order to make the correct or preferable decision. 50. Having considered all of the evidence, we are satisfied that the applicant does not suffer a 10% whole person impairment which can be attributable to service life , in terms of s 24 of the Act. An amount of compensation is therefore not payable under that provision. 17 The Commission did not dispute that Mr Bryant had by his notice of appeal engaged the jurisdiction conferred on this Court by s 44 of the AAT Act. Though that statute terms the proceeding an "appeal", it is one in the Court's original jurisdiction. That jurisdiction is only engaged if there truly is a question of law, for that is what s 44 specifies the appeal is "on": TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation [1988] FCA 119 ; (1988) 82 ALR 175 ; Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232 ; (2003) 76 ALD 321 ; Price Street Professional Centre Pty Ltd v Commissioner of Taxation (2007) 243 ALR 728. Having considered the questions specified in the notice, I am satisfied that the Commission was right to adopt this stance. did the Tribunal, in the circumstances of this case, exceed the jurisdiction conferred upon it by s 64 of the SRC ACT ? 19 The submissions made by the parties in respect of these issues were as follows. The submission was put in this way. The task consigned to the Commission when reconsidering the original decision of 16 March 2006 was not that of deciding whether Mr Bryant suffered from a disease (and hence, by definition an "injury" for the purposes of the SRC Act ) to which his naval service had contributed to a material degree, for that had already been determined by a determination made by the Commission on 25 January 2006 which had never fallen for reconsideration. These being the parameters of the "reviewable decision", when s 64 of the SRC Act conferred jurisdiction on the Tribunal to review that decision, it was submitted that like parameters attended the powers and discretions which the Tribunal was able to exercise under s 43(1) of the AAT Act in deciding whether to confirm, vary or set aside that decision. 21 In aid of this submission, Mr Bryant pointed to observations made by the Full Court in Lees v Comcare (1999) 56 ALD 84 , at [39] to the effect that the powers and discretions conferred on the Tribunal by s 43 of the AAT Act are conferred for the purpose of reviewing the decision under review and are not powers able to be exercised at large. Reference was also made to observation of the Full Court of the High court in Canute v Comcare [2006] HCA 47 ; (2006) 226 CLR 535 , at 542, [14], taken up by Greenwood J in Parker v Military Rehabilitation and Compensation Commission (2007) 96 ALD 624 , at [52], to the effect that the Approved Guide fell for application through the "prism" of the injury which the claimant had suffered resulting in permanent impairment. Reliance was also placed upon the proposition, flowing from the rejection of a submission to the contrary by Jenkinson J in Comcare v Amorebieta (1996) 66 FCR 83 , at 96, that s 24(5) of the SRC Act was not to be construed in a way which admitted of an assessment of the degree of permanent impairment proportionate to the causal contribution of the incident giving rise to the compensation claim. 22 For its part, the Commission submitted, principally by reference to Telstra Corporation Limited v Hannaford [2006] FCAFC 87 ; (2006) 151 FCR 253 , that, questions of liability to pay compensation under s 24 of the SRC Act can involve "primary aspects" of liability such as whether there is an "injury" for the purposes of that Act. The Commission also emphasised that the Tribunal was not obliged, subject to procedural fairness considerations, to limit the conduct of its review to the case presented by the parties, citing Grant v Repatriation Commission [1999] FCA 1629 ; (1999) 57 ALD 1 and Bramwell v Repatriation Commission (1998) 158 ALR 623 in support of this proposition. It was submitted that no Tribunal acting reasonably could have made that decision or, alternatively the decision was so unreasonable that no reasonable person could have come that decision, and as such the decision was vitiated by what was termed " Wednesbury unreasonableness". 24 The submission in regard to sleep apnoea and psychological factors were put by Mr Bryant in this way. Sleep apnoea was mentioned in the Statement of Facts and Contentions, but was not considered as a possible cause of headaches until Dr Lethlean's report of 3 November 2006. Even then, so it was submitted, it was considered as a possible cause and not the most common cause of headaches. Further, Dr Lethlean was not an expert on sleep apnoea and no evidence was called on the subject. Psychological factors were submitted to be a non-issue. Such factors, it was noted, were not included in the Statements of Facts and Contentions of the parties, were mentioned only once in the transcript and were not the subject of closing address by either counsel. Psychological factors were first raised in Dr Lethlean's report of 3 November 2006. This issue was outside of Dr Lethlean's expertise. 25 In support of these submissions, Mr Bryant pointed to observations by Mason J (as he then was) in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1985) 162 CLR 24 at 41 to the effect that a court may set aside an administrative decision that has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance, on the ground that the decision is manifestly unreasonable. It was also noted, by reference to Federal Commissioner of Taxation v Swift and Ors (1989) 18 ALD 679 and Riddle v Telstra Corporation Limited [2006] FCA 58 ; (2006) 149 FCR 348 , that these principles apply equally to a decision of the Tribunal. 26 The Commission submitted, by reference to the Full Court decision in Minister for Immigration & Multicultural Affairs v Betkhoshabeh [1999] FCA 980 ; (1999) 55 ALD 609 , that the decision of the Tribunal, at most, falls within the scope of a decision where the facts were such that an opposite conclusion would have been open to the decision maker, and as such does not evidence an error of law. The Commission also pointed to the evidence before the Tribunal, particularly that of Dr Lethlean, which questioned the extent of the impairment resulting from the injury and submitted that it was therefore open to the Tribunal to proceed as it did. The Commission sought further to support these submissions by referring to the high threshold for a determination of " Wednesbury unreasonableness", citing Lord Green MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230; and also the observation of Gummow J in Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 at 654, [137] , that it is very difficult to show unreasonableness where the facts are such that reasonable minds could reasonably differ. Mr Byrant's submissions proceeded as follows. The global approach to "minor interference" in O'Rourke v Comcare , is contrary to the approach the Court has taken to interpreting the Guide in Whittaker v Comcare [1998] FCA 1099 ; (1998) 86 FCR 532 and Comcare v Fiedler [2001] FCA 1810 ; (2001) 115 FCR 328. These cases are, it was submitted, supportive of the proposition that, where there is ambiguity in a phrase, as there is with "minor interference", then the Tribunal should take the approach most favourable to the employee. If the global approach in O'Rourke v Comcare has the effect of limiting or reading down the meaning of "minor interference" then it ought not be followed. If an "activity of daily living" (ADL) is interrupted, temporarily suspended or ceased altogether because of a headache that amounted, it was submitted, to an interference and whether it is minor or significant depended on the frequency, duration and severity of attacks. Where headaches amount to more than a de minimus interference with ADL, it was submitted that this would then constitute a "minor interference". It was submitted that Mr Bryant's medical history, as provided to Dr Lethlean, which history was assumed to be uncontroversial, would fall within the meaning of "minor interference" so construed and hence amounted to a 10% impairment under Table 13.1 of the Approved Guide. 28 It was further submitted by Mr Bryant that the Tribunal fell into error as to the method of assessment under the Approved Guide, in several ways. These were; the acceptance of Dr Lethlean's opinion that an assessment could not be altered without a reassessment; the disregarding of Dr Rowe's opinion due to its reliance on the Applicant's statements, despite this also being the basis of Dr Lethlean's opinion and there being no requirement in the Approved Guide preventing such reliance; and the giving of equal weight to sleep apnoea and psychological factors as causes of the ailment without these being reasonably open on the evidence. 29 On behalf of the Commission, it was submitted that the comparison between the term "difficulty", as considered in Whittaker v Comcare and Comcare v Fiedler , and the term "interference" as used in Table 13.1 of the Approved Guide was not appropriate to support a de minumus argument. In support, the Commission pointed to the observation of the Full Court in Fiedler at [24] that, "There is no reason to think the Tribunal considered that any difficulty with digital dexterity, no matter how slight, was sufficient to come within par 1 of Table 9.4". 30 The Commission further submitted that, even if O'Rourke v Comcare were the source of an incorrect test to apply to the term "minor interference", the Tribunal's reasons do not disclose that it applied such a narrow conception. In support of this, the Commission pointed to the Tribunal's reasons at [49] as showing that the Tribunal did consider whether there was a de minumus interference. The Commission submitted that, whilst the Tribunal was not satisfied on the evidence that the 10% impairment was met, this was not because the interference was considered too minor. The Commission finally submitted, in regard to the acceptance of Dr Lethlean's opinion over that of Dr Rowe, that this was a matter of the weight afforded to evidence and did not give rise to any errors of law. The statutory scheme allows for progressive and evolving decision-making giving effect to the provisions of ongoing review of relief or entitlements in the nature of course of workers compensation, being review which allows for adjustment or change in the light of events and circumstances which may subsequently happen. The statutory scheme hence reflects a flexible scope for adjustment by way of decisions in the nature of awards to be made subsequently to the determination of s 14 liability, whether that determination be made in isolation, or in the context of decision-making concerning consequential relief that may be required in the light of evolving circumstances. It is therefore a scheme which allows progressively for ongoing relief, and is thus not comparable of course with the process of curial resolution of the traditional common law entitlement of an injured employee for damages as a consequence of the negligent conduct of an employer. The opening words of s 14(1) '[s]ubject to this Part...' are consistent with the flexibility inherent in the ensuing codification of the various facets of compensation envisaged. 58 The first instance decisions of this Court in Power, Hill and Riddle, which I have reviewed, each reflect in my opinion correctly the operation of the statutory scheme, and in particular its provision for ongoing adjustment designed to accommodate changing circumstances inclusive for instance (as here involved) of changing medical diagnosis. The approach to statutory construction and operation evident in those first instance authorities is not at odds with the approach to statutory construction and operation adopted by the Full Court in Lees subsequently to Power and Hill and prior to Riddle . They bind me as much as they bound the Tribunal. Given that, there is no utility in a rehearsal of earlier authority. Rather, the task is to ascertain how those conclusions operate on the facts of the present case. 33 Here, as it was entitled to do in its administration of the SRC Act , the Commission chose to bifurcate the process of making of determinations in response to a claim made by Mr Bryant, via his solicitors, on 15 July 2005 to extend the Commission's existing liability to pay compensation under the SRC Act so as to include a headache condition and to reassess his lump sum impairment compensation entitlement accordingly. Initially, on 25 January 2006, the Commission determined that Mr Bryant had suffered the contraction of a disease to which his military service had contributed to a material degree. The disease concerned was identified as "Muscle-tension type headache". It was determined to be a "stand-alone condition", i.e. one unrelated to Mr Bryant's earlier accepted compensable injury to his neck. The disease identified in this determination was an "injury" for the purposes of the SRC Act . 34 Mr Bryant did not seek reconsideration of the determination of 25 January 2006. The status of this determination is identical to the earlier determination made by Telstra, that of 8 May 2002, analysed by Conti J in Telstra Corporation Limited v Hannaford . Mr Bryant sought reconsideration only of the later, 16 March 2006 determination, described at the outset of these reasons. When, on 24 July 2006, a decision was made on reconsideration it was that decision, and that decision alone, which became the "reviewable decision" for the purposes of s 64 of the SRC Act . 35 In the passage from Telstra Corporation Limited v Hannaford which I have quoted above Conti J does not, in terms, mention s 24 of the SRC Act , instead referring to ss 16 , 19 , 21 and 27 of the SRC Act . However, his Honour's reference to these particular provisions was clearly by way of example (witness their being preceded by "for instance"). The compensation for which s 16 (compensation for medical expenses and the like), s 19 (compensation types for injuries resulting in incapacity), s 21 (compensation for injuries resulting in incapacity where the employee is in receipt of a lump sum benefit) and s 27 (compensation for non-economic loss) respectively provide are but particular types of compensation eligibility for which is enlivened, subject to the additional satisfaction of their relevant statutory criteria, once it has been concluded that an "injury" for the purposes of the SRC Act has been suffered. Compensation for an injury which has resulted in permanent impairment, for which s 24 of the SRC Act provides, is another. Each of these is a type of compensation for which Part II of the SRC Act provides. In these circumstances, there is no material distinction to be drawn between Telstra Corporation Limited v Hannaford and the present case. 37 To the extent that Mr Bryant contends for a contrary conclusion, that contention must be rejected. 38 Paragraphs 37, 39, 40 and 41 of the Tribunal's reasons evidence that the Tribunal did consider whether Mr Bryant indeed suffered from the hitherto accepted "injury" of "muscle tension type headaches". The Tribunal concluded that he did. In so doing, the Tribunal necessarily accepted that Mr Bryant suffered from a "disease" for the purposes of the SRC Act , i.e. materially, an ailment suffered by him that was contributed to in a material degree by his employment by the Commonwealth (see; the then definition of "disease" in s 4 of the SRC Act ). At the relevant time, the SRC Act provided that an "injury" included a "disease" (definition of "injury" in s 4 , SRC Act ). 39 Having reached the conclusion that Mr Bryant suffered from an "injury" for the purposes of the SRC Act , the task for the Tribunal was that laid down by s 24(5) of the SRC Act , to determine the degree of permanent impairment of the employee resulting from that injury under the provisions of the Approved Guide. Regrettably, as is revealed by those portions of para 49 and para 50 of the Tribunal's reasons emphasised in the excerpt quoted above, the Tribunal did not undertake that task according to law, for the following reasons. 40 In Canute v Comcare [2006] HCA 47 ; (2006) 226 CLR 535 , in a joint judgement, a Full Court of the High Court emphasised by repetition (226 CLR at 548, [37] and [38]) that the task under s 24(5) involved the assessment of compensation " resulting from an injury ". As the High Court put it, the occurrence of an "injury" "both actuates and defines the ambit of Comcare's duty under s 24 of [the SRC Act]" (226 CLR at 548, [37]). The suffering of an "injury" as defined is antecedent to that assessment task which in this case fell on the Commission rather than Comcare to undertake because Mr Bryant was a member of the Defence Force. 41 As is revealed by the portion of para 50 of the Tribunal's reasons emphasised in the excerpt quoted above, the Tribunal seems to have conceived its task to be to decide whether it was satisfied that the Mr Bryant suffered a degree of whole person impairment " which can be attributable to service life ". With respect, Mr Bryant's entitlement, if any, to permanent impairment compensation was not just to the extent that his employment with the Commonwealth contributed to that impairment to a material degree. It was to compensation in an amount which reflected the degree of permanent impairment resulting from an injury. 42 Canute v Comcare revealed one type of impermissible conflation of inquiry in the determination of permanent impairment compensation, the treating as relevant to the inquiry as to the degree of permanent impairment resulting from an injury something which independently satisfies the statutory definition of an "injury". This case, in my opinion, reveals another, the treating of employment contribution as relevant to the determination of the degree of permanent impairment "resulting from an injury". The contributors to an ailment may be multi-factorial. If an employee's employment by the Commonwealth contributed in a material degree to the employee's ailment, than that employee has suffered a "disease" and thus an "injury" for the purposes of the SRC Act . That "injury" then provides the "prism" through which permanent impairment compensation "in respect of the injury" is determined: s 24(1) SRC Act . So far as that "injury" is concerned, and subject of course to the Tribunal's ability to revisit that antecedent question, the focus of inquiry then shifts to the degree of permanent impairment resulting from that injury as assessed by reference to the Approved Guide. In that inquiry, it is nothing to the point that there may be other contributors to the "injury" apart from employment with the Commonwealth. 43 This type of conflation of inquiry is also evident in part of the emphasised portion of para 49 of the Tribunal's reasons, "the headaches reported could not then be attributable to service life and therefore be compensable under Table 13.1". The reference to "compensable under Table 13.1" is also, strictly, erroneous as the source of the liability to pay permanent impairment compensation is s 24 of the SRC Act , not the Approved Guide. This reference though was not the subject of any complaint and seems to me to be but infelicity or casualness of expression. 44 If Mr Bryant's headaches were solely the result of an ailment other than the accepted injury, "muscle tension type headaches" condition, then no compensation under s 24 of the Act would be payable in respect of the accepted injury. That would be because, whatever degree of permanent impairment from which Mr Bryant suffered, that impairment would not have "resulted from" that accepted injury. The task for the Tribunal was to decide for itself the degree of permanent impairment which had "resulted from" the accepted injury: Comcare v Amorebieta (1996) 66 FCR 83 , at 96. 45 That is not though, as its reasons evidence, how the Tribunal conceived its task. The Tribunal, wrongly, conceived that its task was to assess the impairment that had "resulted from service life". This aspect of the jurisdictional challenge made by the Appellant has merit. 46 Further comment is also necessary in relation to the way in which the Tribunal dealt with this matter. 47 The relevant compensable "injury", from which the Tribunal accepted Mr Bryant suffered was a particular type of headache condition, "muscle tension type headaches", not "headaches" generally. It may be that it is possible definitively to distinguish the symptoms of "muscle tension type headaches" from those occasioned by, for example, psychological factors or sleep apnoea. Equally, it may to some extent not be possible to draw such a distinction. To the extent that it is not, the Tribunal, like the Commission, was obliged to assess impairment by reference to the totality of impairment "resulting from" the accepted injury on the footing that it was not possible to isolate from that impairment anything which did not result either from another "injury" or from a condition which could never constitute an "injury". A like approach is taken where it is not possible to isolate the impairment flowing from an aggravation of an underlying condition from that flowing from the underlying condition itself: Jordan v Australian Postal Corporation (2007) 99 ALD 303 at 310, [30]. It is settled that in those circumstances a body such as the Commission or the Tribunal sitting in its place is obliged to make an assessment beneficially in favour of a claimant. I would not modify my assessment without the opportunity of re-assessing Mr Bryant clinically and discussing his condition, symptoms and restrictions. Sleep apnoea in itself can cause (or increase) headaches, concentration and tiredness difficulties. It's possible that this is relevant to his current and continuing difficulties. " (Emphasis added). Yes. He was also adamant in cross-examination that Mr Bryant needed to be reassessed. If so, those symptoms and their related impairment would not "result from" the accepted injury. Here though the Tribunal's conclusion in respect of sleep apnoea was that it "could equally account" for the symptoms described by Mr Bryant --- Tribunal Reasons, [49]. That finding puts the position rather higher than did Dr Lethlean, who saw sleep apnoea as a "possible" cause of Mr Bryant's headaches. There was no evidentiary support for a "could equally account" finding. 52 The submission for Mr Bryant that this constituted " Wednesbury unreasonableness" misconceives the nature of that type of error of law. As Gummow J explained in Minister for Immigration and Multi-cultural Affairs v Eshetu at 649, [124] this descriptor, derived from the decision of the English Court of Appeal in Associated Provincial Picture Houses Ltd v Wednesbury Corporation , refers to that body of administrative law which is concerned with the judicial review of the abuse of discretionary powers. When standing in the Commission's place so as to decide whether Mr Bryant had an entitlement to compensation under s 24 of the SRC Act the Tribunal was not exercising a discretionary power. Neither does s 24 of the SRC Act posit an eligibility test grounded in a state of administrative satisfaction to a state of affairs. The principles attending the judicial review of a decision made under this type of statutory provision were comprehensively discussed by Gummow J in Eshetu's case, but are of no present relevance. That is not to say that no error of law is revealed. If the Tribunal reaches a conclusion critical to its determination without any material to support that conclusion that is an appealable error of law: Secretary, Department of Social Security v Murphy [1998] FCA 809 ; (1998) 52 ALD 268 , at 271-272. 54 No particular ambiguity is overtly evident in the 0% and 10% parts of Table 13.1. The Approved Guide provides a definition for the expression "activities of daily living" ("ADL"). As will be seen, some ambiguity may attend that definition. Interference with such activities will be minor if it is small in size, extent or importance (see the definitions of "minor" in the Macquarie Dictionary, Federation Edition, at p. 1217 and the Oxford English Dictionary at p. 861). 55 The 0% and 10% parts of Table 13.1 require the making of an affirmative finding by the Tribunal as to the frequency of headaches. At paragraph 47 of its reasons the Tribunal notes the differences in the accounts of frequency evident in the accounts given by Mr Bryant to Doctors Rowe and Lethlean, the fact that these relate to differing points in time and that the frequency "seems to have reduced between 1994 and October 2005". There is no resultant affirmative finding as to the degree of frequency of headaches. Neither is there any positive finding as to whether, however frequent they may be and however they may interfere with "activities of daily living", they are "readily reversed by appropriate medication or treatment". 56 In assessing what constituted a "minor interference" with the "activities of daily living" the Tribunal sought to follow an approach adopted in an earlier tribunal case, O'Rourke and Comcare [1997 ] AATA 304 (26 August 1997, Deputy President Burns). The circumstances of a given case may be such that one ADL is so affected, both biologically and psychosocially, as to fall to be described as "minor interference with activities of daily living". In another case however, where there is a low level of, say psychosocial, interference with several ADL, that could similarly fall to be described as "minor interference with activities of daily living". It is highly unlikely, when taking a global approach to this assessment, that a small infraction of one ADL could properly be described as "minor interference with activities of daily living". Its use saves the repeated specification, in those parts of the Approved Guide when reference to the same is directed, of each of the activities mentioned in the definition. 58 Though the term is a collective one it does not, with respect, follow that the "global approach" is thereby mandated. Indeed, in its reference to one ADL being so affected as to fall to be described as "minor interference" the Tribunal itself in O'Rourke seems to counsel against the adoption of such an approach in such a case. Another conclusion is that the term ADL is not limited to the basic mechanics of an activity but due weight must be given to the psychosocial aspect of the function ie the ability to stand may be impaired because one cannot stand straight, or stand still or stand around on even standby without some supervision or direction. ' It seems to me that no criticism can be taken of the correctness of this passage, save for the ambiguity in the reference to "any one of the particular functions listed in the glossary definition". If that reference was meant to read "any particular one" was necessary to have been adversely affected, no complaint could be made. Thus there is no requirement that there be "minor interference" with all, or most or any particular one of the activities listed in the definition of that collective term before a finding of "minor interference" may be made. To the extent that the "global approach" counselled in O'Rourke suggests otherwise, and that seems to be how the Tribunal in the present case understood it, it is inconsistent with the decision of this Court in Emery and should not be followed by the Tribunal. 60 Some of the criteria in Table 13.1 do require medical evidence for the making of a finding of fact, notably whether, for example, headaches are "readily reversed by appropriate medication or treatment". Others though are but conclusions to be drawn from evidence which may be related by the claimant or others who have observed him or her. Indeed, both the Commission and, when sitting in its place, the Tribunal need to take care in ensuring that medical practitioners do not usurp their role of finding such facts on evidence. That is not to say that the opinions of a medical practitioner on, for example, the severity of a particular individual's headaches are irrelevant. They plainly are relevant but the body charged with assessing the degree of permanent impairment is the Commission or, as the case may be, the Tribunal, not a medical practitioner. Recalling this ought also serve to avoid the risk of the Commission or, as the case may be, the Tribunal acting on what may prove to be a medical assessment based on a perhaps unarticulated error in the construction of the Approved Guide on the part of the medical practitioner. Mr Bryant bore no formal onus of proof in the Tribunal proceeding. Strictly, the nature of the proceeding was that of an administrative inquiry. Nonetheless, if, that is the position in which the Tribunal was left on the body of evidence it chose to prefer then, without more, its decision would be unexceptional. 62 The difficulty is that the Tribunal has come to this conclusion on the basis of a manifest misconception of the meaning and effect of s 24(5) of the SRC Act and of the meaning of Table 13.1 in the Approved Guide. Further, one of its supporting findings of fact overstates the evidence before it and is otherwise unsupported. 63 Mr Bryant has not had a hearing according to law. The state of the evidence is not such that findings of fact by this Court under s 44(7) of the AAT Act would be appropriate. 64 In these circumstances, the appeal should be allowed and the matter remitted to the Tribunal to be heard and decided again. Upon that rehearing the hearing of further evidence should be permitted. The constitution of the Tribunal for the purposes of the rehearing is a matter for the Tribunal's President who will doubtless consider in that regard the evidentiary preferences already voiced by the Tribunal as presently constituted. 65 I shall hear the parties as to costs. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | appeal from administrative appeals tribunal whether tribunal exceeded its jurisdiction by wrongly conceiving the reviewable decision whether tribunal erred in finding other possible causes for the applicant's symptoms whether tribunal applied an incorrect construction of the term minor interference where tribunal wrongly considered whether impairment resulted from service life rather than the degree of permanent impairment resulting from the accepted injury where tribunal erred in finding that other factors could account for symptoms without evidentiary support where tribunal incorrectly applied a global approach to the term minor interference with activities of daily living where appeal allowed administrative law |
2 The parties are agreed on declarations to be made and upon the penalties to be imposed. Nevertheless, it is necessary for the Court to be satisfied that the penalties proposed are, having regard to the facts as established or agreed, within the range of penalties that arise for consideration in the exercise of the Court's discretion. That said, it has been held that it is not necessary or useful for the Court to be diverted by the question whether precisely the same penalty would have been applied in the absence of agreement (see Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 at [57] and [126] applying Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 and N W Frozen Foods Proprietary Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285. 3 The proceedings were commenced by Application and Statement of Claim. They were originally defended. They concerned allegations that Mr Lanscar (and through him the second respondent ('the CFMEU')) advised, encouraged or incited Papas Painting Contractors Pty Limited ('Papas Painting') to take discriminatory action against individual contractors which it had engaged and to refuse to use their services because they were not union members. It was further alleged that Mr Lanscar (and through him the CFMEU) by his actions intended to coerce Papas Painting to take discriminatory action against the contractors. 4 The pleadings alleged contraventions of s 298S(2)(a) and (b) of the Workplace Relations Act 1996 as in force on 9 February 2005. On 9 February 2005, Mr Lanscar, and through him, the Union, advised, encouraged or incited Papas Painting, via Mr Papas, to take discriminatory action against the ABN painters, in that Mr Lanscar, and through him, the Union, advised, encouraged or incited Papas Painting, via Mr Papas, to refuse to make use of painting services offered by the ABN painters. Further, on 9 February 2005, Mr Lanscar, and through him the Union, threatened to take industrial action against Papas Painting with intent to coerce Papas Painting to take discriminatory action against the ABN painters, in that Mr Lanscar, and through him the Union, threatened to take industrial action against Papas Painting with intent to coerce Papas Painting refuse to make use of the services offered by the ABN painters. On 19 January 2005, there was a conversation at a meeting which was held between Messrs Papas, Lanscar and Johnstone. Mr Lanscar's diary was produced in response to a notice to that effect by the applicant. Leave was sought and granted that it be uplifted for inspection. When the proceedings resumed the following morning the applicant called expert evidence from Dr Steven James Strach, a forensic document examiner. Dr Strach had, during the period of the adjournment, examined Mr Lanscar's diary and discovered that an entry in the diary on 19 January 2005 had been altered. He provided a written report in which he stated that the alterations were detected by him with the use of infrared and red/infrared luminescence detection techniques. The diary in its altered form read: ' Meeting with Papas over... wages and conditions. ' The diary in its original form read 'Meeting with Papas over... union membership' the words 'union membership' had been heavily scored out on both sides of the relevant page and the other words written in underneath. Dr Strach was not cross-examined. 8 Following Dr Strach's evidence the respondents elected to withdraw the defence which had earlier been filed and not to lead evidence in the proceedings or to cross-examine the applicant's witnesses. In these circumstances the allegations in the Statement of Claim stand unchallenged, as does the evidence which was read in the applicant's case. It is not necessary for the Court to deal further with this aspect of the matter. 11 I am satisfied on the basis of the unchallenged assertions in the Statement of Claim and having regard to the evidence in the applicant's case that the declarations in proposed Order 1 are appropriate. It is not necessary, in the light of the parties' agreement that breaches have occurred in the terms suggested, to undertake any separate analysis of the legal elements of those offences. 12 The conduct admitted by Mr Lanscar and by the CFMEU is serious. It must be regarded as a deliberate breach of a clear legislative prohibition. It is appropriate that the penalty reflect this fact. 13 The applicant informed me, in unchallenged written submissions on the question of penalty, that the CFMEU has a prior record of breach of provisions in Part XA of the Act. 15 I am satisfied that the penalties proposed by the parties in proposed Order 2 are, having regard to the seriousness of the breaches, within the range from which the Court would itself have selected a penalty to impose. In those circumstances there is no need to depart from the penalty which the parties have agreed is appropriate. 16 I will, accordingly, make the orders which the parties have, by consent, proposed should be made. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan J. | breach of part xa of the workplace relations act 1996 (cth) union membership union advised, encouraged or incited discriminatory conduct agreement between parties as to proposed penalty penalty should be within the range of penalties the court would impose itself when the proposed penalty is within the appropriate range the court may give effect to agreement between the parties and need not exercise an independent discretion or decide whether it would have found the same penalty workplace relations penalty |
He received sickness benefits between 11 August 1993 and 17 October 1995, and has received disability support pension from 19 October 1995 to the present time. He says he did not want, and does not want, those benefits and that they were granted to him in error. 2 The decision to grant him those benefits was affirmed by the Administrative Appeal Tribunal (the Tribunal). Mr Zambini appealed from that decision. An appeal from that Tribunal lies to this Court for error of law only: s 44 , Administrative Appeals Tribunal Act 1975 (Cth). On 16 October 2006 a judge of this Court ruled that there was no error of law in the decision of the Tribunal to affirm the decisions under the Act to grant Mr Zambini those benefits, and to continue to make available to him the disability support pension. 3 Mr Zambini has now appealed to the Full Court of this Court from that decision of 16 October 2006. That is because, it is submitted, Mr Zambini has not specified in his notice of appeal proper grounds of appeal, nor identified any question of law or fact upon which the Full Court might reverse the decision of the learned judge at first instance. In essence, by invoking O 52 r 18, the Secretary is seeking to have the appeal summarily dismissed. Such an application is within the jurisdiction of a single judge under s 25(2B)(aa) of the Federal Court of Australia Act 1976 (Cth). 5 Obviously, an appeal should not be dismissed on such grounds if there were some identified or identifiable grounds capable of supporting an argument that the appeal might succeed. 6 Order 52 r 13(2) requires the notice of appeal to state whether the whole or part only and what part of the judgment is appealed from, to state briefly but specifically the grounds relied upon in support of the appeal, and to state what judgment the appellant seeks in lieu of the order appealed from. I think it is plain enough from the notice of appeal that it is the whole of the judgment of 16 October 2006 which is appealed from. There is mixed systemic of process, fact and law *Noteworthy respondent's Sparke & Helmore Lawyer informed by letter Friday 27/10/06. 2. An order denouncing and quashing the adverse decision of Australian Federal Court Justice Besanko (re Whistleblower) Come Forward). That the matter be resolved as per Applicants initial application in a more sadisfactory and solution orientated lawful manner as set out in legislation Executive Arm Federal & State Govt (MLC Legislator) have been informed. 9 In response to the notice of motion, Mr Zambini filed an affidavit on 27 November 2006. In broad terms, it joined issue with the assertions that he did not in his notice of appeal comply with O 52 r 13. It attached a lengthy document including a letter apparently to the solicitors for the Secretary dated 27 November 2006. The lengthy document enclosed what it described as "an overview Grievance/facts & contentions", a further "Grievance/Facts contentions Opposing your Motion " and a further "Grievance/Facts/contentions to oppose your Affidavit ". I have read those documents. I do not think that they identify in any coherent way any grounds relied upon in support of the appeal, or that they indicate that there is any prospect of the appeal succeeding. 10 At a directions hearing on 29 November 2006, I explained to Mr Zambini the deficiencies in his notice of appeal and what was required by the Rules. I gave him an opportunity to file an amended notice of appeal to comply with Or 52 r 13(2)(b) and (c). He has filed a further document of five pages dated 5 December 2006. I think it makes clear enough, as required by O 52 r 13(2)(c), that he seeks an order setting aside the judgment appealed from and setting aside the decision of the Tribunal, so that his application to the Tribunal to review the decisions to grant him sickness benefits and subsequently disability support pension can be reheard and reversed. 11 I have read that document carefully to see whether it could in any way identify briefly, but specifically, the grounds relied upon in support of the appeal. I do not think it does. I will not incorporate that document into these reasons simply because of its length. It is discursive. It is assertive about a number of alleged individual factual errors or omissions, but they do not provide any clear picture of the thrust of the appeal. It is not either necessary or appropriate for me to address those individual facts on this application, because the issue is whether the notice of appeal briefly but specifically specifies grounds in support of the appeal, or whether by amendment it could achieve that purpose. The document of 5 December 2006, in response to the opportunity given to Mr Zambini to meet that requirement of the Rules, does not do so. 12 I have considered whether with further opportunity Mr Zambini could comply with that Rule. In the course of the hearing today, I have gone through with him the reasons for judgment of the judge at first instance to see if he can identify any particular passages in those reasons which demonstrate or might demonstrate error. Three things have emerged from that discussion. The first is that Mr Zambini does not, in his criticisms of that judgment, distinguish between the recital by the learned judge of the history of his claims and the process of decision-making in relation to them from the consideration and reasons for the decision of the learned judge. Nor does he do so in respect of the Tribunal's decision. A quite lengthy discussion illustrated that point and that Mr Zambini either would not or could not make that distinction. In fact, the reasons for judgment of the learned judge largely record the history of Mr Zambini's claims under the Act and of the process of decision-making in relation to them. The second thing that emerged is that Mr Zambini disagrees with a number of the facts recorded as a matter of procedural history in a way which indicates that his complaints are of a factual nature only. For instance, despite it being pointed out that in the bigger picture of his appeal and the nature of the relief which he seeks it was an unimportant issue, Mr Zambini nevertheless regarded it as significant that the learned judge had recorded that Mr Zambini was suspended from his former employment without pay from 28 July 1993 when he said the date should have been 12 July 1993. When Mr Zambini made an application for a disability support pension supported by a medical certificate, Mr Zambini complained that the judge had recorded that it was "his" doctor who provided the certificate when, he says, it was provided by a doctor from the "miscellaneous workers union". Those two matters illustrate that Mr Zambini's complaints, so far as I could discern them, relate to matters of fact and not to matters of law. Thirdly, and more importantly, having gone through the judgment at some length, Mr Zambini has not identified to me any matter in which the learned judge at first instance could arguably be shown to have been in error in any way material to the appeal. Nor did he identify any error of law or arguable error of law on the part of the Tribunal. 13 In my judgment there is no prospect, giving Mr Zambini by a further opportunity to amend his notice of appeal, that he would be able to do so in a way which complies with O 52 r 13(2)(b). That is not simply because I have reached the view that he is unable to express himself in terms which would satisfy that rule. It is also because, as a result of his various responses to the motion referred to above, there is no apparent ground of appeal which might be arguable even if properly expressed. It is plain not simply that O 52 r 13(2)(b) has not been complied with, but that there is no prospect of it being complied with. It is also plain Mr Zambini is unable to express any error on the part of the learned judge at first instance which might give him an arguable prospect of the appeal succeeding, nor to express any error of law on the part of the Tribunal in its decision-making process. 14 In those circumstances, it is appropriate to summarily dismiss his appeal by reason of his non-compliance with O 52 r 13(2) and I so order. 15 I make the following additional comment. Mr Zambini does not want the benefits which he had been granted under the Act. The decision-makers must apply that Act in its terms. Although there may be circumstances which explain why Mr Zambini applied for sickness benefits and subsequently a disability support pension which are significant to him, the fact is that he made those applications and the decision-makers then had to address them. It is perhaps curious that a person in Mr Zambini's position continues to receive such benefits when he does not want them. The answer may simply be that that is what the legislation provides. It is then for the legislature to determine whether, in circumstances such as those of Mr Zambini, he should be entitled under the Act to withdraw his application for benefits, or by some process to cease to be entitled to benefits under the Act because he does not want or no longer wants to receive them, even though in terms of the Act as it is presently expressed he is entitled to them, and even though the decision-makers exercising delegated powers under the Act in its terms must continue to grant those benefits because in 1993 and 1995 respectively, Mr Zambini made the applications for sickness benefits and subsequently disability support pension. 16 I therefore order, on the respondent's notice of motion of 16 November 2006, that the appeal be dismissed. The appellant must pay to the respondent his costs of the appeal, including the costs of the respondent's notice of motion. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | appeals federal court rules o 52 r 18 application for summary dismissal of appeal. practice and procedure |
He applied to the Department of Immigration and Citizenship for a Protection (Class XA) visa on 4 February 2008. A delegate of the Minister refused to grant the visa on 24 April 2008. An application for review was lodged with the Refugee Review Tribunal on 19 May 2008 and by way of a decision signed on 19 August 2008 the Tribunal affirmed the delegate's decision. An Application for review of the Tribunal's decision was filed in the Federal Magistrates Court on 2 October 2008 and an Amended Application was subsequently filed on 28 November 2008. That Court dismissed the Application pursuant to Rule 44.12(1)(a) of the Federal Magistrates Court Rules 2001 (Cth) on 8 December 2008: SZMUV v Minister for Immigration and Citizenship [2008] FMCA 1644. (2) To avoid doubt, a dismissal under paragraph (1) (a) is interlocutory. An appeal to this Court from an interlocutory decision of the Federal Magistrates Court requires leave: Federal Court of Australia Act 1976 (Cth) s 24(1A). Considerations relevant to the exercise of that discretion are ( Décor Corp Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397 at 398 to 399, per Sheppard, Burchett and Heerey JJ): No Application seeking leave has been filed in this Court. The proceeding in this Court was commenced by a purported Notice of Appeal as filed on 24 December 2008. In accordance with Directions given by the Registrar on 14 January 2009, the purported appeal has been treated as an Application for leave to appeal and the Notice of Appeal as a draft of the Notice that would be filed if leave were granted. The handwritten Grounds of Appeal set forth as follows (without alteration): The single judge of the Federal Magistrate Court in His Honours judgement delivered on ... failed to find error of law, jurisdictional error, procedural fairness and relief under section 39B of the Judiccery Act 1903. The learned Federal Magistrate has dismissed my application without considering the legal and factual errors contained in the decision of the Refugee Review Tribunal. His Honours should have found that the Tribunal failed to appropriately deal with the documents in particular the inference that the documents are fabricated thus breaching section 424A. The Tribunal has not given the applicant an opportunity in the section 424A letter to deal with the claim raised by the Appellant. The Applicant appeared before the Court unrepresented, although he did have the benefit of an interpreter. He accepted that the argument set forth in his written Outline of Submissions had not been advanced before the Federal Magistrate. The explanation provided was that the prospect of raising that argument was only raised by a " friend " in conversation subsequent to the hearing conducted by the Federal Magistrates Court. Notwithstanding considerable reservation, it is considered that leave to appeal should be refused. INADEQUACY OF REASONS? Those reasons occupy some nine pages --- of those nine pages, over two pages set out verbatim the submissions of the Minister as to the relevant " background "; one page sets out verbatim the grounds of the Amended Application ; and a further two pages adopt and set out verbatim the Minister's written submissions on substantive issues. The balance of the judgment --- some four pages --- sets out the reasons as expressed by the Federal Magistrate. It is not for this Court, exercising an appellate jurisdiction, to itself consider the Amended Application and to conclude --- for reasons not expressed by a Federal Magistrate --- whether it would have also reached the same conclusion. It is not for this Court to provide the findings and reasons that should have been provided by the Federal Magistrate. This Court should be provided with the invaluable assistance that is in fact gained from a reading of the reasons of the Federal Magistrate whose decision is under appeal --- rather than assistance from the written submissions previously advanced on behalf of the Respondent Minister. In the present proceeding, it is not at all self-evident that the Magistrate: The Respondent Minister did not argue that the Federal Magistrate was not under a duty to provide reasons for his decision. The argument on behalf of the Minister was that this obligation had been discharged. An insistence upon a decision-maker expressing his or her own findings and reasons, and resisting a course whereby submissions otherwise filed by a party are " adopted " or " incorporated " as the reasons of the decision-maker, is not a mere formality. It is an insistence upon a discipline requiring the decision-maker to independently address the facts and circumstances of a particular case and to independently apply the relevant legal principles to those facts and circumstances. That which may appear self-evident upon a mere reading of submissions prepared by others often proves to be an over-simplification when the discipline of making findings and expressing reasons is independently undertaken. The provision of reasons serves a valuable purpose in the administration of justice: C onnell v Auckland City Council [1977] 1 NZLR 630. That is inevitable and is a logical result of our judicial system. There is all the world of difference between a disappointed litigant and a disturbed litigant. In the latter category come litigants who cannot understand why the decision went against him. In this case the appellant would be justified in feeling disturbed as he presumably does because he has brought this appeal. He is disturbed that justice did not appear to him to have been done. It is of the utmost importance that Her Majesty's subjects should have faith in our judicial system. By far the greatest number of civil and criminal cases come before the lower court. One should not draw distinctions between courts but it is of fundamental importance that the lower courts, which deal with so much work and with whom the average citizen has greater contact, should maintain respect for and faith in the judicial system. The affinity of law and reason has been widely affirmed and a Judge's reasoning --- his or her reasons for the decision --- is a demonstration of that close assimilation. Arbitrariness or the appearance of arbitrariness is refuted and genuine cause for lasting grievances is averted. Litigants are assured that their case has been understood and carefully considered. If dissatisfied with the outcome, they are able to assess the wisdom and worth of exercising their rights of appeal. At the same time public confidence in the legal system and the legitimacy and dynamic of the common law is enhanced. The legal system can be seen to be working and, although possibly at times imperfectly, striving to achieve justice according to law. The primary Judge in his reasons stated that regardless of any determination of his own, the matter was to be removed forthwith to the High Court. The delivery of " lengthy reasons ", according to the primary Judge, was thus considered to be of " little assistance ". The transcript of submissions was incorporated into the reasons and preference expressed for the submissions of the worker and the State. " The applicant ", the primary Judge concluded, " has discharged his onus in all respects and is entitled to an award ". These include proper fact finding at first instance. The analysis of issues by one legally trained mind will often help others to cut through the issues on appeal to those which are most important. That was certainly not the case here. See also: Goldsmith v Villanueva [2000] NSWSC 1181 at [13] per Adams J; Civil Aviation Safety Authority v Central Aviation Pty Ltd [2009] FCA 49 at [44] to [45] per Perram J. In the context of hearing appeals arising under the Migration Act 1958 (Cth), this Court is heavily dependent upon the Federal Magistrates Court properly discharging the functions entrusted to it. And an unsuccessful litigant before that Court is also entitled to go away knowing the reasons of the Federal Magistrate as to why he has lost. A course of simply incorporating the submissions prepared by others exposes a disappointed litigant to a sense of grievance --- however misplaced --- that the Federal Magistrate has merely " rubber stamped " the administrative process to date and the approach being pursued by the Minister. A deficiency in reasons may be exposed in a number of ways --- there may, for instance, be an absence of findings upon which a conclusion has been reached, or an absence of reasons directed to the findings that have been made. In the present proceeding, each of the grounds set forth in the Amended Application has been addressed, albeit by an incorporation of the Minister's submissions as the reasoning process of the Magistrate. But that, it is respectfully considered, is the deficiency. A litigant is entitled to reasons as formulated by and expressed by the Magistrate. To adopt any other course is only to encourage an appearance that the Magistrate has not independently applied his own mind to the application before the Court and to encourage a course whereby the discipline of writing reasons is sacrificed to expediency. Such observations do not necessarily entail that reasons for decision should not, in an appropriate case, incorporate proposed findings or reasons otherwise set forth in the submissions of one or other of the parties. Much will depend upon the circumstances of each individual case. But the minimum requirement is that a litigant can discern from the reasons provided the basis upon which a Magistrate has in fact proceeded. A litigant is entitled to feel confident that the reasons provided are those of the Magistrate and not a mere adoption of the reasons of others without independent thought being given to each of the arguments advanced and resolved. The difficulty in the present proceeding emerges from the extent to which the Magistrate has pursued a course of incorporating the work of others. That difficulty is only compounded by the generality of the submissions previously advanced by the Respondent Minister and thereafter incorporated in the Magistrate's reasons. A principal ground being advanced before the Federal Magistrate by the present Applicant was a denial of procedural fairness " by reaching adverse conclusions that the Tribunal did not find the applicant to be a credible or reliable witness, being conclusions that were not obviously open on the known material, without giving the applicant the opportunity to be heard in respect of those matters ". There is no substance in this complaint. The applicant was on notice from the delegate's decision that his credit was in issue. Furthermore, contrary to the applicant's assertion, the adverse credit findings of the Tribunal were obvious inferences from the evidence before it. Both the submission and the reason provided are but generalities. In contrast stand the reasons of the Tribunal. The Tribunal expressed its finding as to credibility and then went on to provide instances to support its finding. With respect to the material aspects of his claim I found his evidence to be vague and at times confusing. The applicant's evidence was vague and full of generalities. I would have expected that if he had been a General Secretary or any office holder he would have been able to give me a more detailed account of how he joined the party, the nature of his activities with which he was involved and of his role as office holder. I found his evidence to be confused and lacking in credibility. He claimed that a relative was a Member of Parliament for the Awami League however could not tell me the name of his seat or any other details relating to his candidature. I would have expected that he would have had a better understanding of the organisation of the Awami League and how it operates in the Comilla area and greater knowledge of the structures and organisation of the party. The Magistrate correctly concluded that " the applicant failed before the Tribunal because he was not believed ": [2008] FMCA 1644 at [5] . He then went on to address, albeit briefly, the arguments founded upon an alleged breach of s 424A of the Migration Act 1958 (Cth) and an allegation of actual bias. The decision in SZDGC v Minister for Immigration and Citizenship [2008] FCA 1638 , 105 ALD 25, it was concluded, was to be distinguished. The very process of distinguishing that decision exposes not only an independent consideration of the facts of SZDGC but an independent consideration of the facts of the case then before him and an analysis of the decision of the Refugee Review Tribunal. Obvious care must be taken to ensure that an appeal does not become a vehicle for simply criticising the manner in which the reasons of a judge at first instance have been expressed. Recognition must also be given to the fact that the Federal Magistrates Court is entrusted with a primary role in resolving migration cases. In that Court in 2007 over 1500 migration applications were filed and more than 2000 migration matters were finalised. These figures were higher still in each of the three preceding years. Any review of the reasons as provided by a Federal Magistrate must necessarily take into account the sheer number of the cases that that Court has to resolve. But there is a point below which the economy of language with which reasons may be expressed cannot trespass. In the present proceeding it is unquestionably the case that the reasons for decision of the Federal Magistrate may have been better expressed and more fully expressed. Had that course been taken, the Applicant may well have continued to express regret --- but he would at least feel confident that his case had been thoroughly considered. Notwithstanding the extent to which the Magistrate has simply incorporated the submissions of the Federal Magistrate, it is nevertheless considered that he did carefully review the materials before him and in doing so committed no error. SECTION 424A? Had reliance been placed upon the handwritten Grounds of Appeal those Grounds would have provided no basis upon which leave to appeal would have been granted. Those Grounds fail to comply with Order 52 r 13(2) of the Federal Court Rules 1979 (Cth). And, even if the Grounds were to be construed as an attempt to re-agitate each of the arguments previously advanced before the Federal Magistrate, each would be without substance. There is no appellable error discernible from such reasons as were provided by the Federal Magistrate. Insofar as the second handwritten Ground seeks to rely upon " factual errors " committed on the part of the Tribunal, mere factual error alone would not constitute a basis upon which the decision of the Tribunal could be set aside. Sections 424A and 425 of the Migration Act 1958 (Cth) are provisions fundamental to ensuring that a party is accorded such procedural fairness as has been considered appropriate by the legislature. Before the Federal Magistrate a breach of s 424A was raised for resolution. The economy of language with which the Magistrate's reasons have been expressed only exposes a minimum of how that argument was perceived and resolved. The Tribunal used this information while making the decision. This was against section424A of the Migration Act 1958 . The Tribunal considered all of the applicant's claims. The Tribunal also had regard to documents submitted by the applicant immediately after the decision of the delegate. However, it is well established that s.424A does not apply to country information, as such information falls within s.424A(3)(a). There is no arguable substance to this ground. There is no reference to this new argument in the brief affidavit relied upon before the Magistrate or elsewhere in any of the written submissions filed by the Minister before the Federal Magistrate. The written submissions now filed in this Court are considered to be an attempt to raise for the first time on appeal an argument that has not previously been argued. Given the confined jurisdiction entrusted to the Federal Magistrates Court to review decisions of the Tribunal, reservation is expressed as to whether or not this Court on appeal can entertain a fresh ground not previously considered by a Federal Magistrate. Assuming, however, that this Court does have a discretion to permit a fresh argument to be raised, that discretion would be exercised adversely to the present Applicant. Central to the exercise of any discretion is an assessment as to whether it is " expedient in the interests of justice" to allow the fresh argument to be now relied upon: VUAX v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 158. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The Court may grant leave if some point that was not taken below, but which clearly has merit, is advanced, and there is no real prejudice to the respondent in permitting it to be agitated. Where, however, there is no adequate explanation for the failure to take the point, and it seems to be of doubtful merit, leave should generally be refused. In our view, the proposed ground of appeal has no merit. There is no justification, therefore, for permitting it to be raised for the first time before this Court. It is not expedient in the interests of the administration of justice to raise this new ground for principally two reasons, namely: (i) on one view, the argument now sought to be advanced is (perhaps) a more specific expression of an argument which was previously advanced and resolved by the Federal Magistrate. One argument previously advanced and resolved was a generally expressed ground as to a denial of procedural fairness. If this be the case, the Applicant has had an opportunity to advance his submissions and suffers no prejudice by being denied a yet further opportunity to refine his argument; (ii) if it be in fact a fresh ground, as it most probably is, the present Applicant suffers no prejudice as he was given an opportunity to make submissions on the question as to whether documents had been fabricated. His evidence was that the documents were obtained by his family for the purpose of supporting his application and have been prepared in English rather than Bengali. Also relevant to any exercise of discretion is any explanation for the failure to raise the fresh argument sought to be relied upon: e.g. MZXEN v Minister for Immigration and Citizenship [2007] FCA 829 , 240 ALR 582. In the present proceeding no explanation was forthcoming as to why the argument was not previously relied upon before the Federal Magistrate. There is equally no injustice to the Applicant in not now entertaining the argument as to the failure on the part of the Tribunal to itself initiate further inquiries, as there is no such general duty imposed upon the Tribunal. In Minister for Immigration and Ethnic Affairs v Singh (1997) 74 FCR 553 , the Full Court held that there is no duty upon the Tribunal to undertake its own investigation into the authenticity of documents supporting a visa application. In a particular case the Tribunal may indeed be obliged to verify a document in this fashion, but there is no general rule to that effect. Nor can a duty to enquire be sourced from s 427(1)(d) of the Migration Act . This provision empowers the Tribunal to make its own inquiries for the purpose of reviewing a decision, but it creates no obligation on the part of the Tribunal: Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 , 78 ALD 224 per Gummow and Hayne JJ at [43] and Callinan J at [124]; WAGJ v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 277 per Heerey, Nicholson and Mansfield JJ at [24] to [25]; SZATG v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1595 , 83 ALD 596 per Hely J at [22]. In the present case, there is no error in the Tribunal proceeding to make its decision without pursuing further inquiries of its own initiative into the veracity of the Appellant's documentation. The Applicant is to pay the costs of the First Respondent. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | application for leave to appeal reasons for decision mere incorporation of submissions the requirement for reasons application dismissed migration |
The individuals are the first to fourth defendants in these proceedings. The companies are the fifth to eighth defendants. Keypoint Developments Pty Ltd was joined as a ninth defendant later and an application made for similar orders against it. 2 For reasons published on 20 April 2006 orders were made appointing receivers to the property of the four individuals and three of the corporations being the fifth, sixth and eighth defendants --- Australian Securities and Investments Commission, In the Matter of Richstar Enterprises Pty Ltd (ACN 099 071 968) v Carey (No 3) [2006] FCA 433. A separate order, by way of a Mareva injunction, was made against the seventh defendant, Bowesco Pty Ltd, which was already in receivership under the terms of securities over its assets. Similar orders were made in relation to Keypoint Developments on 26 May 2006 - Australian Securities and Investments Commission, In the Matter of Richstar Enterprises Pty Ltd (ACN 099 071 968) v Carey (No 4) [2006] FCA 644. 3 Orders were also made requiring each of the defendants to prepare, and deliver to ASIC and the respective receivers, affidavits of their assets and liabilities. 4 ASIC sought orders that the costs of the receivers in each case should be met out of the assets of the defendants. I declined to make that order at the time and stood over the question whether the costs should be payable from the defendants' assets. 5 Each of the defendants has prepared and delivered affidavits of their assets and liabilities pursuant to the order which I made on 20 April 2006. A question has arisen as to the sufficiency of the disclosure made by the first defendant, Mr Norman Carey, in relation to his affidavit. ASIC seeks an order that he be required to attend for cross-examination before the Court on his affidavit and a related affidavit. The costs question was the subject of written submissions. The question whether Mr Carey should be required to attend for cross-examination was the subject of oral argument on 29 May 2006. 6 I am not prepared, at this point in the proceedings, absent agreement, to make orders that the receivers' remuneration be paid out of the assets of the defendants. In so concluding I have regard to the necessarily provisional basis upon which the appointments were made. While serious questions were raised, in support of the original application by ASIC, about the conduct of various of the individuals who are defendants in these proceedings and about the companies which they controlled, their respective liabilities to third parties have not been ascertained. The purpose for which the appointment of the receivers was made was to protect the assets of the various defendants against their possible liability to other parties. The appointment is made in the context of an ongoing investigation by ASIC. The receivers' evidence is that there are only limited funds available from the defendants to meet their remuneration and the affairs of the corporations are so closely intertwined that it is difficult to separate out work in relation to one of them from work in relation to another. 7 In my opinion the receivers' remuneration should be met by ASIC for the time being. I am also concerned about the impact that providing for the remuneration of the receivers out of the assets of the defendants may have upon the no doubt already parlous position of creditors of each of the defendants. I will therefore not make the orders sought by ASIC but give it liberty to apply at a later time, if circumstances change, for an order that it be indemnified out of the assets of the defendants for the costs of the receivers. In so saying, I acknowledge that two of the individual defendants, Messrs Beck and Dixon, have agreed with ASIC that the costs of the receivers appointed in respect of their respective property be paid out of that property. They have evidently so agreed upon the basis that neither of them is required to pay any part of the costs of the receivers appointed in respect of any other defendant. I am prepared to make those orders by consent. 8 In relation to the cross-examination of Mr Carey, I am satisfied that there is a real possibility that his disclosure affidavits have not provided all the information which he was required to provide. I will therefore order that he make himself available for examination by both ASIC and the receivers in relation to the information which he was required to provide by par 4 of the Order made on 20 April 2006 and on the affidavits which he has sworn in relation to that information. Such examination is to be conducted before a Registrar of the Court. As an incident of that examination, Mr Carey may be required by the Registrar to produce books, documents, records or other papers relevant to the matters on which he is to be examined. (9) A person must not contravene an order by the Court under this section that is applicable to the person. Those sections provide for the Court to issue a summons to a person for examination about the examinable affairs of the corporation. It is unnecessary to set out here the terms of those provisions as, in my opinion, they are not applicable in the present case which must be concerned with Mr Carey's compliance with the Court orders made on 20 April 2006 and whether the Court should exercise its general powers under s 23 of the Federal Court Act requiring his oral examination to ensure compliance or to give proper effect to the Court's orders. It is important to note however, that any examination or cross-examination of Mr Carey must be relevant to that purpose. Wider ranging inquiries may require resort to some other process such as that for which ss 596A and 596B of the Corporations Act provide or otherwise under ASIC's coercive investigative powers. An order that the receivers' reasonable costs and expenses properly incurred in performance of their obligations be payable from the collective assets of the defendants. An order that any decision as to which of the defendants is to ultimately bear the receivers' reasonable costs and expenses be reserved. An order the Keypoint receivers' reasonable costs and expenses properly incurred in the performance of their obligations and as approved by the Court, shall be payable from the assets of Keypoint and/or the fifth, sixth and eighth defendants. The orders that can be made under the section are directed, inter alia, to the preservation of assets against which recovery may be sought in the event that liability to 'an aggrieved person' is established on the part of a 'relevant person'. The orders are made in the context of an ongoing ASIC investigation or a pending prosecution or civil proceeding. In the present case the orders were made to preserve the status quo and the assets of the defendants pending the outcome of ongoing investigations. The protection of the interests of potentially aggrieved persons might also be advanced to the extent that the appointment of the receivers and the ancillary orders would facilitate the ongoing investigation. This consideration applies to final orders made under the section as well as to interim orders for which it expressly provides in s 1323(3). The final orders made under the section are necessarily of a temporary or holding character rather than finally disposing of the rights and liabilities of the relevant persons affected by them. There was therefore a need for restraint in the formulation of orders made under the section. The appointment of a receiver is 'an extraordinary step' --- Australian Securities and Investment Commission v Burke [2000] NSWSC 694 at [8] (Austin J). In the present case the interlocutory character and protective purposes of the orders made were considered in defining the limits of the receivers' powers. The powers so defined were a moderated and qualified version of those initially sought by ASIC. 18 The provisional character of the judgments upon which the orders for the appointment of the receivers were based informs consideration of the question whether the receivers' costs of discharging their functions under those orders should be borne by the defendants. It is not the object of the orders made under s 1323 to punish the defendants. Their object is to preserve their assets and thereby protect the interests of persons to whom they may have a liability. A secondary object is to ascertain the extent of the assets. This understanding of the purpose of such orders is well established in case law relating to s 1323 and its predecessors. 19 The Corporations Act does not expressly authorise the Court to make an order that the persons or companies who are the subject of the orders appointing receivers to their property pay the costs of those receivers in discharging their function. The Court may confer upon the receivers 'such powers as the Court orders'. Such powers necessarily relate to the ways in which the receivers can deal with a relevant person's property. The imposition of a costs liability by the Court is not readily accommodated by words authorising it to confer powers on the receivers. Absent any express power in the Corporations Act the relevant provision can be found in s 23 of the Federal Court Act or in the implied incidental power --- Jackson v Sterling Industries Ltd [1987] HCA 23 ; (1987) 162 CLR 612. 20 Although, in my opinion, the existence of a power to impose a liability to pay receivers' remuneration out of the defendants' assets can be found in s 23 as an incident of the powers conferred on the Court by s 1323 of the Corporations Act , it is not lightly to be exercised. 21 The point was well made by Waddell J in Corporate Affairs Commission v Smithson in which the appointment of receivers under s 573 of the Corporations (New South Wales) Code was considered. The section was, in the relevant parts, similar to s 1323. Waddell J pointed to the 'severe effects' that the appointment of a receiver might have upon a defendant noting that the court was precluded from requiring the Commission to give an undertaking as to damages as a condition of appointing a receiver. Unjustified and irrecoverable damage could be suffered where the relevant person was subject to the appointment of receivers as security for claims which might not be made out. It should not be thought that in every case the property of a relevant person may be taken over by a receiver and his financial affairs investigated in order to provide security for claims against him, which may or may not succeed, on the basis that in any event the relevant person will have to pay the receiver's remuneration. It may well be that in a particular case, in order to avoid such a consequence, no order should be made permitting the receiver to take his remuneration out of the assets received, thus leaving it to the Commissioner to be responsible for such remuneration pending a determination of the liability of the relevant person. In so concluding, Cooper J cited a judgment of McPherson J in Rosanove v O'Rourke (1987) 1 Qd R 275. The question in that case was whether receivers appointed in the equitable jurisdiction of the Supreme Court of Queensland, to a partnership in dispute, should be able to recover against the partners personally for their remuneration where partnership assets were not sufficient. McPherson J answered the question in the affirmative but was reversed in the Full Court in Rosanove v O'Rourke (1988) 1 Qd R 171. It was not in dispute that the receivers could recover their remuneration out of the assets of the partnership. First, both are permanently liable on their contracts and second, both have a right of indemnity out of the property or estate. In my opinion the position of a receiver appointed in the exercise of equitable jurisdiction differs from that of a receiver appointed in the exercise of the statutory power conferred by s 1323. There is no entitlement, that goes with the appointment, to recover remuneration from the assets of the relevant person. The appointment under s 1323 when made on the application of ASIC and based on an ongoing investigation, aids the public regulatory and protective functions conferred upon ASIC by the Corporations Act and by the Australian Securities and Investments Commission Act 2001 (Cth) . That is a foundation for such an appointment which differs from that which underpins the private equitable remedy. 23 In Australian Securities Commission v Cooke (1996) 22 ACSR 580, Nicholson J made an order for receiver's costs under s 1323 to recover remuneration out of the estate of the relevant person. There were, however, no reasons given to explain that order and it does not appear that it was the subject of any argument before his Honour. 24 I do not consider at this stage that, absent agreement, I should order that the receivers recover the costs and remuneration out of the assets of the defendants. While there are serious concerns about the conduct of the defendants, these are based on provisional judgments about the facts. No liability has been ascertained. I am prepared to make an order in respect of the third and fourth defendants because they have consented to that course no doubt on the basis that they are insulated from the risk of having to contribute to the costs of the receiverships over other defendants. ASIC will have liberty to apply again for the orders it seeks as circumstances change. It may also seek an order at or before the end of the receivership that it be indemnified out of the assets of the defendants (other than the third and fourth defendants) for any payments made by it to the receivers in relation to the discharge of their functions. It began with a general statement that ASIC or external administrators had taken all the records of all the companies of which he was a shareholder or director. 27 Mr Carey said that he has 'no bank accounts in my personal name and do not exercise any control over any bank accounts of which I am aware'. He said he was a signatory to a number of bank accounts under the control of financial officers of companies of which he was a director but could not recall each and every account. Those companies are presently under the control of receivers or administrators or liquidators. He said he was owed $27,000 by Westpoint Corporation Pty Ltd (Receiver and Manager Appointed) for wages, superannuation, annual leave, pay in lieu of notice and redundancy. He said he does not have any debtors. 28 Mr Carey's affidavit of 4 May 2006 set out an itemised inventory of his assets and liabilities. On a separate attachment to his affidavit entitled 'Property owned by the Defendant' he disclosed a one sixth share in a race horse 'Great Nation' which had cost him $4,000. He estimated the current value of that interest at $4,000. He also disclosed a Colonial Select Superannuation Account with an estimated current value of $32,547. Personal effects valued at $6,000 were disclosed. The value of his property was said to be $42,547. 29 Mr Carey said that he may owe contingent liabilities relating to a number of guarantees which he had given to financiers and other persons. None of those guarantees had been called up at the date of preparing the statement and their outcome would not be known until a number of projects had been completed. He did not believe that there would be shortfalls on loans to which he had provided the guarantees, however he acknowledged that possibility depending on the outcome of the completion and sale of certain projects. He neither owns nor controls any real property or other property with the possible exception of 'any residual interest in companies that I own shares in that are currently under external administration'. He said all of his personal property is situated at his residence. 30 In a further affidavit sworn on 22 May 2006 Mr Carey referred to the order made on 20 April 2006 for the delivery up to the receivers of books and records relating to his Individual Property. He said that he is not in possession of any documents with respect to personal property that he owns and he does not own any real property. He has no documents to deliver up in accordance with the orders made on 20 April 2006. All documents which he had, or might have had, in relation to his personal property are presently in the possession of ASIC or external administrators. He could not identify the documents that they might have and would be guessing as to what documents each of the external administrators might have. 31 Mr Carey referred to a written request made by Mr Rundle on his behalf with respect to his salary entitlements. He has been unable to locate any written correspondence pertaining to his salary entitlements claim and Mr Rundle, he said, has informed him that he does not know where such documents could be found. 32 Mr Carey's brother-in-law, who is married to his sister Karen Carey-Hazell, arranged for him to acquire an interest in the horse, Great Nation. His sister attended to his purchase of that interest. He did not recall ever receiving a share certificate or owner's certificate in relation to it. He did recall receiving some invoices for payment and some prize money cheques but cannot now say where those documents are. His sister attended to those records on his behalf. He does not retain receipts for clothing and minor household appliances which he owns. He pays cash for such items and after purchasing them would throw away the invoices and receipts. Having searched his residence, he has not found any documents recording his purchase of any personal items nor has he found any warranty documents relating to them. He does not own any motor vehicles and that he has no liability in respect of a motor vehicle. He does not consider it a liability given that he has no obligation to pay it. He believes, however, that if he does not make the contribution referred to the company that owns the apartment, Revetment Systems Pty Ltd, would withdraw its permission for him to live in it. 33 As to the latter point, it appears from an affidavit sworn by Mr McMaster that a search of ASIC records indicates there is no corporation with the name Revetment Systems Pty Ltd. Mr McMaster said that there are eight entities with the words 'Revetment Systems' included in their name, six of them are wholly owned subsidiaries of Rold Corporation Pty Ltd which is wholly owned by Mr Carey's brother Allan Frank Carey. 34 In an affidavit sworn on 18 May 2006, Mr McMaster exhibited a letter from Freehills to Corrs Chambers Westgarth, the solicitors for the receivers. The letter was dated 12 May 2006 and set out a living expenses request on behalf of Mr Carey. Mr Carey's actual living expenses are $5,127.09 a week, and are itemised in the attached Schedule. That $4,000 amount accords with the amount His Honour was prepared to allow our client (and the other natural person defendants) to access in order to meet their weekly living expenses when making orders on 30 March 2006 in this regard, and as subsequently extended until 20 April 2006 by the orders made on 13 April 2006. The urgency then of his being able to access funds on a weekly basis to pay for such things for his children is readily apparent. This has been stated to be subject to there being sufficient funds available to make such payments. We will be seeking an order from the Court seeking a date for the cross-examination to occur shortly. The submissions focused on the affidavits of 4 and 22 May 2006 which directly related to par 4 of the Orders made on 20 April 2006 as they applied to Mr Carey. 42 ASIC submitted that the affidavits of 4 May and 22 May 2006 were vague, incomplete and manifestly inadequate and not sufficient to comply with the terms and spirit of the disclosure orders. In its submissions relating to the inadequacy of Mr Carey's disclosure of income, ASIC pointed out that he had not made any reference to wages, director's fees, commissions or other sources of income, distributions of capital or distributions of income, loans or other forms of similar property in either of the affidavits of 4 May or 22 May other than the assertion that he is owed the sum of $27,000 by Westpoint Corporation. He did not offer any itemised breakdown of the nature of what he is allegedly owed and the way in which that debt arose. 43 The limits of the disclosure of his income were said to be inconsistent with his assertion in correspondence that he is entitled to a fortnightly income of $4,892.31 from Westpoint Realty Pty Ltd. That was in turn inconsistent with the statement in the Freehills' letter that he is entitled to a gross salary of $3,000 per week from each of Westpoint Realty and Keypoint Developments. There was no reference to any such alleged salary entitlements in his affidavits. ASIC submitted that if Mr Carey is in receipt of any income or capital or is entitled to receive any income or capital, that is an asset which he should disclose under oath. 44 In relation to living expenses, ASIC referred to the schedule to the Freehills' letter which set out Mr Carey's alleged current living expenses. It submitted that many of those appear to be long term expenses. ASIC said it has no information as to the sources of property (income or capital) that was or is available to Mr Carey to meet those living expenses. The sources of such property have not been disclosed. No explanation had been received in answer to the letter sent on 22 May 2006 from the Australian Government Solicitor to Freehills seeking an explanation of the various items. ASIC submitted that there is a clear inconsistency between his statements under oath that he has no property save for a share in a race horse and some minor household items on the one hand and the long term living expenses disclosed in the schedule to the Freehills' letter on the other. ASIC submitted that the letter suggests that Mr Carey has had and has access to a significant pool of funds by way of capital or income from which to pay those expenses. 45 ASIC characterised Mr Carey's itemised inventory of assets and liabilities in the affidavit of 4 May 2006 as 'scant' and failing to specify in detail what his assets comprised. No detail was given of the 'contingent liabilities relating to a number of guarantees' referred to in the affidavit of 4 May 2006. Although Mr Carey said that he does not own any motor vehicles and has no liability in respect of any, ASIC submitted it is clear that he must have one or more vehicles in his possession. It referred to his claim for a weekly car cleaning cost of $80. 46 ASIC also submitted that Mr Carey was vague about his living arrangements. It referred to his claim that he is not subject to a 'rental obligation to pay rent pursuant to a lease document or tenancy agreement'. This may perhaps be contrasted with the first item in the weekly living expenses schedule submitted by Freehills on 12 May 2006 which refers to a 'Rent Instalment' of $1,083. ASIC referred also to the non-existence of any company with a registered name of Revetment Systems Pty Ltd which Mr Carey claimed owned the apartment. 47 ASIC then criticised the statements made in the affidavit of 4 May 2006 relating to shareholdings and directorships. It pointed out that not all of the companies with which Mr Carey is involved are under external administration or liquidation. He made no attempt to identify companies with which he is associated which are not in external administration, companies that have assets and their approximate value or the nature of the business of the companies and whether they remain trading. Nor did he make any reference to their assets and liabilities. ASIC submitted that Mr Carey is a shadow or de facto director of a number of other companies over which he exercises some degree of control. It was said to be apparent that he has an interest in Keypoint Developments of which his sister, Karen Carey-Hazell, is a director. ASIC referred to the fact that he gave instructions to Ms Fox, an employee of the Westpoint Group, between December 2005 and January 2006 to effect a series of transactions between entities of the Group. These assignments, described by ASIC as 'irregular assignments', were referred to by Oran Zohar in his affidavit of 29 March 2006. 48 In submissions filed on behalf of Mr Carey, he opposed the application by ASIC for leave to cross-examine him. He submitted that in the alternative he should file a further affidavit providing answers to the questions raised by ASIC in its request for particulars of 22 May 2006. In the alternative, if the Court were to grant leave to cross-examine it should be confined to the contents of the affidavits dated 4 May and 22 May 2006. He also sought an order that before any cross-examination ASIC should make a list of all documents in its possession, custody or control relating to his property and living expenses and deliver that list, verified by affidavit, to him. 49 As a primary position, Mr Carey argued that the Court should not be required to look beyond the affidavits which he had filed. It was submitted that cross-examination of a deponent of a disclosure affidavit will not normally be ordered. An order for cross-examination should only be made when such an order is the only just and convenient way of ensuring the deponent would not deal with his assets so as to deprive a plaintiff of the fruits of a judgment. Reference was made to Kodak (Australasia) Pty Ltd v Cochran (unreported Supreme Court of New South Wales, Equity Division, Brownie J, 4 April 1996); House of Spring Gardens v Waite (1985) FSR 173. It was also submitted that it may not be appropriate to make an order for cross-examination when a deponent is prepared to provide a further affidavit. He cited Planet International Ltd v Garcia (No 2) [1991] 1 Qd R 426. 50 It was also submitted that the Court should be astute to guard against wide-ranging cross-examination and to ensure that ASIC is not permitted to embark on a fishing expedition. The scope of cross-examination foreshadowed by ASIC's counsel was said to have been extensive and to strongly suggest that it was ASIC's intention to embark on a fishing expedition. 51 It was submitted that the Court must be satisfied, based on admissible evidence, that there is a substantial likelihood that Mr Carey had failed to comply with the Court's orders. Mere speculation or a mere possibility of non-compliance would be insufficient to discharge that onus. 52 In relation to the allegation that he had made an inadequate disclosure of income, Mr Carey argued that entitlements to wages and the like arising from personal contracts are mere contractual expectancies incapable of assignment. The fact that he had not made reference to potential sources of income, other than that stated in his schedule of assets and liabilities, did not give rise to any inference that he had not complied with the orders made on 20 April 2006. An expectancy of income is not property and it cannot constitute an asset until received. 53 It was submitted that it is reasonable to infer that long term and annual expenses such as school fees referred to in the schedule of living expenses, would have been paid prior to orders made on 20 April 2006 but must be provided for in the future. No adverse inference should be drawn from that circumstance. No assumption should be made that he has income producing property which had not been disclosed. Any default must be 'reasonably established'. 54 As to the statement of assets and liabilities, it was said that Mr Carey has not been vague and has, by his affidavits, endeavoured to state to his best knowledge and belief his current asset and liability position. His financial documentation was seized by ASIC and in the circumstances he has done all he could to identify the matters pertaining to his assets and liabilities. It was submitted that there was no clear evidence that he is a shadow or de facto director of any company. Clear and cogent evidence should be required before acceptance of ASIC's contention in this regard and no such evidence had been adduced. 55 In relation to Mr Carey's alleged involvement and interest in numerous companies, it was submitted that he had given full and frank disclosure about those matters. ASIC had not identified any evidence to suggest that the matters deposed to were incomplete or inaccurate. It was further submitted that if cross-examination is to be ordered, Mr Carey ought to be given an opportunity to prepare and to that end ought to be granted access to documents in the possession, custody and control of ASIC for that purpose. 56 In my opinion the Court has the power to order the examination of a party on the adequacy of a disclosure affidavit provided pursuant to an order of the Court under s 1323 of the Corporations Act . Such an order should, I think, ordinarily be accompanied by an order having the effect of requiring the relevant person to file in court an affidavit listing all his property and a further order having the effect of requiring him to transfer or deliver all of it to the receiver. If the relevant person fails to comply with such orders proceedings could be taken against him for contempt of court or, in my opinion, an order could be made under the Supreme Court Rules 1970 , Pt 43 , r 1, for him to attend before an officer of the court and be orally examined on such questions concerning or in aid of the enforcement of the order as may be specified in the order for examination. Under that rule he can also be required to produce documents. The power to do so derives from s 23 of the Federal Court Act , if from no other source. That power may well have a wider application than the power to make orders ancillary to a Mareva or other injunction in proceedings between private parties. The Court could, as an incident of its power to appoint receivers, require a relevant person to present himself or herself for examination by the receivers or ASIC before a Registrar in order to ascertain the extent and nature of the person's assets. The use of a disclosure affidavit is not required in every case. It is simply a mechanism to the same end. The Court is not confined to directing the filing of a disclosure affidavit and only if that is inadequate directing oral examination of the deponent. 58 In my opinion there is a real possibility that the disclosure affidavits sworn by Mr Carey have failed to disclose the full extent of assets and property owned or controlled by him or in relation to which he has an interest. The term 'control' used in Order 4 is to be interpreted according to its ordinary meaning and not limited to property in which he has a legal or beneficial interest. 59 I will make orders that Mr Carey present himself for examination by ASIC and the receivers before a Registrar of the Court at a time to be fixed by the Registrar. The Registrar may also direct him to produce such books, documents, records or other papers as may be relevant to the examination. There will be liberty to apply. I will also direct that Mr Carey make himself available for oral examination before a Registrar and to produce such books, documents, records and papers as are then required to be produced. The costs of the application will be reserved. ASIC will have the opportunity, as circumstances change, of renewing its application in relation to the remuneration of the receivers and/or seeking an indemnity out of the assets of the defendants, other than the third and fourth defendants, in relation to payments it has made to the receivers. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | [2006] fca 684 |
Alternatively, Shelston seeks that parts of the Statement of Claim be struck out, and it also seeks an order for security for costs against Sheiman in an amount of $50,000. It now seeks to file a Further Amended Statement of Claim ("the FASC"). The hearing before me in relation to summary dismissal and striking out of certain pleadings was conducted by reference to the FASC. 3 In the principal action, Sheiman claims that Australian Patent No. 741580 should be revoked. The patent relates to an invention of a new method of aerosol disinfection which improves the efficiency of disinfection. Sheiman also seeks damages as a result of the respondents' alleged conspiracy to injure the applicants (see [39]-[91] of the FASC) and for breach of the Trade Practices Act 1974 (Cth) ("TPA") (see [92]-[93] of the FASC). 4 Sheiman claims that the patent should be revoked on the grounds that it was obtained by fraud, false suggestion and misrepresentation in the course of the application (see [26]-[32] of the FASC). It also claims that the invention is not patentable as it is not a manner of manufacture within the meaning of s 18(1)(a) of the Patents Act 1990 (Cth) (see [33] of the FASC). Revocation is also sought by it on grounds of lack of novelty, obviousness, and lack of utility. This is a lower threshold than was previously endorsed by the High Court in General Steel Industries Ltd v Commissioner for Railways [1964] HCA 69 ; (1964) 112 CLR 125. In addition, O 11 r 16 of the Federal Court Rules provides that a pleading may be struck out in whole or part where it discloses no reasonable cause of action, has a tendency to cause prejudice, embarrassment or delay, or is otherwise an abuse of process. If the Court accepts for the purpose of the application that the pleaded facts are established but finds that they do not contain the elements of the asserted cause of action, the Court may receive evidence to determine whether a genuine triable issue exists. 6 In order to establish liability on the ground of conspiracy by unlawful means, it is necessary to show that the alleged conspirators agreed to do an act which is independently unlawful apart from the conspiracy itself or to use unlawful means to attain their object. The expression "unlawful act" for the purposes of the tort includes crimes, torts, and breaches of statutory provisions. Frequently, conspiracy claims have arisen in the context of industrial action. In the present case there is an allegation that certain acts (referred to in [39] of the FASC) were unlawful because they constituted conduct which was false and misleading under the Patents Act 1990 (Cth) and the Criminal Code Act 1995 (Cth), or which breached the Corporations Act 2001 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth). 7 To succeed in a cause of action for conspiracy, it is necessary not only to allege an independently unlawful act, but also to allege an intention to cause injury to the applicant. Establishing the mere existence of a conspiracy is insufficient without the associated intention to injure. Where the alleged conspiracy involves unlawful means or acts, then it is sufficient if only one of several of the purposes of the conspiracy was to injure the aggrieved party. It is not necessary to show that the purpose was the sole or predominant purpose of the conspiracy: see Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots [1991] 1 VR 637. 8 The elements of a conspiracy claim were discussed by Hely J in Australian Wool Innovation Ltd v Newkirk [2005] FCA 290 at [60] - [64] . The elements of the tort of conspiracy are briefly set out in Bullen & Leake & Jacob's Precedents of Pleadings , Vol 2, 15 th edn, Sweet & Maxwell, London, 2004 at [50]. 9 Although the Notice of Motion originally filed by the Novapharm parties challenged the pleadings filed by Sheiman and sought summary dismissal of the proceeding, the Novapharm parties no longer press this point. However, they continue to press the application for security for costs, which I deal with below. 10 Shelston, on the other hand, submits that no cause of action has been disclosed as against it because the only pleadings of conspiracy concerning Shelston relate to its capacity as the authorised agent of the Novapharm parties (by whom Shelston was retained to provide services as a patent attorney). Shelston submits that, since the Novapharm parties are alleged to act in this matter only through Shelston as duly authorised agent, a claim of conspiracy cannot exist as between the corporation and an entity or person who is alleged to have done no more than act as that corporation's duly authorised agent. I am of opinion that in such a case it is entirely artificial to speak of the directors as "procuring" the company to break its contract in the sense in which the word is used in the Lumley v. Gye ... type of case. An incorporated company is a figment of the law. It is incapable of acting except through agents. Its directors are persons who have been authorised by the constituent members of the corporation to cause acts to be done on its behalf. They are its agents who have power to control its acts. It cannot act at all except through them or through some other authorised agents. They are not in the position of outsiders who are influencing the independent volition of a contracting party who is capable of exercising volition for himself. He is not a stranger. He is the alter ego of his master. His acts are in law the acts of his employer. In such a case it is the master himself, by his agent, breaking the contract he has made, and in my view an action against the agent under the Lunley v Gye ... principle must therefore fail, just as it would fail if brought against the master himself for wrongfully procuring a breach of his own contract. Presently, that case represents the law in this country and I will follow it. I should say that even if Said v Butt were not the authority in Australia I should still be inclined to apply this case because it appears to me to be good law. These sub-paragraphs can be broadly summarised as particularising what Sheiman alleges were the false statements and fabricated experiments results, all of which are said to have been made with the purpose of furthering the alleged conspiracy. The FASC then outlines in detail a series of alleged acts during the period of 1998 to 2003, including alleged secrecy agreements, fabricated laboratory results, forged laboratory reports, false invoices, untrue assertions of ownership and inventorship of the invention the subject of the patent and several others. 15 In relation to Shelston's application for summary judgment, counsel for Sheiman referred to the pleadings and evidence which had been filed and contended that, on a fair reading of the FASC, the allegations against Shelston were being made against a co-principal and not merely against an agent. Although, as I read the FASC, it does not clearly suggest that Shelston was acting otherwise than as an agent, having regard to the evidence referred to by Sheiman and the submissions made by counsel, I am not persuaded that the arguments pertaining to agency and conspiracy should be dismissed as against Shelston. Although there are considerable shortcomings in the pleadings as presently framed, I am not persuaded that there is no cause of action which could have reasonable prospect of success. Accordingly, I decline to dismiss the proceedings. The submissions made by Shelston on this point were originally made by the Novapharm parties, but were not pressed by them on the hearing of this matter. Shelston adopted those original submissions, while the Novapharm parties elected to proceed only with its application for security of costs. 17 The submissions advanced by Shelston raise a number of important respects in which Sheiman's pleadings, as presently framed in relation to the conspiracy allegation, are deficient. 18 I accept that each of these identified deficiencies exists in the FASC. Accordingly, while I do not think that the FASC is so deficient as to warrant summary dismissal of the proceeding, I am of the view that the particulars concerning the conspiracy claim should be struck out and pleaded afresh. 19 I note at this point that there is an application to remove the eighth respondent, Mr Ian Ernst, from the proceeding on the basis that he is merely an agent for the Novapharm parties, and should therefore not be a respondent in his own right. In my view this matter can be dealt with in the same way as I dealt with Shelston's submissions above, namely that the allegations as presently framed against Mr Ernst should be struck out and an opportunity afforded to Sheiman to reframe its claims against him. 20 The second set of deficiencies in the FASC which are identified concern the pleadings in relation to the trade practices claim. It is further submitted that the trade practices claim should be struck out because the allegations of misrepresentations made in the FASC relate to the publication of a prospectus some nine years after the original patent application, which lapse of time demonstrates the fallacy in arguing that the identified loss and damage was suffered as a result of those misrepresentations. 21 I accept that each of these identified deficiencies is present in the FASC. Accordingly, I intend to strike out the claims in the FASC concerning alleged contraventions of the TPA by Shelston, and grant leave to Sheiman reframe their pleadings. 22 For the reasons given above, I refuse the application for summary dismissal of the proceeding. However, having regard to the numerous deficiencies in the FASC, I strike out those paragraphs which have been objected to concerning the conspiracy claim and the trade practices claim as against Shelston. I grant the applicants leave to re-plead. I order that the applicants pay the costs thrown away as the result of this application and as the result of amendments to the Statement of Claim and Amended Statement of Claim. Moreover, the respondents point out that no one has been forthcoming to proffer any undertaking as to payment of costs likely to be incurred in this proceeding. There is no challenge to the amount of costs claimed by way of security, and in my view the amounts sought are, on the evidence, reasonable estimates given the complexity and serious nature of the allegations. 24 In response to the application for security for costs, Sheiman submits that its claims have a prospect of success and says that, if security for costs were to be awarded, it would be prevented from ventilating its cause of action due to a lack of funds. Sheiman also says that the evidence discloses that any lack of funds on its part is due to the wrongful conduct of the respondents. 25 Order 28 r 3 of the Federal Court Rules permits the Court to take into account certain matters when making an order for security for costs. Section 1335(1) of the Corporations Act 2001 (Cth) also provides that the Court may require security for costs from a company where it appears by credible testimony that there is reason to believe it will be unable to satisfy an adverse costs order. 26 In relation to claims for security, the Court observed in Jodast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248 that it is not appropriate for the Court to embark on an investigation of prospects of success in a proceeding at a very early stage and even less so where substantial evidence has been filed. 27 In my view, having regard to the complexity and serious nature of the allegations made in the FASC, the long period over which the dispute has run and the number of parties involved, the hearing of the present case is likely to be lengthy and the process of discovery and other preliminary steps is likely to be extensive. In these circumstances, I consider that there should be an order for security for costs in the sum of $50,000 in respect of the Novapharm parties and additional security for costs in the sum of $50,000 in respect of Shelston. In fixing these figures, I have taken into account the evidence before me as to the way in which those amounts were selected and I consider them to be reasonable and conservative. I strike out the FASC in relation to the conspiracy and trade practices claims. I grant liberty to Sheiman to re-plead within 28 days from the date of these reasons. I order Sheiman to pay the costs of the strike out application and the application for security for costs, and I order Shelston to pay the costs in relation to its unsuccessful application for summary judgment. I order that the applicants pay the costs thrown away as the result of amendments to the Statement of Claim and Amended Statement of Claim. Finally, I order that Sheiman provide security for costs in the amount of $50,000 in respect of the Novapharm parties and security for costs in the amount of $50,000 in respect of Shelston. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | summary judgment claim of conspiracy whether reasonable prospect of successfully prosecuting the proceeding whether agent-principal relationship a conspiracy. application to strike out proceedings identified deficiencies in pleadings whether opportunity to re-plead. application for security for costs length, complexity and number of parties involved in proceeding. practice and procedure practice and procedure practice and procedure |
The Tribunal had affirmed a decision of a delegate of the first respondent, the Minister for Immigration and Citizenship who formed the view that the appellant is not a person to whom Australia has protection obligations under the Convention Relating to the Status of Refugees 1951 , amended by the Protocol Relating to the Status of Refugees 1967 (Convention) and accordingly refused to grant a protection visa on 19 May 2008. On 18 March 2008 the appellant lodged an application for a protection visa with the Department of Immigration and Citizenship, which included a statement of his circumstances. A delegate of the Minister refused the application for a protection visa on 19 May 2008. On 16 June 2008 the appellant applied to the Tribunal for a review of that decision. In his application, the appellant claimed to fear persecution because of his support for the Nepali Congress Party. He claimed that because of his support he became a target of Maoist insurgents in and around his village in about 2002. He claimed that the Maoists used his farm for shelter and forced the appellant and his family to feed them and that when he protested he was beaten and robbed. He claimed the Maoists also bombed his house, completely destroying it. The appellant stated that after his house was destroyed he and his family moved to his parents' house in the city where he started a small business. He claimed that the Maoists targeted him again, in about 2006, requiring him to make "donations". When he was not able to make any more payments, the Maoists beat him and threatened to kill him. They used his shop for their own personal use and stole his goods, forcing him to close the business. He stated that he had no choice but to leave the country, and as he had family in Australia, he came to Australia. The appellant provided additional information to the Refugee Review Tribunal. The Tribunal stated that the appellant had shown that he was "willing to embellish, if not fabricate", his claims in order to invoke refugee protection. This finding was based on four stated reasons. First, the Tribunal noted that following his time in the city, he returned to the village and farm between 2006 and 2008. However, the evidence that he worked on his farm in this period, which did not appear in his initial statement in support of his application for a protection visa, only came out through a "considerable effort on the Tribunal's part". For instance, he said in turn that he had not been able to do any work between July 2006 (when he returned to his farm) and February 2008 (when he departed Nepal); then that he had done some farming work and general merchandise work during that period; then he denied having worked at all (July 2006 --- February 2008) saying his previous response arose from a misunderstanding of the Tribunal's questions; then he agreed that he did work on his farm during this period (ie July 2006 to February 2008). Further, the Tribunal had to repeatedly put questions to the applicant as he appeared not to provide meaningful responses to questions put. The present Tribunal has utilised the hearing interpreter on previous occasions and this problem had not occurred before (at least with this interpreter). Further, the Tribunal was eventually able to obtain apparently meaningful responses to questions put to the applicant after repeatedly asking same. At any rate, this has led the Tribunal to conclude the problems it had in eliciting evidence were not due to the fault of the interpreter. Additionally, the Tribunal concluded that the appellant did not suffer any harm between July 2006 and February 2008 (when he departed Nepal). Thirdly, the Tribunal noted that the appellant stated that he did not wish to travel to India because of the Maoist presence there but took no steps to ascertain whether the chance of harm in India was less than in Nepal. This also led the Tribunal to find that the appellant did not fear that he had a real chance of persecution between July 2006 and February 2008. Fourthly, the Tribunal found that the appellant's delay in seeking a visa to come to Australia was inconsistent with a genuine fear of persecution, dismissing his explanation for the delay (that he was waiting for his finances and english language ability to improve) as implausible. The Tribunal therefore further concluded that the appellant had not been harassed or harmed by Maoist insurgents between July 2006 and February 2008, dismissing his claims in this regard as false. The Tribunal rejects same as false. The Tribunal is therefore satisfied the applicant and his family, were able to reside and work safely on their farm in Nepal, between July 2006 and February 2008 (at which time the applicant departed Nepal and his wife and children returned to reside in his parent's home in Ghorahi City). The Tribunal is also satisfied the applicant was able to obtain work commensurate with his skills in Nepal (between July 2006 and February 2008) as a farmer and there is no evidence before it that has satisfied the Tribunal he would not again be able to do so should he return to Nepal. In making this finding the Tribunal noted that the appellant's "lack of knowledge and/or understanding about the Nepali Congress was indicative of a lack of any real interest on his part". The Tribunal was also not satisfied that businessmen in Nepal were targeted by Maoists for any other reason than "opportunistically and for their perceived capacity to provide monies". In making this finding the Tribunal noted that, based on independent country information, numerous other persons and occupations were similarly targeted by the Maoists. Overall, the Tribunal concluded that the appellant was not a witness of truth, rejecting all of his "material" claims as either an embellishment or fabrication. Therefore, the Tribunal concluded that the appellant did not have a well-founded fear of persecution. Regarded the opportunistic targeting by Maoists of businessmen in Nepal as precluding a finding that persecution for opportunistic reasons could give rise to refugee obligations for businessmen in Nepal. The Federal Magistrate, in considering the Tribunal's decision in light of the claims made by the appellant, was satisfied, first, that the Tribunal's decision was not based on the strength or weakness of his political views but rather on its finding that the appellant's interest in the Nepali Congress Party was not a real one. His Honour also found that the appellant did not make a claim that he might be persecuted by reason of the imputation to him of a political opinion and that such a claim was not otherwise sufficiently apparent that the Tribunal was required to consider it. In relation to the second claimed ground, His Honour stated that the Tribunal had found that the targeting of Nepali businessmen was no different to the targeting of numerous other persons and occupations in Nepal. Therefore the conduct complained of could not be said to indicate that Nepali businessmen were being harassed because of their distinctive features or because of attributes peculiar to them. Thirdly, his Honour found that the Tribunal had expressly taken into account the events that the appellant claimed had been ignored but had generally rejected all of his claims on credibility grounds and therefore did not err when concluding that the appellant did not face a real chance of persecution were he to return to Nepal. Having found no jurisdictional error in the decision of the Tribunal, the Federal Magistrate dismissed the application. The grounds of appeal are substantially similar to those advanced in the Court below. Regarded the opportunistic targeting by Maoists of businessmen in Nepal as precluding a finding that persecution for opportunistic reasons could give rise to refugee obligations for businessmen in Nepal. Absent that, a decision refusing an applicant a protection visa will be "privative clause decision" for the purpose of s 474 of the Migration Act 1958 (Cth) from which no appeal or relief on judicial review is available: Plaintiff S157/2002 v Commonwealth of Australia (2003) 211 CLR 476 at [76]. It is also accepted (see Plaintiff S157/2002 211 CLR 476 at [76]) that there may also be jurisdictional error if a tribunal fails to discharge "imperative duties" or to observe "inviolable limitations or restraints" upon which its exercise of administrative powers is conditioned. See also Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [82] ; Lobo v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 168 ; (2003) 200 ALR 359 at [45] . However, where a decision of the Refugee Review Tribunal refusing an applicant a protection visa turns entirely on an assessment of that applicant's credibility, a challenge to the Tribunal's findings and conclusions can only amount to an impermissible attempt to undertake further merits review. This proposition has been affirmed in a number of cases. Recent examples include SZKMV v Minister for Immigration and Citizenship [2009] FCA 157 at [18] per Stone J; SZMFH v Minister for Immigration and Citizenship [2009] FCA 105 at [14] --- [15] per Graham J; SZMLR v Minister for Immigration and Citizenship [2008] FCA 1853 at [11] per Spender J. Accordingly, a finding by the Refugee Review Tribunal, which is not capable of being set aside on the basis of jurisdictional error, is a factual one which is not open to challenge by way of judicial review or on subsequent appellant proceedings: see NAHI v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 10 at [10] . The appellant had communicated with the Federal Magistrate and the Tribunal in a similar way. At no time has he been legally represented. He told the Court that a friend had helped him draft the grounds of appeal. There is no doubt that in Tribunal proceedings and Court proceedings, self representation is not usually the ideal way for a party to proceed. Nor is it always optimal for a party to communicate through an interpreter. Special care must always be taken by bodies such as tribunals and courts when dealing with self represented persons communicating through interpreters, especially when they are not familiar with the official processes in Australia. Indeed, a case like this highlights the importance of persons in the position of the appellant telling their story to the initial finders of fact, such as the delegate of the Minister, and in particular, the Refugee Review Tribunal on review in as much appropriate detail as possible. This also highlights the importance for every member of a tribunal, particularly an inquisitorial tribunal like the Tribunal, to explore in an objective way the story that an applicant wishes to tell in seeking some right or entitlement or privilege from an administrative decision-maker. That said, it is understood that the Tribunal is not expected to make an applicant's case for them, although it is appropriate to consider claims that, while not expressly made, emerge clearly from the materials before the Tribunal: NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; 144 FCR 1 at [68] . In Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 ; 78 ALJR 992 Gummow and Hayne JJ at [43], [44] considered that as the Refugee Review Tribunal was not under "a duty to inquire", but simply to provide a written statement setting out its decision on review, the reasons for the decision and the findings on any material questions of fact and referring to the evidence or other material on which those findings are based. However, Gleeson CJ at [16] and Callinan J at [126] appeared to countenance the possibility of circumstances where further inquiry may be necessary and appropriate in order to avoid unfairness. In Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 225 CLR 88 the High Court of Australia held that procedural fairness required the Refugee Review Tribunal to inform an applicant of the substance of an allegation made in a "dob in" letter held by the Tribunal before reaching a decision. The Tribunal was required to review a decision of the Executive made under the Act and for that purpose the Tribunal was bound to make its own inquiries and form its own views upon the claim which the appellant made. And the Tribunal had to decide whether the appellant was entitled to the visa he claimed. There is in the event no question of procedural unfairness in this case or that the Tribunal did not have sufficient material before it to permit it to make material findings of fact. It did not therefore need to inquire further. In the end, the Tribunal made findings of fact, based on the credibility of the appellant which critically affected the outcome of the application before the Tribunal and the review before the Federal Magistrate, which also critically affect the outcome of this appeal. When one reads the whole of the statement of decision and reasons of the Tribunal it is clear that the Tribunal accepted that there was much evidence to show generally an abuse of human rights in Nepal, the appellant's country of origin, in the relevant period that the appellant alleged abuse. The country information considered by the Tribunal supports the applicant's oral and written evidence that the Maoist insurgents were and are capable of acting in a brutal and arbitrary manner. This is plainly a euphemism for extortion. However the Tribunal did not accept that the appellant had suffered in the ways he alleged. That is to say, the Tribunal was not satisfied that the appellant had suffered acts of brutality in 2002, 2006 or in the period 2006 --- 2008, or that he had been subjected to the extortion in the city in 2006. It appears that the Tribunal initially accepted that the appellant's account of events, particularly in 2002 on his farm and in 2006 in the city where he then went, were plausible. First, the Tribunal had difficulty in getting the appellant to provide a clear account of what he had been doing between 2006 (when he left the city and returned to his farm) and February 2008 (when he departed Nepal for Australia). The Tribunal was unimpressed with the account the appellant gave it. There were inconsistencies in that evidence. The Tribunal explained that this was not a case where the communication between the applicant and the Tribunal was affected by an interpreter's inability to properly assist. This evidence on its own led the Tribunal to consider that the appellant was prepared to change his claims as he thought suited his case (see [40] of the Tribunal reasons). Secondly, the Tribunal was unimpressed with the fact that the appellant had not mentioned in his statement in support of his visa application that he had been harmed, harassed or even questioned after he returned to his village in July 2006. Yet, when he gave oral evidence to the Tribunal about that period he made these claims. The Tribunal was not satisfied with the appellant's explanation that he must have forgotten to include these points. Thirdly, the Tribunal noticed that it had been open to the appellant to travel to India, given there was an "open border" between Nepal and India at material times. He could have avoided persecution in India. The Tribunal was not satisfied that the appellant's explanation --- that the Maoists were in India too and would find him --- was compelling. That he did not do this has formed part of the reason the Tribunal is satisfied the applicant did not fear he had a real chance of persecution in his village between July 2006 and February 2008. This was also the third reason that ultimately led the Tribunal to conclude the applicant is not a witness of truth. The Tribunal noted the appellant explained that he wished to improve his finances and his english language ability before travelling to Australia. In his submissions to the Court, on this appeal, the appellant expressed some regret that the Tribunal did not find him to be a credible witness. He appealed to the Court to "show compassion" on the hearing of the appeal. In essence, however, the appellant appeared to accept that the credibility findings made against him were open to the Tribunal. In the event, I think it is fair to say that the credibility findings made against the appellant were open to the Tribunal and, to the extent the appellant may be taken to have implicitly challenged them, the findings must stand. No doubt in many cases it is a difficult decision for a Tribunal to make, whether a particular applicant has satisfied it that the account of the persecution they have claimed should be accepted. As noted above by reference to the authorities, it is also very difficult for an applicant whose basic credibility has been challenged in Tribunal proceedings and found wanting to recover from that finding in further review and appeal proceedings. It therefore goes without saying that it is of the utmost importance the Refugee Review Tribunal take special care before making such findings. Thus, the importance of ensuring that an applicant before a Tribunal has had every opportunity, sometimes at the prompting of the tribunal itself, to fully explain their position so that misunderstanding or lack of information does not infect or affect the findings of fact, including on credibility, that a tribunal may ultimately make. Nonetheless, as I have noted above, there is no claim made in this case, either before the Federal Magistrate or before this Court that any relevant information was not taken into account by the Tribunal or that there has been some lack of procedural fairness so far as the Tribunal hearing was concerned. In all the circumstances, while the third and fourth reasons for finding against the appellant on credibility grounds may not on their own have supported the finding ultimately made, it was at least open to the Tribunal to find, as it did, that the appellant had "embellished his evidence to the Tribunal" for all the reasons given. It should be noted, however, that the Tribunal's finding in relevant respects was that the appellant had "embellished, if not entirely fabricated, his material claims" (see for example [44]). The Tribunal, in the end, was not satisfied that the appellant had made out his claims. At no point did the Tribunal actually conclude that the appellant had in fact "fabricated" his claims. It seems the Tribunal was content to find on the materials and the evidence before it that the appellant had "embellished" his claims. Plainly the Tribunal was left in some doubt. Plainly it was not prepared to find that the material facts alleged by the appellant were so or not sufficiently made out to support a finding he was a person to whom protection should be afforded under the Convention. In my view, it was unfortunate that the Tribunal used the expression that the appellant had "embellished, if not entirely fabricated, his material claims", as it may be considered to introduce an element of ambiguity into the Tribunal's own decision-making process. If a tribunal is not convinced that a person has simply made up their evidence --- that is, has lied ---then they, in my respectful opinion, should use expressions that imply such a view. If a tribunal is of the view that evidence has been embellished such that it cannot be relied upon to support a finding of the material facts asserted by the claimant, then it should clearly state that to be the case. The point is important, in my view, because if a tribunal is not satisfied that an applicant before it has in fact lied, but is of the view that the applicant has embellished evidence such that it cannot be relied upon, this will usually suggest there is some factual basis to the claims made, but that the tribunal cannot sort out fact from fiction. However, in some cases the Tribunal may still find itself able to find some facts which are relevant to the case at hand. There may well, for example, be circumstances where an applicant for a protection visa exaggerate, his or her claims of persecution for perfectly explicable reasons. They may be so concerned to convince the decision-maker that they have suffered for a Convention-based reason, that they exaggerate their case. Or they may come from backgrounds where a certain degree of emphasis is required when dealing with administrative decision-makers in order to make their point. Whatever the reason for exaggeration it does not necessarily mean that there are still not relevant facts capable of being found to provide a Convention-based reason for granting a protection visa. Therefore, in my view, simply to say that an applicant has "embellished, if not entirely fabricated" a material claim, is not usually likely to be a helpful decision-making approach. Indeed it may, on occasion, be considered a formula that avoids the difficult fact finding exercise that a Tribunal is often required to undertake. Nonetheless, as indicated above, in this case, the credibility findings against the appellant have not been materially challenged before the Federal Magistrate or in the course of this appeal. Further, I consider that taking into the account the findings made by the Tribunal in relation to the evidence before it, and the reasons for the findings, the Tribunal's finding that it was not "satisfied" that a protection visa should be issued was open to it. The Tribunal was indeed alert to a number of the difficulties to which I have referred. In [65] of its reasons the Tribunal acknowledged the difficulties of proof that may be faced by some applicants for refugee protection in Australia. The Tribunal understood it may on occasion be appropriate to extend the benefit of the doubt to an applicant for refugee protection. However, a Tribunal was also aware that it should not uncritically accept any and all allegations made by an applicant. The Tribunal also understood that it is not essential that a decision-maker necessarily have rebutting evidence available to them before they can find that a particular factual assertion has not been made out, and that usually it is not the Tribunal's role to make the applicant's case for them. As noted, the Tribunal did no accept that the applicant was a witness of truth. However, having dealt with particular claims of the appellant, at [66], the Tribunal went further and concluded that it was sufficiently satisfied that the applicant was not a witness of truth, "such that I am satisfied there are reasonable grounds to reject all his material claims". To the extent that the Tribunal has dealt with particular material claims made by the applicant and explained why they should not be relied upon, the Tribunal's findings are appropriate and acceptable. However, a sweeping rejection of the reliability of "all material claims" is, I consider, an inappropriate way to find facts in many cases. In this case, counsel for the Minister, in reliance on this finding, submitted that the appellant was unable to demonstrate even a subjective fear of persecution, let alone an objective fear on the evidence. However, the question of a subjective fear was never directly addressed by the Tribunal and I am not prepared to find that the generalised rejection of his material claims extends to an unexpressed finding that he lacked a subjective fear of persecution if her were to return to his country of origin. The Tribunal is satisfied the applicant's lack of knowledge or understanding about the Nepali Congress is indicative of a lack of any real interest on his part. The Tribunal is therefore satisfied that should the applicant return to Nepal, he would voluntarily choose to again focus on his business, career and family as he has done in the past, and not on his political opinion. The Tribunal is therefore not satisfied the applicant's claimed political opinion would give rise to a well founded fear of persecution for him should he return to Nepal. The first and third sentences of the quoted paragraph certainly suggest this. On the other hand, the second sentence indicates that the Tribunal considered that due to a lack of knowledge or understanding about Nepali Congress, the appellant lacks any real interest. I do not think it is possible to take the Tribunal's later general finding at [66], that none of the material claims made by the appellant to be true, to mean that the Tribunal actually found, for example, that the appellant does not generally support Nepali Congress. The only reasonable conclusion to draw from the way the Tribunal has expressed its reasons is that, as stated in [57], the appellant has no real interest in Nepali Congress or holds no real political opinions. This is what the Federal Magistrate found in the Court below. In many respects it is an odd finding that the Tribunal has made. It seems to assume that only persons who have active or currently expressed political opinions are able to establish a well founded fear of persecution for possessing political opinions. This indeed leads into the second part of the first ground, namely, that the Tribunal failed to have regard to whether the applicant might be persecuted for his perceived, imputed or actual political opinions, even if not strongly held. Perhaps the Tribunal's finding in the end is intended to convey that the appellant, on the evidence, not only does not have any actual political opinions of his own, but also does not have any perceived or imputed political opinion for which he is likely to suffer persecution. In other words, that he has no political opinions either strongly held or otherwise. This is consistent with a finding that he has no real interest in Nepali Congress or political opinion. The third part of the first ground asserts that the Tribunal failed to consider the extent of the persecution of persons supporting or perceived or imputed to support the Nepali Congress. The Minister contends that ground 1(a) is answered by the fact that the Tribunal completely rejected all the appellant's material claims --- which included his claim to be a supporter of the Nepali Congress Party. As I have indicated, I think the generalised finding to this effect at [66] is not usually an appropriate way to find material facts should not be relied upon in this regard. However, the evidence generally supports this finding. In this case, the Minister says the answer to ground 1(b) is that the claim was not made explicitly and did not arise squarely from the material before the Tribunal. As indicated below, not only was the claim not made explicitly but on the facts it did not arise at all. The Minister says the answer to ground 1(c) is that the claim to have been a supporter of the Nepali Congress Party was rejected and there was no claim of being perceived or imputed as being such a supporter. This too is substantially so on the facts as found by the Tribunal. The Minister's responses to the three parts of ground 1 seem in the end to revolve entirely around the Tribunal's finding in the second sentence of [57] that the appellant lacked knowledge or understanding about the Nepali Congress, which was indicative of a lack of any real interest on his part. Plainly this finding is not tantamount to a finding that the appellant did not know of the Nepali Congress. It is simply a finding that he lacked any real interest in that party. In this context, as suggested above, the proper understanding of the expression of the Tribunal's finding seems to be that not only has the appellant, on the evidence, been demonstrated not to be politically active, but also that he is not politically interested and is not an actual, perceived or imputed supporter of the Nepali Congress. In the event, I consider this is the proper basis upon which the Tribunal's expression of its finding in [57] is to be understood. In other words, the Tribunal found that, at various times, the appellant has been a farmer and then a business operator in the city without ever holding any particular views or being active in his support for, or perceived or imputed to be a supporter of, Nepali Congress. For that reason, he cannot have a well founded fear of persecution, for a perceived or imputed or actual political opinion that he holds concerning Nepali Congress. Accordingly, to the extent that a contrary submission arose in the context of the hearing before it, the Tribunal rejected the submission. This finding at [49] seems to accept that Maoists also target businessmen and extort "donations" from them. What is confusing though, in the Tribunal's reasons at [49], is the expression of the reasons why the appellant is unlikely to be targeted if he were to return to Nepal. As stated above, the Tribunal is not satisfied the applicant was subject to any harm, including extortion by Maoists, after July 2006. Nor is the Tribunal satisfied, based on the evidence before it, which it has accepted, that the applicant would be unable to obtain work commensurate with his skills (as a farmer) in his village should he return. The Tribunal seems to thereby avoid making any clear findings about whether or not, while in the city, the appellant suffered extortion in the operation of his business. When one goes back to the finding in [47] that "even though the Tribunal accepts the applicant may have been subject to some form of harm by Maoists in 2002 (on his farm) and 2006 (in Ghorahi City), given the other adverse credibility findings herein, the Tribunal is satisfied he has (at the least) embellished these claims", it seems the Tribunal was prepared to accept that there "may have been" some extortion in the city in 2006, yet now discounts the relevance of that possibility because nothing apparently happened to the applicant after July 2006 when he returned to his farm. Furthermore, the Tribunal seems to be satisfied that if the appellant confines himself to farming --- and refrains from taking up the challenge of running a business again in the city --- then he should be safe from targeting. In these circumstances, the Tribunal's finding at [66] that, to the extent the Tribunal has "not expressly rejected his material claims herein, I now find that none of the applicant's material claims ... are true", seems rather gratuitous. In my view, as suggested above, for a tribunal to make a generalised finding of fact along these lines is tantamount to making no material findings of fact at all. It is an inappropriate practice that should be avoided. The question remains however, whether, if it be the case that the appellant may have been subject to extortion in 2006 while operating as a businessman in Ghorahi City, that conduct bespeaks a real risk of suffering harm by reason of political opinion and/or membership of a particular social group. The Tribunal understood that the appellant's claims constituted a legal submission that he was a member of a particular social group for the purposes of the Convention on the basis that he was "a businessman" and that businessmen as a group were and are targeted. Even if it were the case that a person is shown to be apolitical, in the sense that they do not hold actual political opinions, or there is no evidence to suggest they ordinarily express political opinions, if they are nonetheless a member of a particular social group, which group is taken to express or stand for certain political opinions, then membership of the group may well lead to the imputation of political opinion in relation to each and every member of it. Accordingly, the quick dismissal by the Tribunal of this submission for the reason that the Tribunal had already found that the appellant does not personally have "political convictions", lacks solid reasoning. However, the Tribunal then went on to find that, in any event, businessmen are apparently randomly targeted for extortion in Nepal and, for that reason, (like other persons and occupations) are targeted for opportunistic reasons because they are perceived for having the capacity to provide monies. In this regard, counsel for the Minister draws attention to the decision of the Full Federal Court in RAM v Minister for Immigration and Ethnic Affairs [1995] FCA 1333 ; (1995) 57 FCR 565. Plainly, extortionists are not implementing a policy; they are simply extracting money from a suitable victim. Their forays are disinterestedly individual. The learned judge at first instance recognised this. He also found, correctly in my view, that there was no evidentiary support that the society to which the appellant belonged recognised the characteristic of wealth as alone creating an identifiable group. His Honour also found that the group posited (the rich) was too vague, uncertain and extraordinarily wide. Such difficulties are not necessarily obstacles to 'the rich' constituting a particular social group where the evidence establishes that wealth is definitive of such a group, although evidence of width may inhibit findings of particularity. Rather, individual businessmen were targeted opportunistically for their perceived capacity to provide, if necessary by force, money. In these circumstances Ground 2 must fail. What the Tribunal did decide in respect of the appellant, however, is that he could safely reside in his village and work as a farmer if he were to return to Nepal, because he was safely able to live in his village and work as a farmer between July 2006 and February 2008. For that reason the Tribunal was not satisfied that the appellant had a real chance of being persecuted for a Convention-based reason should he return to his village and work as a farmer: [64] of the Tribunal's reasons. This reasoning at [64] of the Tribunal's reasons must be understood in the light of the other findings made by the Tribunal in respect of the credibility of the appellant, to the effect that the appellant had embellished his claims to have suffered harm by Maoists in 2002 on his farm, and in 2006 in Ghorahi City; and that the appellant lacked knowledge or understanding about the Nepali Congress and thereby lacked any real interest in the party and was not focussed on his political opinion. At [53] the Tribunal, after analysing the extent of the appellant's political opinion, seems to have formed the view that, while Maoists may have targeted the appellant prior to July 2006, this was only for the reason of obtaining donations. As to the appellant's fear of being targeted prior to going to the city, the Tribunal made very specific findings of fact that, save to accept that the appellant "may have been subject to some form of harm" on his farm in 2002, he had "embellished" that claim: see [47]. In light of this finding, I do not consider that the finding of the Tribunal at [66] (that none of the applicant's material claims are true) applies to this particular reasoning process. What the Tribunal seems to have decided, however, is that because the appellant had not demonstrated that any harm had come to him in the period after 2008 when he returned to the farm from the city, it may be assumed that he was no longer at risk if he lived in his village and on the farm. While the Tribunal appears to have accepted that there was some evidence targeting the appellant while he was on the farm in 2002, taking into account the evidence concerning his period back on the farm between 2006 and February 2008, the overall conclusion was that he is not at real risk of being persecuted for a Convention-based reason should he return to his village and work as a farmer today. As I say, having regard to the evidence of what apparently transpired between July 2006 and February 2008, and the particular findings of fact made by the Tribunal were open to it (that indeed nothing untoward did happen in that period) then it appears to me that the Tribunal was entitled to conclude that there was no real chance of persecution in the future. The Federal Magistrate held to similar effect. In the result, I think the Tribunal is properly to be understood as saying two things: I consider that the claimed jurisdictional error on the basis of Ground 3 is not made out. The Court therefore orders: The appeal is dismissed. The appellant to pay the First Respondent's costs, to be taxed. I certify that the preceding one hundred and five (105) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | appeal from federal magistrate credibility finding by refugee review tribunal self represented litigant no jurisdictional error no appealable error migration |
The ground upon which judgment is said to be justified is the respondents' repeated and serious breaches of interlocutory orders made by the court. In its Notice of Motion, the applicant has set out, in detail, the terms of the final orders to which it claims to be entitled. Alternatively, the applicant seeks the making of a range of orders, dealing with discovery and other matters, to which I shall turn in due course. This proceeding was commenced on 13 July 2004. It has endured a particularly difficult interlocutory history. To an extent, that circumstance is the result of the nature of the allegations made by the applicant, and of the nature and size of the first respondent's business. That business, like that of the applicant, involves the electronic publication to its customers of Material Safety Data Sheets ("MSDSs") which, as I understand it, constitute tabular representations of hazards, precautions, safety measures etc, which are relevant in the use of a wide range of liquids, gases, powders and other substances used throughout industry. Without going too deeply into the facts of the matter for the purposes of this interlocutory occasion, it is sufficient to say that the applicant's electronic system is described as the "Infosafe" system, and the MSDSs which it publishes to its customers are, it seems, all endorsed with an identifying numeral preceded by the words "Infosafe No". The system operated by the first respondent is built around a very substantial database of MSDSs described as "The Collection". In both cases, a customer who has electronic access rights may, by using the internet, download the appropriate MSDS for the industrial product or substance of interest. Evidently, the service provided by each of the applicant and the first respondents is a useful one. The applicant relies upon several causes of action, but it will be sufficient for present purposes to note that it claims to own the copyright in the MSDSs which are part of its Infosafe system. It alleges that the respondents have obtained access to many of those MSDSs (by various means) and, in the course of incorporating them into The Collection, have copied them. As put in this way, the applicant's case requires the identification of each relevant MSDS as a copyright work, and of the corresponding MSDS within The Collection as an infringing work. To know which, out of many thousands of MSDSs, are those which need to be relied upon as copyright works, the applicant has considered it necessary to commence by requiring the respondent to discover those of their own MSDSs which carry indications of copying from the corresponding MSDSs of the applicant (eg, and most commonly, by still being endorsed with the "Infosafe" numbers which are relevant to them). This approach which, at least conceptually, was not resisted by the respondents, led to the making of a number of discovery orders in the proceeding; but those orders, and the discovery obligations which they carried, likewise led to practical difficulties which have added considerably to the time occupied by, and to the expense associated with, the interlocutory stages of the case. I shall refer presently to the particular orders upon which the applicant relies in pursuit of judgment under O 35A. They extend from 3 December 2004, when the first discovery order was made, to 13 December 2007. In the way the applicant puts its case, the respondents' failure to comply with the orders upon which it relies, although serious and ongoing, was not obvious until some time in 2008, after the applicant's solicitor had had the opportunity of securing independent access to The Collection and of there uncovering, so the applicant says, a great many "Infosafe" MSDSs which had not been discovered, and also the existence of circumstances which then made it clear that the respondents had not complied with some of the orders previously made by the court. I mention these matters at this stage without further comment to explain what might otherwise appear odd, namely, that the present Notice of Motion was filed so long after the time when the obligation first fell upon the respondents to comply with the orders to which the applicant refers. Against that background, I shall commence by setting out the orders, the breach of which should, in the submission of the applicant, entitle it to judgment against the respondents, and some of the more important facts surrounding the making of those orders. On 3 December 2004, Finkelstein J ordered, without limitation, that the parties provide sworn lists of discovery on or before 4 March 2005, and provide inspection thereof by 18 March 2005. On 3 June 2005, his Honour vacated that order, and ordered that the parties provide sworn lists of discovery on or before 20 June 2005. The respondents provided their discovery on 8 July 2005. Their list included a document, numbered 211, which was a database of all the MSDSs then constituting The Collection. No discrimination was made between the MSDSs which did, and the MSDSs which did not, contain the word "Infosafe" or provide some other indication of relevance in the proceeding. According to the applicant, this left it with the problem of sorting through many thousands of MSDSs in document 211, with a view to identifying those which, because of their relevance, ought to have been discovered. The applicant contended that such an obligation lay upon the respondents, as the parties required to give discovery in relevant respects. On 2 November 2005, Finkelstein J heard the parties with respect to the identification of the relevant MSDSs within document 211, after which his Honour made the following order: By 11 November 2005 the Respondents provide to the Applicant's solicitor a listing of those documents within Respondents' discovered document no. Order 4(b) was concerned with other MSDSs which, as events transpired, were in PDF format. On 9 December 2005, the respondents provided two compact disks to the applicant, apparently in purported compliance with the discovery and inspection obligations arising under orders 3 and 4(a) as made on 2 December 2005. The matter of the respondents' compliance with order 4(b) as made on 2 December 2005 proved somewhat problematic. The respondents did make document 211 available for inspection by the applicant's expert, Professor Batten, but it seems that she suggested that her task of identifying the "Infosafe" files within the MSDSs in PDF format then in that document would be assisted if the respondents provided a "bit stream dump" of The Collection as it then existed, together with supplementary dumps at regular intervals. This was one of the matters that came before Registrar Mussett on 29 March 2006. The Registrar made the following order: The Respondents provide a physical bit stream dump of The Collection to Professor Lynn Batten and Mr Lei Pan together with an affidavit stating the procedures that the Respondents took in making the physical bit stream dump on or before 7 April 2006 and thereafter at three monthly intervals. In May and September 2006, the respondents filed Notices of Motion for the variation of an undertaking originally given by them to the court on 3 September 2004. By 16 February 2007, the Respondents will remove from any electronic storage means or database created by either or both of them or on their behalf all HTML source code relating to the Infosafe MSDS. Pending the hearing and determination of this proceeding or further order, the Respondents will not copy, print or convert any of the Infosafe MSDS already contained in "The Collection" in HTML format before their deletion as required by order 2 hereof. On 1 December 2006, the court made orders which are presently relevant in two respects. First, the court ordered the respondents to provide counsel for the applicant with the facility to make access to the collection from their chambers via the internet. The terms of the order, which were substantially a matter of consensus between the parties, were as follows: On or before 7 December 2006, the Respondents provide to the Applicant's Counsel and each of them the means (including providing any password and manuals necessary) via the World Wide Web from their computers in their respective chambers, to live, real time and continuing access to "The Collection" via Chemgold II and otherwise via the same means as enjoyed by customers of the Respondents to enable inspection, including downloading and printing of pages, of "The Collection" by the Applicant's solicitor, counsel and independent experts freely and unhindered and to enable checks to be performed concerning compliance with the Undertakings given to the Courts by the Respondents on 16 October 2006; such access to be subject to Counsel's Confidentiality Undertakings already provided; and such access to continue until the conclusion of this proceeding. The applicant insisted that the respondents identify those files. The respondents insisted that PDF files were not searchable by reference to the word "Infosafe". The applicant countered that searching was possible with the use of a program called "Forensic Toolkit". The respondents then invited the applicant to use that program itself for the purpose, to which the applicant rejoined that carrying out the respondents' discovery was not its task. It became clear to the court that this flow of assertion and counter-assertion (conducted via the undemanding medium of the bar table as it was) was going nowhere. The respondents did file and serve a Notice of Motion, as contemplated by order 1 made on 13 December 2007, on 15 February 2008. The hearing of the motion came on before the court on 18 June 2008 (by which time the respondents had, on 7 March 2008, provided some further discovery of documents of the kind referred to in pars (a) and (c) of order 1 made on 13 December 2007). The motion was resolved substantially by consent. Further orders were then made, upon which the applicant does not presently rely. It is sufficient to note that, as a result of the process instituted on 13 December 2007, the respondents came to accept that Forensic Toolkit could be used at least to a significant extent in searching PDF files. I turn next to the applicant's allegations of breach of the orders to which I have referred. The applicant first alleges that the respondents failed to comply with order 2 made on 16 October 2006, in that they did not remove from their electronic storage means all HTML source code relating to Infosafe MSDSs by 16 February 2007. The steps taken by the respondents to comply with that order are referred to in the affidavit of Ridwan Ahmed affirmed on 3 March 2009. Mr Ahmed says that, in late 2006, Mr Bialkower (the second respondent) told him that the first respondent was required to delete all MSDSs in The Collection in HTML format which contained the words "Infosafe" or "Chemsafe". Mr Ahmed explains the procedures which he employed to effect those deletions. There were some respects in which he did not succeed in deleting all "Infosafe" MSDSs by 16 February 2006. In late February 2007, a further 179 MSDSs, which should have been deleted, came to Mr Ahmed's attention. He deleted those files. In about the middle of March 2007, a further 218 Infosafe MSDSs in HTML format came to Mr Ahmed's attention, and he deleted them. Save for the matters to which I refer in the next paragraph, it seems that, by about the middle of March 2007, the respondents had removed from their storage means all of the Infosafe MSDSs in HTML format which had existed on those means at the time when the order was made, 16 October 2006. In its evidence in support of the present Notice of Motion, the applicant refers to access having been made to The Collection by its solicitors making use of the "sites" of organisations or companies which were, it seems, customers of the first respondent. It also seems that that would have required the solicitors to have used user names and passwords with which they were provided by persons unknown. By means of that access, those representatives identified a number of Infosafe MSDSs in HTML format which, apparently, had not been removed pursuant to order 2 made on 16 October 2006. Mr Ahmed investigated the situation thus disclosed. At the times which are relevant to this allegation, in North America the first respondent's licensee was a company called Global Chemical Data, Inc which provided access to The Collection under the name "Chemwatch NA". For that reason, a computer server was located in Tennessee, for which a consultant to Global Chemical Data, Inc, Mr Jacob Arthur, was responsible. According to Mr Ahmed, the respondents operated an interconnected system of servers which were regularly synchronised (or "synced", as the jargon apparently goes). Under this system, a "purge" function ensured that files which had been deleted from the main server in Melbourne would, at the point of synchronisation, likewise be deleted from other servers. It was only in the course of addressing the allegations contained in the applicant's Notice of Motion, however, that Mr Ahmed discovered that, some time before 2007, Mr Arthur had disabled the "purge" function in the server at Tennessee. The result was that, to the extent that there were any Infosafe MSDSs in HTML format on the server in Tennessee, they were not deleted when that server was synchronised with the server in Melbourne, notwithstanding that the corresponding files had, in compliance with the court order, been deleted from the latter. It seems that there were 397 Infosafe MSDSs in HTML format that remained on the server in Tennessee until corrective action was taken on the instructions of Mr Ahmed, only very recently. That circumstance was said to explain the ability of the applicant's solicitors to view the offending MSDSs by reference to the sites which they visited. It is further submitted on behalf of the applicant that, on its proper construction, order 2 made on 16 October 2006 created an ongoing obligation upon the respondents to remove from any electronic storage means or database any HTML source code, relating to Infosafe MSDSs, which had been placed on that storage means or database subsequent to 16 October 2006. I cannot accept that submission. Relevantly to the present question, the respondents' ongoing obligations were contained in the undertaking given to the court on 16 October 2006. What would happen to files already on the respondents' system was the concern, and the only concern, of order 2. The applicant next alleges that the respondents failed to comply with order 3 made on 16 October 2006 in that they converted three Infosafe MSDSs then contained in The Collection in HTML format into PDF format. This was said to have occurred between 17 October 2006 and 17 February 2007, and was based on the identification of the relevant files by an employee of a consultant to the applicant on 6 November 2006 (in the case of two of the files) and on 24 January 2007 (in the case of the other file). The files were, it seems, added to the first respondent's system by way of a database on a server in India known as "the repository", which is used to process and to register to The Collection MSDSs received from the first respondent's customers (to the detail of which process I shall refer below in another context). The respondents' evidence, given in an affidavit affirmed by one of the first respondent's employees, was that it was likely that these MSDSs were added to the repository on or about the dates that they were converted, which she took to be 6 November 2006 and 24 January 2007. She said that the presence of those MSDSs on those dates did not indicate that they were in The Collection on 16 October 2006. The only comment on this evidence made in the reply submissions of the applicant was that the respondents' evidence disclosed that it was "more likely that [the first respondent] breached its undertakings to the Court rather than order 3 of the 16 October 2006 orders", adding: "Either conclusion is a damning indictment. " The applicant next alleges that the respondents failed to comply with order 3 made on 1 December 2006 in that the access to The Collection which they provided to the applicant's counsel in their chambers was more limited than the access which they provided to their own customers, and which in particular did not provide access to Infosafe MSDSs in HTML format that were contained in The Collection. Robert Lees, a consultant solicitor engaged by the applicant, viewed, or attempted to view, a number of MSDSs in The Collection by the use of different "sites". On many occasions, he was unable to view MSDSs using the means provided by the respondents to the applicant's counsel which he, or a director of the applicant, was able to view using other means (ie user names and passwords other than those provided to counsel). The evidence of the applicant in this respect is complicated to a degree, but the effect of it is that its counsel were not provided with the comprehensive access ordered on 16 October 2006. In his affidavit affirmed on 3 March 2009, Mr Ahmed says that he was responsible for arranging for the applicant's counsel to be given access to The Collection and Chemgold II (another commercial product by which the first respondent gives its customers access to MSDSs). He says that, in doing so, he set the "filters" according to the standard default settings for Australian customers of the first respondent. He says that the applicant's counsel were able to remove or to alter those filters during any session in The Collection by clicking on the "clear filters" tag or simply by overriding all or any of them with a preferred option. He rejects the allegation that there were Infosafe MSDSs in HTML format accessible via one website which were "blocked or hidden from view" when accessed via another website. Mr Ahmed explains the different results found by Mr Lees, and by the director of the applicant, by various combinations of these circumstances. In its reply submissions, the applicant did not accept the respondents' explanation for the differing results apparently achieved by the applicant's representatives in making access to The Collection by different means. In effect, the applicant used its reply submissions to engage with Mr Ahmed argumentatively, for example by proposing that different results could not be explained by different filter settings. It also pointed out that the different results achieved by its solicitor were not confined to MSDSs in HTML format. Without the deponents of the affidavits relied on by the applicant and the respondents having been cross-examined, it is not possible for the court to resolve the differences which arise between them on this interlocutory application. In particular, I cannot reject the evidence of Mr Ahmed, or its sufficiency to answer the applicant's concerns, simply on the basis of the submissions made by the applicant in reply. There are, it seems, factual issues of a technical nature involved here with respect to which the parties are not ad idem . It is somewhat optimistic, in my view, for the parties (particularly for the applicant) to consider that the court might resolve them by reference only to untested affidavits. I am not prepared to find that the access provided by the respondents to the applicant's counsel fell short of what was required save in the respects accepted, and explained, by Mr Ahmed in his affidavit. It did fall short to that extent, of course, and I shall turn to the consequences thereof presently. The applicant next alleges that the respondents failed to comply with the order made by Registrar Mussett on 29 March 2006 in relation to bit stream dumps provided on 27 May and 10 September 2008. The applicant caused a comparison to be made between those bit stream dumps and the MSDS files located by Mr Lees and its director in 2008. The comparison disclosed 76 MSDSs in HTML format that were not included in the bit stream dumps. The applicant alleged that the respondents had "deliberately excluded HTML files for Infosafe MSDS from the bit stream dumps provided since 17 February 2007 in order to conceal the fact that the respondents have not removed those HTML files as required by the court's orders". The respondents' evidence does not appear to deal with the discrepancy alleged by the applicant. Rather, in their written submissions the respondents say that the applicant's evidence "does not establish this allegation". They submit that "the only MSDS that were not provided in the bit stream dumps were those that, unbeknown to [the first respondent], had remained in the [Tennessee server] until about 16 December 2008 or that had been inadvertently added to The Collection and then removed within the period between bit stream dumps. " There was, however, no evidence called by the respondents in those terms. Notwithstanding that omission, the applicant appeared to accept the respondents' explanation, since it submitted in reply: "The fact is the bit stream dumps provided ... do not contain the HTML files of Infosafe MSDS contained in the The Collection on those dates. " This was, it was submitted, a breach of the Registrar's order, and was a consequence of the "cavalier approach" to compliance taken by the respondents. The applicant next alleges that the respondents failed to comply with orders that required them to discover Infosafe MSDSs. The orders relied on were the general discovery orders made by Finkelstein J on 3 December 2004 and 3 June 2005 and the order of 13 December 2007. Since the order of 3 December 2004 was vacated by that of 3 June 2005, and since each was an order for general discovery, there is no need further to consider the former. As noted above, the respondents did comply with the latter (on 8 July 2005). The sufficiency of that compliance then became a matter of dispute. The focus of concern was on the obligation, and the ability, of the respondents to identify, within document 211, the MSDSs that were discoverable. The "bit stream dump" protocol was established, but for various reasons that was not regarded by the applicant as a substitute for discovery. The parties then moved into controversy with respect to the question whether it was possible for the respondents to search, within The Collection, for PDF files containing the word "Infosafe". To provide some resolution to that controversy, the court made the orders of 13 December 2007. The obligation of the respondents to provide discovery under order 1 made on 13 December 2007 was defeasible by the filing and service of a Notice of Motion by the respondents for the relief contemplated in order 2 by 15 February 2008. The respondents did so comply. Since the obligation conditionally imposed by order 1 was to do an act by 29 February 2008, that obligation never came into existence. The dispute between the parties as to whether the respondents should be required to give discovery in the terms of order 1 made on 13 December 2007 (save to the extent that such discovery was given on 7 March 2008) became the focus of the respondents' Notice of Motion of 15 February 2008. On the present motion, the applicant submitted that the respondents had, on 7 March 2008, made discovery "in purported compliance" with order 1. It submitted that that discovery was "hopelessly and deliberately inadequate". However, accepting for present purposes that the respondents did have discovery obligations with the content alleged by the applicant, and accepting that they have fallen short of the proper discharge of that obligation, it could not be said that the respondents' defaults amounted to a breach of the order made on 13 December 2007. The applicant next alleges that the respondents failed to comply with order 1 made on 1 December 2006. It is common ground that that order was not complied with (according to its terms) by 22 December 2006. The applicant accepts that the respondents provided discovery as referred to in the order on 23 February 2007. However, the gravamen of the applicant's complaint is that the respondents thereafter discovered no further documents --- which, it may be presumed, were coming into existence on a regular basis in the conduct of the first respondent's business --- of that kind subsequently. The applicant has pressed the respondents to give ongoing discovery of documents of that kind, but the respondents have, apparently, taken the view that, once the applicant opted for damages rather than an account of profits (which it has, apparently, done since the making of the order in question), invoices, commercial documents and the like were simply irrelevant in the proceeding. So far as the present application is concerned, however, the question is not whether the respondents have omitted to provide continuing discovery: it is whether they failed to comply with order 1 as made on 1 December 2006. As I have noted, they did fail to comply, but that failure was constituted only by being about two months late in their provision of the discovery required by the order. The applicant relies upon O 35A r 2(2)(d) of the Federal Court Rules . It seeks an order under r 3(2)(c) that the court enter judgment against the respondents for the relief to which it appears to be entitled on its Fifth Further Amended Statement of Claim. There has been very little authoritative judicial guidance given as to the way in which the discretion arising under O 35A r 3(2) should be exercised. In the present case, both sides referred me to the judgment of the Full Court in Lenijamar Pty Ltd v AGC (Advances) Limited [1990] FCA 520 ; (1990) 27 FCR 388. In that matter, a proceeding had been dismissed by the Judge at first instance because of the then applicants' delays in prosecuting it, and their failure to comply with procedural directions. His Honour had acted under what was then O 10 r 7(1)(a) of the Rules, which referred to a situation now covered by O 35A r 3(1)(a). There is no requirement of intentional default or contumelious conduct, although the attitude of the applicant to the default and the court's judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period will usually be important factors in weighing the proper exercise of the discretion conferred by the rule. There is no requirement of "inordinate and inexcusable delay" on the part of the applicant or the applicant's lawyers, although any such delay is likely to be a significant matter. There is no requirement of prejudice to the respondent, although the existence of prejudice is also likely to be significant. And it must be remembered that, in almost every case, delay adversely affects the quality of the trial and is an additional burden upon the parties. On the contrary, the rules must be administered sensibly and with an appreciation both of the fact that some delays are unavoidable, and unpredictable, by even the most conscientious parties and their lawyers, and of the likely serious consequences to an applicant of staying or dismissing a claim; .... We would not wish our observations to cause respondents to apply for dismissal of proceedings simply because there has been a non-compliance with a direction by the applicant, even though it does not cause or indicate a continuing problem in preparing the matter for an early trial. As it is impossible to foresee all of the circumstances under which the rule might be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to cooperate with the court and the other party or parties in having the matter ready for trial within an acceptable period and cases --- whatever the applicant's state of mind or resources --- in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non- compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the judge that the applicant is either subjectively unwilling to cooperate or, for some reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding. Ex hypothesi the default is continuing and is imposing an unacceptable burden on the respondent. But the continuance of the non-compliance is of the essence of this situation. If, when the court looks at the matter, the direction has already been complied with, the defaulting applicant may be ordered to pay any wasted costs; but it would be difficult to justify the dismissal of the proceeding solely because of that default. It accuses the respondents of defaults which demonstrate an inability or (more specifically) an unwillingness to cooperate with the court and itself in having the matter ready for trial. It says also that those defaults are continuing, and are occasioning delay, cost and prejudice for itself in the prosecution of the proceeding. The applicant contends that the defaults of the respondents are sufficiently serious to justify an order shutting them out permanently from defending the applicant's claims. Indeed, the effect of the order which the applicant seeks would be to deliver complete success to it in the proceeding, without any investigation of the merit of its claims, and without consideration of the substance that the respondents' defences may possibly have. As I made clear to counsel in argument, that would be a very large step for the court to take, and I did not understand counsel for the applicant to propose that it should be taken save in a clear case of quite serious defaults by the respondent concerned. The starting point, of course, is a consideration of the respondents' defaults as alleged by the applicant, and, to the extent that there is substance in those allegations, of the seriousness of those defaults. Based on my reasons as set out above, I make the following findings with respect to the applicant's allegations that the respondents have breached various orders of the court: In my consideration of the particular defaults alleged against the respondents above, I have found that none of them, individually, would justify an order the effect of which would be to shut the respondents out from defending this proceeding. The applicant does not suggest, however, that any one of those defaults, taken individually, should have that result. Rather, the applicant submits that the defaults, when take together, show a course of conduct, and an approach to the conduct of the proceeding generally, which is inconsistent with the respondents' obligation to give conscientious attention to the defence of the applicant's claims, and to provide such cooperation as would facilitate the achievement of justice in the proceeding. The applicant alleges that the respondents' defaults are "deliberate and contumelious", and bespeak a determination on the part of the respondents to conceal from the applicant, and from the court, the full extent of their appropriation of the applicant's MSDSs. The applicant submits that, as a result of the respondents' defaults, it has suffered, and will continue to suffer, serious prejudice in the prosecution of its claims in the proceeding. Particularly since many of the documents either not discovered, not removed from a database or improperly converted to a different format are, as alleged by the applicant, all said to be infringing works of themselves, the applicant's task of constructing and prosecuting a case for infringement has, it says, been severely compromised. I do not accept the applicant's case in this regard. The respondents' defaults, even taken together, do not fall into either of the categories mentioned in Lenijamar . The respondents have not been unwilling to comply with the orders referred to by the applicant; nor does the evidence bespeak their inability to do so. It is an unhappy reality of complex litigation that procedural orders are not always complied with according to their terms, or in a timely way. I do not condone that reality, but it stands some distance apart from the kind of serious circumstances that would justify an outcome of the kind for which O 35A provides. I accept that the respondents have, in some instances at least, been less than duly conscientious in their compliance with the orders which have been made in this case. On the other hand, I recognise that the facts of the case, and particularly the size and complexity of the first respondent's operations, have often made compliance an involved and difficult task. The respondents' evidentiary case in answer to the present motion has, for the most part, been comprehensive in its scope and systematic in its approach. That case, and the respondents' conduct of their defence generally (which I have been able to observe over many months as docket Judge) leave me in no doubt but that they are both able and willing to provide the necessary degree of cooperation and compliance to bring the proceeding to trial with as much expedition as the nature of the case permits. Nothing put by the applicant on its present motion persuades me to take the serious step of cutting out the respondents from defending the case on its merits. For the above reasons, I propose to dismiss so much of the applicant's motion as seeks an order under O 35A of the Rules. That conclusion requires me to consider the alternative relief sought by the applicant. Largely because of the evidentiary response provided by the respondents to the applicant's Notice of Motion, that alternative relief is now sought in somewhat different terms from those set out in the notice itself. The respondents too have proffered terms of orders which, they say, would be appropriate in the circumstances. To understand the positions which the parties adopt in this regard, it will be necessary to refer to the nature of the first respondent's operations. According to the evidence of Mr Ahmed, the first respondent provides access to The Collection to many thousands of customers all over the world. For that purpose, it uses a system of "master, slave, backup and development servers" that each contain a copy of The Collection. The present system was established in the second half of 2008. The master server --- known as "Lucy" --- is now located in Texas. There is also a slave server --- known as "JR Chemwatch" --- located in Texas. By means of regular synchronisation, Mr Ahmed believes that the copy of The Collection on JR Chemwatch is identical to that on Lucy. The Tennessee server referred to earlier in these reasons remains active, and is regularly synchronised with Lucy. There is also a backup copy of The Collection located on a server in Melbourne, known as "Oberon". That is also regularly synchronised with Lucy. Additionally, there is a server in India used by Elogix Software Pty Ltd ("Elogix"), which supplies services to the first respondent. Elogix acquires and registers MSDSs on behalf of the first respondent. It seems that it is the standard practice of many of the suppliers of chemicals and like substances to make their MSDSs freely available on the internet. MSDSs are downloaded by Elogix "in large batches", after which they are compared with the MSDSs for the corresponding substances already in The Collection, so that the latter might be updated as required. If there are to be MSDSs added to The Collection, they are "registered" and sent both to Lucy and to a copy of The Collection maintained on the server in India. That server, to which I have already referred in these reasons, is called "the repository". The first respondent's customers do not have access to it. It is not synchronised with Lucy, or with any other server, but, about every three months, the copy of The Collection on Lucy is "rebuilt" from the copy on the repository. After each rebuild, Lucy is then synchronised with the other severs to which I have referred. In summary, the position seems to be that the entirety of The Collection is located on Lucy, which is the server from which all of the first respondent's customers, save those based in North America, receive digital data which go to make up the MSDSs to which they are, by their contractual arrangements, entitled to have access. North American customers receive their data from the Tennessee server. JR Chemwatch and Oberon also hold complete copies of The Collection, but no data is sent from them to the computers of the first respondent's customers. The repository is effectively the portal through which new MSDSs, intended ultimately to be added to The Collection, arrive into the system. At the same time as being added to the repository, new MSDSs are sent to Lucy, but the three-monthly rebuild of the latter from the former seems to imply that, if any differences between them happened to arise, it would be the contents of the repository that would become the current version of The Collection for the first respondent's purposes generally. Additionally, it submits that indirectly created PDF files containing the words "Infosafe No" stored in The Collection should be discovered by resort to the Forensic Toolkit program and also (it seems) by using the database's vendor field with reference to the companies referred to in paras (viii)(C) and (D) of the applicant's Particulars of Copyright Ownership. The respondents' proposal deals only with PDF files. They say that directly created such files containing the words "Infosafe No" stored in The Collection should be discovered by resort to "a standard windows search". Indirectly created such files containing the words "Infosafe No" stored in The Collection should be discovered by using the database's vendor field with reference to the companies referred to in paras (viii)(C) and (D) of the applicant's Particulars of Copyright Ownership. Turning next to the repository, the applicant takes exactly the same approach as it does in relation to Oberon, but additionally seeks a general order that the respondents make discovery of the repository as such. The respondents take a different approach. Their submission in relation to directly created PDF files is the same as that made in relation to Oberon. In relation to indirectly created PDF files, they say that such files containing the words "Infosafe No" stored in The Collection should be discovered by resort to Forensic Toolkit. In relation to HTML files, they make the same submission as made in the case of directly created PDF files. Finally, in relation to servers other than Oberon and the repository, the applicant seeks the same discovery as noted above in the case of "any other electronic storage devices, databases or systems". The respondents resist discovery beyond Oberon and the repository. The differences between the parties are to an extent more apparent than real, and result, in my view, from their attempts to pull together a number of cascading pragmatic solutions to the discovery issues which this proceeding presents. It would be idle to embark upon an explanation of how the parties have come to what is manifestly such an untidy pass in the course of these attempts. Given the history of the respondents' provision of discovery in the proceeding, I think the applicant is entitled to be placed, so far as practical electronic means permit, substantially in the position of a party to whom comprehensive discovery (in relation to Infosafe MSDSs) has been given. Thus I propose to order that the respondents provide a disc of all MSDSs containing the words "Infosafe No" stored in The Collection on Oberon, on the repository server and on all other electronic storage devices, databases and systems in the possession or under the control of the respondents or either of them. However, I will qualify that order in two ways. First, in relation to indirectly created PDF files, I will provide that the respondents' obligation will be taken to have been discharged if they make a good faith search for such files using Forensic Toolkit and by using the vendor field of a particular database or storage means by reference to the companies referred to in paras (viii)(C) and (D) of the applicant's Particulars of Copyright Ownership. Secondly, in relation to the repository and other electronic storage devices, databases and systems, I will likewise provide that the respondents' obligation will be taken to have been discharged if they file an affidavit (made by a person with direct knowledge of the matters to which it relates) stating that the contents thereof are identical to the contents of Oberon in every particular. I consider that these orders will make it unnecessary to make a general discovery order in relation to the repository. The respondents resist the making of such an order on grounds which are substantially pragmatic. They point to evidence that MSDSs that are newly added to the repository in India are invariably at the same time added to the master server in the United States; and that, about every 3 months, that server is "rebuilt" from the repository. They say, therefore, that there is unlikely to be any material difference between the repository and Oberon at any point in time. They add that they have not been able to obtain instructions from Elogix as to the practicality or cost of providing a bit stream dump from the repository (that expedient not having been sought in the applicant's Notice of Motion as filed). I consider that the applicant has established a prima facie entitlement to the order which it seeks. I do not consider that any difference is made by the circumstance that the MSDSs on the repository in India are not accessible by the first respondent's customers. However, I recognize the force of the other points made on behalf of the respondents, and I do not propose to require them to undertake a substantial and potentially costly exercise if the only result of it would be the provision of data no different from that sourced from Oberon. As in the case of the discovery orders, I will make an order along the lines sought by the applicant, but, in relation to the repository, I will accept as sufficient compliance with the order an affidavit (made by a person with direct knowledge of the matters to which it relates) stating that the bit stream dump provided in relation to Oberon is identical in every particular to a bit stream dump which would have been provided, on the same day, from the repository, had one been so provided. The applicant next seeks the extension of order 3 made on 1 December 2006 to permit its solicitor, Mr Round, and his consultant solicitor, Mr Lees, to have the same access (in their respective homes) to The Collection as is provided by that order for the applicant's counsel. It is said that the original order included the applicant's solicitor within the class of people who would take advantage of the access provided in counsel's chambers, and the absence of an explicit right for Mr Round and Mr Lees to have access in their own right, as it were, served merely to require them to attend at counsel's chambers for the purpose of carrying out functions which the order contemplated they would perform. As against this, it is pointed out on behalf of the respondents that Mr Round is not in independent practice, but is employed by the applicant. It is also said that the evidence relied on by the applicant on the present motion of itself demonstrates that Mr Round surreptitiously obtained user names and passwords which enabled him to have access to The Collection by means other than hitherto ordered by the court. This is, as I read it, a kind of "lack of clean hands" argument by the respondents in opposition to this order sought by the applicant. What the applicant proposes is, in my view, a convenient and sensible expedient. Notwithstanding that, if the access sought by the applicant for its solicitors were to be exercised at the premises of the applicant itself, I would have a concern as to the efficacy, in practical terms, of the confidentiality undertakings previously given. However, since the access is to be only in the homes of Mr Round and Mr Lees, I am prepared to treat those undertakings as providing sufficient protection for the respondents. I should not be astute to doubt whether these two solicitors would place compliance with those undertakings on a higher plane than pursuit of the applicant's commercial interests. It may be that they have hitherto obtained means of access to The Collection in ways that the respondents would not regard as proper, but, in the events which have transpired, that has brought to light a number of respects in which the respondents have fallen short of their obligations to provide discovery and to comply with orders of the court. It is possible that, if Mr Round and Mr Lees hereafter have more regular, and more convenient, access to The Collection, any inadvertent acts or omissions of the respondents will be drawn to their attention, and then corrected, promptly and without the expense and inconvenience which have been associated with the present motion. I propose to make the order sought by the applicant in this respect. The applicant next seeks the imposition of a further discovery obligation upon the respondents, to be complied with by a date certain to be fixed by the court, in similar terms to the obligation arising under order 1 made on 1 December 2006. The applicant says that the respondents complied with that order only on 23 February 2007, and have provided no corresponding discovery since. It relies on a party's ongoing obligation to discover relevant documents. The respondents contend that documents of the kind referred to in the order sought by the applicant could be relevant only if an account of profits were sought, and point out that, since the making of the order on 1 December 2006, the applicant has opted for damages as its preferred remedy. They also refer to the fact that compliance with that order, apparently, consumed substantial resources (in time and money) and ultimately required the delivery of 26 lever arch folders of copy documents to the applicant. I do not think that the respondents' distinction between damages and an account of profits entirely meets the applicant's point. Even where damages are sought, in a market in which the applicant and the first respondent are direct competitors, every sale made or contract entered into by the latter might well be, depending on how the evidence turns out, a sale or contract lost to the former. I should not shut the applicant out from making such a contention part of its case, and from leading evidence from which such a conclusion might be drawn. Documents of the kind sought by the applicant are relevant (in the context of discovery if not of admissible evidence) to a case along these lines. However, the orders of 1 December 2006 do not reflect the new environment created by the applicant's election to seek damages rather than an account of profits. I consider that orders the equivalent of 1.2, 1.3 and 1.6 should be sufficient for the applicant's purposes. Beyond that, I am persuaded by the respondents' objections that the dollar value of the first respondent's own sales should not be regarded as relevant, and that the substantial costs of re-compliance with the full extent of the orders as made on 1 December 2006 would outweigh the potential value to the applicant of the documents that might be disclosed other than in the limited respects I have indicated. I shall, however, reserve to the applicant liberty to apply if this more limited approach has the practical effect of frustrating its legitimate attempts to have access to documents which demonstrate the extent to which the first respondent has traded in products which might otherwise have been obtained from itself. The respondents submit that, having complied with such discovery orders as the court might make on the applicant's motion, they should be relieved of any further obligation to discover MSDSs or invoices and other financial and commercial documentation. They say that The Collection is an evolving and commercially-dynamic database, and that a point must come where they are entitled to focus their attention on preparing for trial free of the distractions of complying with an ongoing obligation to give discovery. I think there is substance in this submission. To use a metaphor which the parties have, I believe, used on previous interlocutory occasions, there must be a line in the sand marking the point at which the applicant's allegations are tested. I have given the parties some dates in September 2009 for the trial of the action. That is now, in my view, sufficiently proximate for the respondents to turn their attentions towards the trial and away from discovery. I do, however, make two qualifications to this ruling. First, it applies only to discovery of MSDSs and to documents of the kind referred to in order 1 made on 1 December 2006. Other discoverable documents which may come into the respondents' possession or power will be subject to the usual ongoing obligation. Secondly, I shall make my ruling subject to any further order of the court. I do not want to exclude the possibility that, at a later time, the applicant may bring forward a legitimate basis for obtaining further discovery of MSDSs and/or of commercial documents. It is conceivable that a basis may be presented in the context of settling final orders to be made in the proceeding, for example, if the applicant should ultimately succeed. The applicant also seeks a particular remedy which was said to be justified by proof of the respondents' breach of the undertakings they gave on 16 October 2006. (2) The Court, on being satisfied that the undertaking was binding on the person, shall make the order referred to in subrule (1). (3) The Court may be informed of an undertaking to the Court in the proceedings by (amongst other things) reference to a note made by the Judge hearing the proceedings or by his clerk. (4) This rule does not affect the powers of the Court to punish a person for contempt. Resort to it was had by one of the parties in Louthean Publishing Pty Ltd v Central West Media Limited , in relation to which Nicholson J gave an unreported judgment on 15 April 1996. Since his Honour held that the requirements of subr (1) had not been satisfied in the circumstances of the case, he was not required to rule on the question whether subr (2) was mandatory, or gave the court a discretion. That would be a difficult question, particularly in circumstances in which a breach of an undertaking might not, as a matter of discretion, incline the court to make an order in corresponding terms. For example, a party may undertake not to take some action, of the kind which, if taken, would be taken once-and-for-all (such as the demolition of an historic building). If the party, in breach of the undertaking, took that action, it would seem to be quite pointless then to make an order prohibiting the party from doing so again. Yet that would seem to be the effect of the rule. Another oddity about O 35 r 11, if I may so observe with respect to those responsible for its inclusion in the Rules, is that it appears to have no analogue in the rules of any other court of comparable jurisdiction. Neither, so far as I can see, does the rule reflect a practice which any Australian court follows, or has ever followed. There is, of course, the practice (referred to recently in Morgan v State of Victoria [2008] VSCA 267) of making an order limiting a time for the payment of money, in circumstances where a previous undertaking, expressed without any such limitation, has not been complied with. That practice, however, does not go the distance required to explain the very broad terms of O 35 r 11. However these reservations may be, the fact is that the rule exists, and appears to impose an obligation on the court to make an order in the circumstances referred to. In the present case, the applicant has led evidence the effect of which, quite clearly, is that, since 16 October 2006, the first respondent has included in various electronic storage means copies of HTML source code relating to MSDSs containing the words "Infosafe No.". Indeed, the contrary is not seriously suggested by the respondents. Rather, the respondents resist the applicant's motion in relevant respects at two levels. First, they submit that O 35 r 11 could not be mandatory and, as a matter of discretion, the court should not make the order sought by the applicant. Given the terms of the rule, however, I could not accept that submission. As it happens, had the rule been expressed in discretionary terms, I would still have held that the applicant had satisfied the requirements of subr (1), and that there appeared to be no particular reason why the discretion should not be exercised in its favour. Secondly, the respondents submit that, as a matter of construction, their undertaking of 16 October 2006 did not preclude them from maintaining a copy of an HTML MSDS, so long as they did not include that copy in any database which was accessible to third parties (such as their customers). I do not accept that construction. Although par (a) of the undertaking extends the proscription contained therein to the respondents making available the HTML source code "to any person", there is no basis for construing the previous wide words of the undertaking --- "will not ... include in any electronic storage means or database ..." --- as being limited thereby. For those reasons, I propose to grant so much of the applicant's motion as seeks that the respondents' be released from their undertaking of 16 October 2006, and that an order be made in the same terms. The order will, of course, continue to be subject to the usual undertaking as to damages. The only other order sought by the applicant is by way of the fixing of a date by which it should give notice of any application for leave further to amend its Statement of Claim. It proposes that this date should be the 28 th day after the provision by the respondents of the discs of MSDSs, as dealt with earlier in these reasons. The respondents do not contemplate the making of any further such application, but would consent to the applicant now being given leave, by a date certain to be stated, to file and serve a further amended Statement of Claim, limited to incorporating allegations based on the disclosure of further MSDSs which contain the words "Infosafe No". It seems that this is the applicant's only presently-known purpose for filing a further pleading, but I think the safer course is not to give leave save by reference to a document which exists at the time that leave is given. Although I doubt that the matter will be controversial, I propose to fix a date by which the applicant must apply for leave to amend, and to make it a requirement that the intended amendments be specified in writing at the time of its so applying. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. | party's failure to comply with interlocutory orders whether sufficiently serious to justify shutting party out from defending proceeding whether judgment should be entered against party. party's failure to fulfil undertaking given to court whether the undertaking should be converted into an order whether the court retains a discretion not to do so. practice and procedure practice and procedure |
The respondents are all, in various ways, connected with the harvesting and supply of unshucked abalone in Victoria. 2 The hearing of this action began on 24 September 2007. The trial ran for some five days, during which the ACCC presented its entire case. Its expert witness, Dr Philip Williams, was cross-examined at considerable length, and numerous documents, largely those created by and emanating from the respondents, were tendered. 3 At the conclusion of the ACCC's case, I directed that the matter be referred to the Deputy District Registrar of the Victorian Registry, who had previously conducted a mediation in this proceeding, though unsuccessfully, for further mediation. I did so because I was told that the trial might continue for a very considerable time, as the respondents were contemplating calling a large number of witnesses. It seemed to me that, having regard to the way in which the case was proceeding, that would be very costly, and render the proceedings unnecessarily protracted. As it happened, the second attempt at mediation was successful. The ACCC and the respondents were able to agree on almost all essential facts, and also upon the form of orders that should be made. 4 On 19 October 2007 I heard final submissions from the parties as to the nature of the orders that would be appropriate. I reserved my decision. I now publish my reasons for judgment, and make the orders that I consider are warranted. It contains a number of provisions which proscribe and regulate agreements and conduct, and which are aimed at maintaining competition in trade and commerce: see Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1980) 29 ALR 333 at 340 per Deane J. 6 The Competition Policy Reform Act 1995 (Vic), which introduced the Code, applies the "Schedule Version of Part IV" of the TPA to all "persons" in Victoria. 7 Section 45 of the TPA, which falls within Pt IV, deals with contracts, arrangements or understandings that restrict dealings or affect competition. The chief difference is that it states that a "person shall not" rather than a "corporation shall not". A provision of a contract, arrangement or understanding will be regarded as a price-fixing provision if it has the purpose or likely effect of, inter alia, fixing, controlling or maintaining the price of goods or services or providing for that to occur. 13 Section 75B of the TPA then provides for derivative liability for individuals involved in contraventions of s 45(2). 14 Any contravention by a person of any of the provisions of Pt IV of the TPA, or the Code, may result in an order by the Court that the person pay to the Commonwealth a pecuniary penalty in respect of each act or omission by that person. It is a luxury item which features in expensive restaurants. As a consequence, there is a constant demand for the supply of unshucked abalone which has been caught in Victorian waters. 18 The regulation and management of fishing resources in Victoria is prescribed by the Fisheries Act 1995 (Vic) ("the Fisheries Act " ) and the Fisheries Regulations 1998 (Vic) ("the Regulations "). 19 The Fisheries Act and the Regulations divide Victoria into a number of "fisheries". One such fishery is the "Abalone Fishery", which is managed in three "zones". These are the eastern, central and western abalone zones. 20 Section 51(1) of the Fisheries Act provides that the Secretary to the Department of Primary Industries may, on the application of a person who satisfies certain eligibility criteria, and pays any prescribed fee, issue that person with a fishery licence. 21 Fishery licences are divided into various categories. These include access licences and fish receivers' licences. Fish receivers' licences are, in turn, divided into classes including Fish Receivers' (Abalone) Licences. The holder of a Fish Receivers' (Abalone) Licence is authorised, inter alia, to receive abalone for processing and storage or sale, and to sell abalone from the premises specified in the licence. There are currently eighteen Fish Receivers' (Abalone) Licences issued in Victoria, and therefore eighteen licensed processors in this State. 22 The holder of an Abalone Fishery Access Licence is authorised, inter alia, to take abalone for sale, use or possess commercial abalone equipment and possess, pack and sell abalone. Any such licence is subject to conditions that include ensuring that no abalone is taken under that licence from any zone other than that specified, and that all abalone taken under the licence is transferred or delivered to the holder of a Fish Receivers' (Abalone) Licence no later than 24 hours after the time the abalone is landed. 23 At all material times the number of Abalone Fishery Access Licences granted in Victoria has been limited. The eastern abalone zone has 23 licences, the western abalone zone 14, and the central abalone zone 34. The quantity of unshucked abalone permitted to be caught under each Abalone Fishery Access Licence is also limited, and divided into "quota" units. There is also a licensed aquaculture industry in Victoria producing abalone that is farmed. That too is regulated by the Fisheries Act and the Regulations . 26 In addition to the licensed commercial trade in wild and farmed unshucked abalone, it is commonly accepted that there is widespread illegal poaching of wild abalone throughout Victorian waters. Australian Abalone was the corporate vehicle through which the contraventions of s 45(2) are said to have occurred. Peter Wright, the fifteenth respondent, was a director and shareholder of that company. Peter Morgan, the sixteenth respondent and a qualified legal practitioner, was likewise a director of Australian Abalone. He was also its secretary. Colbrash Investments Pty Ltd ("Colbrash"), the seventeenth respondent, was a shareholder. Natalie Bilborough, the fourteenth respondent, was the sole director and shareholder of Colbrash. Chris Bilborough, the eighteenth respondent and Natalie Bilborough's husband, was a consultant and adviser to Australian Abalone. Finally, QO Nominee Pty Ltd ("QO Nominee"), the nineteenth respondent, was a shareholder of Australian Abalone. 32 In addition, it should be noted that Bob's Marine, Ronda, Leckford, PJ & H Johnston, A & A Reynolds, Dennis Warn and David Hunt all, at one time, held shares in QO Nominee. Peter Johnston, Dennis Warn and Robert Peime were directors of that company. It is also now accepted that those various individuals associated with the corporate quota holders, and Australian Abalone, were directly or indirectly knowingly concerned in or party to those contraventions. 34 In addition, it is agreed that each quota holder was, or would have been, but for the arrangement referred to below, in competition with one or other quota holders in the central abalone zone in Victoria. 35 The evidence upon which the ACCC relies is no longer challenged. It consists largely of documents brought into existence by the respondents, and also the expert opinion of Dr Williams. In addition, a number of agreed facts have been outlined in joint submissions which were filed with the Court. 37 For some time leading up to October 2003, quota holders for the central abalone zone were becoming increasingly frustrated at what they believed to be the low returns which they were getting for their catch. They blamed the holders of Fish Receivers' (Abalone) Licences ("the processors") to whom they were required to supply their catch. They considered that the processors were using their dominant position, under the regulatory scheme that applied in Victoria, to keep prices down. As a general rule, quota holders in Victoria sold their abalone to the processors and did not merely transfer possession to them for on-sale. 38 On 17 October 2003 a meeting of quota holders was held at a property owned by Mr Peime. Mr Johnston and Mr Peime had been the two individuals instrumental in arranging that meeting and notifying others who might be interested in attending. Mr Hunt, Mr Bramley, Mr Warn and Mr Reynolds also attended. However, none of Natalie Bilborough, Chris Bilborough, Mr Morgan or Mr Wright was present. 40 It is evident that those who attended were concerned that there were too many processors, and that prices were too low. There was discussion about overseas marketing, reducing costs, and improving marketing arrangements generally. No formal agreement was reached, other than to create a steering committee, to retain an outside consultant to advise, and to meet again. Among those who volunteered to be a part of the steering committee were Mr Johnston, Mr Peime and Mr Warn. 41 Over the next few months various options were considered, one of which was the possibility of establishing a processing venture. 42 Mr Johnston and Mr Peime issued a "Report from Steering Committee" which was dated 24 November 2003 and addressed to the quota holders. It suggested a tentative date of 12 February 2004 for an information/workshop session to analyse marketing potential and possible business structures. The report also sought contributions of $500 from each quota holder "to get us through this next stage". Subsequently, some contributions were received from quota holders. 43 On 11 February 2004 the group ran the workshop in Frankston. On this occasion those present included Mr Peime, Mr Johnston, Mr Reynolds, Mr Warn and Natalie and Chris Bilborough. The outside consultant, David McKinna, an expert in marketing, spoke. At that stage Chris Bilborough presented an alternative option. He suggested that the industry had to work together and undertake "combined marketing". He spoke of the benefits to be gained by the quota holders from coordination, including the achievement of higher prices. 44 At some stage in February 2004 Mr Bilborough prepared a document entitled "Aussie Abalone: Information Summary February 2004" in which he proposed the creation of a new company which would provide services to quota holders to increase the price of abalone for those who participated in the arrangement. In that document he also proposed that the aim of the new business would be to increase the demand for abalone, to manage its supply and to increase profit for all members of the consortium. 45 Further meetings took place in the ensuing months at which Chris Bilborough's ideas were discussed. Ultimately it was agreed that the respondents would proceed with his plans, rather than those put forward by Mr McKinna. Between 22 April 2004 and 10 May 2004 Mr Morgan was engaged, on the instructions of Chris Bilborough and Mr Wright, to prepare drafts of a supply and marketing agreement, an irrevocable authority and a shareholders' agreement. Copies of those draft agreements were provided to Messrs Peime, Johnston, Warn and Bramley. 46 On 10 May 2004 a meeting was held in Sorrento at which those same individuals attended. At that meeting, an issue was apparently raised as to whether the proposed arrangement constituted "collusion". That was the only time, throughout this entire process, that this issue appears to have surfaced. It seems as though the matter was not taken any further. 47 On 28 May 2004 a meeting was held at a winery. It was attended by various quota holders. At that meeting Messrs Johnston and Peime spoke, Chris Bilborough was present and Mr Wright gave a presentation regarding both the short and long term objects of the proposal. 48 On 9 July 2004 Australian Abalone was registered as a company. As indicated above, Messrs Johnston, Peime, Wright and Morgan were directors of the company. Mr Morgan was also the company secretary. In the event that there are less than three processors purchasing abalone on a particular day, then the average shall be taken of those processors purchasing such abalone on that day provided that in all cases the processors must not include any processor purchasing from Aussie Abalone and/or nominated by Aussie Abalone to a Quota Holder. 59 In relation to Ronda, it is agreed that it gave effect to the contravening provisions in that between 29 July 2004 and 2 August 2004, it supplied unshucked abalone to two abalone purchasers nominated by Australian Abalone. As indicated above, it appears that fees were only paid to Australian Abalone in respect of Ronda's unshucked abalone on four occasions, between 29 July 2004 and 2 August 2004. 64 On 8 October 2004 the ACCC wrote to Mr Morgan, in his capacity as company secretary of Australian Abalone, expressing its concern that Australian Abalone's selling arrangements might be in breach of Pt IV of the TPA, and s 45 in particular. It seems that this letter was not received by Mr Morgan until 11 November 2004, who provided a written response to it on 18 November 2004. That response stated that Australian Abalone was not buying or selling any abalone, it was a marketing company. It also stated that although the respondents did not consider that they had breached any provision of the TPA, if the ACCC still had concerns about the arrangements they would be happy to meet to "resolve any ongoing issues". 65 For whatever reason, no such meeting took place. However, the arrangements with Australian Abalone appear to have ceased within a relatively short time after the ACCC's letter was received. 68 Its price-fixing case focuses upon the Beach Price and the "premium". In ordinary competitive circumstances, each quota holder would negotiate with each processor seeking to get the best possible price for its abalone. However, under the impugned arrangement a quota holder would not supply a processor unless that processor was prepared to pay a premium on top of the Beach Price, and was nominated by Australian Abalone. The Beach Price would go to the quota holder, and the premium would go to Australian Abalone. They were instructed by Fitzpatrick Legal. 70 Australian Abalone, Bob's Marine, Leckford, PJ & H Johnston, A & A Reynolds, MI Lee Marine, Colbrash and QO Nominee all admit that they contravened s 45(2)(a)(i) of the TPA in that during 2004 they made an arrangement which contained provisions that had the purpose of restricting the supply of unshucked abalone to certain processors. They admit that the provisions in question were "exclusionary provisions" within the meaning of s 4D. 71 Those same respondents all admit that they contravened s 45(2)(a)(ii) of the TPA in that the arrangement referred to above also contained provisions which had the purpose, effect and likely effect of controlling the price paid for unshucked abalone taken from the central abalone zone. 72 Australian Abalone, Bob's Marine, Leckford, PJ & H Johnston, A & A Reynolds and MI Lee Marine all admit that from about July 2004 to March 2005 they contravened s 45(2)(b)(i) and (ii) of the TPA by giving effect to the provisions referred to above. 73 Mr Warn and Mr Hunt admit liability for having, during 2004, and from July 2004 to March 2005, contravened the analogous provisions of the Code . They also admit that they were knowingly concerned in the contraventions of the Code committed by Mr Warn and Mr Hunt. 77 As regards Mr North's clients, it should be noted that Messrs Peime, Johnston and Warn were members of the "steering committee", set up after the original meeting in October 2003 to develop the arrangement. These three individuals were also directors of Australian Abalone, and had control over its day to day management. However, Mr Peime and Mr Johnston's liability, and that of Mr Reynolds and Ms Bilborough, is ancillary only. Messrs Hunt and Warn are directly liable under the Code. As indicated above, Mr Hunt entered into the arrangement some two months after the other quota holders. 78 It is agreed that the contraventions of the TPA and the Code arose as part of a single course of conduct, and that the respondents should not therefore be punished for each separate act or omission. It is also agreed that the conduct was of relatively short duration, and that there is no specific or precise evidence as to the amount of loss or damage caused as a result of the contravening conduct. 79 The ACCC accepts that the respondents did not set out to contravene either the TPA or the Code. It accepts that they did not act dishonestly. These concessions were properly made. It is an unusual feature of this case that the respondents acted, at all times, in an open manner. They documented all of their actions. Unlike almost all cases brought under s 45, there was no secrecy in what they did. That speaks volumes as to their state of mind. 80 In their defences, these respondents admitted all issues relevant to the structure of the corporate respondents. They also admitted matters leading up to the execution of the relevant agreements, and the agreements themselves. They are entitled to some credit for having acted responsibly in that regard. 81 Mr North's clients invited me to find that by entering into and giving effect to the arrangements, they acted in the belief that what they were doing was not merely legal, but actually for the benefit of the industry. I do not think that the evidence supports a finding of total selflessness on their part, though it does suggest a concern for all quota holders within the central abalone zone. I am, however, prepared to accept that they had no idea that by making or giving effect to the arrangement, they might be contravening the provisions of the TPA. 82 I accept that the relevant respondents ceased their involvement in this arrangement within a relatively short time after the ACCC wrote to them on 8 October 2004. Accordingly, the arrangement was in place for a comparatively short time, a few months at most. 83 The relevant respondents invited me to find that the moneys received by Australian Abalone, through the premiums negotiated with various processors, were in total somewhere between approximately $43,000 and $71,000. They submitted that all of those moneys were used in running costs, which included a trip (and sale) to China. Accordingly, the shareholders in Australian Abalone never received any payment by way of dividend. That submission seems to me to accord with the general picture presented, and I am prepared to act upon it. 85 Ronda admits that it contravened s 45(2)(a)(i) and (ii) by making an arrangement in about July 2004 with Australian Abalone, the other respondent quota holders (except Mr Hunt), Mr Wright, Colbrash and QO Nominee which contained provisions that had the purpose of restricting or limiting the supply of unshucked abalone to certain processors, and which had the purpose, effect or likely effect of controlling or maintaining the price paid for unshucked abalone taken from the central abalone zone. 86 In addition, Ronda admits that in about July and August 2004 it gave effect to the provisions set out above, and thereby contravened s 45(2)(b)(i) and (ii). 87 Mr Bramley admits that he was knowingly concerned in and party to Ronda's contraventions. They were also the first respondents to admit their contraventions, and to agree to penalties. They were the only respondents who fully accepted liability for what they had done, and agreed on penalties to be imposed, before the trial began. 90 In addition to the mitigating circumstances relied upon by the other respondents, Mr Bramley was not a member of the steering committee formed to develop the arrangement, and was not a director of Australian Abalone. He had no involvement in drafting any of the notices, newsletters or other correspondence to quota holders referred to in the ACCC's pleading. Neither Ronda nor Mr Bramley made any profit out of the arrangement, and there is no evidence that they caused loss or damage to anyone. The ACCC accepts that Mr Bramley believed that competent solicitors had been retained, and that there was nothing untoward about what was being done. The ACCC also accepts that Mr Bramley is remorseful, both on his own and Ronda's behalf. 91 In addition, it is agreed that Mr Bramley is 57 years old, and semi-retired. He has no tertiary education, and formerly worked as a butcher before becoming an abalone diver. Ronda is a small, closely held company which has no assets and does not trade. The probabilities are that it will be wound up. Its Abalone Fishery (Central Zone) Access Licence was transferred to a different company in December 2004, and the ACCC accepts that this transfer had nothing to do with the ACCC's investigation or the matters which are the subject of this proceeding. 92 Ronda and Mr Bramley have borne legal costs in engaging their own solicitors and counsel in relation to the ACCC's investigations and this proceeding. They have not had the advantage of sharing these costs in the way that other respondents have. In addition, he admits that from about July 2004 to March 2005 he contravened s 45(2)(b)(i) and (ii) of the Code by giving effect to those provisions. 95 The pecuniary penalty that is proposed, and agreed, between the ACCC and Mr Wright is $50,000. 96 Mr Wright calls in aid the same mitigating circumstances as are relied upon by Mr North's clients. In addition, he points out that he was not a member of the steering committee, and that he was not involved in drafting the relevant documentation. Mr Wright only became involved in the arrangement after it was reduced to writing. The ACCC accepts that he understood that the arrangement was intended to improve the quality and reliability of supply of unshucked abalone to the market. It also accepts that Mr Wright was not aware of the illegality of the conduct. In addition, it is common ground that Mr Wright will have to borrow money in order to pay the agreed penalty. As previously indicated, Mr Morgan is legally qualified. 98 Mr Morgan admits that, in his capacity as a director of Australian Abalone, he was knowingly concerned in, and therefore liable for, various of the breaches of ss 45(2)(a)(i) and (ii) and 45(2)(b)(i) and (ii) of the TPA and the Code by Australian Abalone, a number of the quota holders, Mr Wright, Colbrash and QO Nominee. 99 The pecuniary penalty that is proposed, and agreed, between the ACCC and Mr Morgan is $20,000. 100 In his capacity as director of Australian Abalone, Mr Morgan acted as the nominee of Mr Bilborough. As indicated above, he was also the company secretary. 101 Mr Morgan played a significant role in the arrangement. On the instructions of Messrs Bilborough and Wright, between 22 April 2004 and 10 May 2004, he prepared drafts of the three critical documents, namely the Shareholders' Agreement, the Supply and Marketing Agreement, and the Irrevocable Authority. He communicated with a number of the respondent quota holders and attended and participated in meetings of Australian Abalone. 102 It is agreed that Mr Morgan advised quota holders of which processors were nominated by Australian Abalone, and emphasised the importance of the catch being supplied only to those processors. 103 Mr Morgan is entitled to rely upon the mitigating circumstances that the other respondents have invoked. In addition, he did not and does not hold an Abalone Fishery Access Licence, and had no previous involvement in the abalone industry. His liability is ancillary only. The ACCC accepts that, although a qualified lawyer, he was not experienced in trade practices law. 104 I should note that Mr Morgan filed written submissions dated 19 October 2007 in which he either challenged, or sought to place a gloss upon the joint submissions that were filed on behalf of the ACCC and himself. In his written submissions he argued that no processor was ever made aware of the Beach Price which was simply a hypothetical, notional figure used to calculate the payment to the quota holder, with the excess moneys being payable to Australian Abalone. He also commented upon the mechanics of the arrangement, pointing out that Australian Abalone was sometimes able to negotiate an extra payment in return for better quality abalone, or because of cost savings. In other words, on some occasions the "premium" that was paid was fully justified by the added value that was provided. 105 Mr Morgan also wished to emphasise that the respondent quota holders had a real and genuine grievance against the processors, believing that they were being manipulated by them. He also emphasised his own high level of cooperation with the ACCC throughout its investigation. He stressed that any contravention of the TPA on the part of the respondents was entirely inadvertent. 107 Mr Bilborough admits that in his capacity as a consultant and advisor to Australian Abalone he was knowingly concerned in, and therefore liable for, various of the breaches of ss 45(2)(a)(i) and (ii) and 45(2)(b)(i) and (ii) of the TPA and the Code by Australian Abalone, a number of the quota holders, Mr Wright, Colbrash and QO Nominee. 108 The pecuniary penalty that is proposed, and agreed, between the ACCC and Mr Bilborough is $50,000. 109 Mr Bilborough is the husband of Natalie Bilborough who relevantly controlled Colbrash and MI Lee Marine. As indicated above, in about February 2004 he prepared the "Aussie Abalone: Information Summary February 2004" in which he proposed the creation of a new company. 110 In March or April 2004 Mr Bilborough was also responsible for having prepared and presented a PowerPoint presentation containing a proposal to establish the new corporate entity, coordinate diving, and negotiate with processors with a premium to cover management costs and increased efficiencies. Throughout this period he met with various quota holders with a view to encouraging them to enter into the arrangement. 111 On 10 August 2004 Mr Bilborough wrote and distributed a document entitled "The Inaugural Aussie Abalone Newsletter" which referred to agreements in place that would allow Australian Abalone to make a "premium". As indicated above, he also attended and participated in meetings of the directors of Australian Abalone held on 31 August 2004 and 10 March 2005. 112 It seems to be agreed that it was Mr Bilborough who first came up with the idea of extracting a premium from nominated processors by using the combined power of any quota holders who ultimately entered into the arrangement. 113 Mr Bilborough is, of course, entitled to rely upon what may be described as the usual mitigating circumstances. In addition, he did not, and does not, hold an Abalone Fishery Access Licence. He is an undischarged bankrupt. Although he eventually agreed to the penalties and other orders proposed, he was one of the last respondents to do so, and even then, invited me to conclude that the pecuniary penalty to which he had agreed was excessive, and should be reviewed. Any reliance on his part on contrition must be viewed in that light. Although such contraventions are not criminal offences, they are regarded as serious. 116 A pecuniary penalty is intended to achieve various goals. These include punishment, proportionate to the gravity of the contravening conduct, and deterrence, both specific and general. 117 At the same time, any penalty that is imposed should not be so high as to be oppressive. Among the factors that may be taken into account by way of mitigation are a blameless prior history, genuine contrition, and a willingness to settle any proceeding so as to avoid unnecessary expense. 118 It is also worth noting that the fact that a company has ceased trading and has no assets are not circumstances which ought to prevent the imposition of a penalty: Australian Competition and Consumer Commission v Commercial and General Publications Pty Ltd (No 2) (2002) ATPR |P41-905 at 45,441 per Heerey J. Such settlement avoids lengthy and complex litigation, with attendant savings of costs. It also leaves the Court free to deal with other urgent matters, and relieves the ACCC of the burden of conducting the litigation, freeing up investigating officers to deal with other matters. 120 The Court must ensure that any consent orders sought as part of the settlement of a proceeding which alleges breaches of the TPA are within power, and otherwise appropriate. However, it should not refuse to give effect to a proposed settlement merely because it would have made different orders had the matter not been resolved. There is no doubt in this case that the declarations sought are within the power of this Court, and are otherwise appropriate. 121 The real question is whether the pecuniary penalties which are now sought, and which have been agreed by the respondents, should be approved. In answering that question it must be emphasised that, in the final analysis, it is for the Court, and not the parties, to determine the amount of any pecuniary penalty. The Court is not to be regarded as a "rubber stamp". See generally NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285; and Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd (2004) ATPR |P41-993. 122 Nonetheless, it is a fact that in the vast majority of cases where pecuniary penalties have been agreed the Court has approved those penalties. That is because the Court is concerned only with whether the agreed penalties are within what is described as the "permissible range". Because the determination of a penalty is not an exact science, that range may be quite broad. If an agreed penalty is "within the range" the Court will generally give it effect. 123 In determining whether or not an agreed penalty is "within the range" the Court will have regard to various matters. These include pecuniary penalties imposed in other cases, particularly those imposed in like circumstances. Questions of parity will also be important. The Court will accord particular weight to the view of the regulator, as representing the public interest, that the penalty is adequate in all the circumstances. 124 The parties have jointly submitted, and I accept, that the Court is entitled to treat the respondents' consent to these orders as involving an admission of all facts necessary or appropriate to the grant of the relief sought. See Thomson Australian Holdings Pty Ltd v Trade Practices Commission [1981] HCA 48 ; (1981) 148 CLR 150 at 164. Cartel conduct can take many different forms. On the one hand, it may be so grave as to warrant massive pecuniary penalties on the scale of those recently imposed by Heerey J in Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 3) [2007] FCA 1617. 126 Cartel behaviour of the kind with which Heerey J was concerned can, as his Honour noted (at [306]) be extremely damaging to the prosperity of a free market economy. Often the profits to be made can be immense, and the risk of detection slight. That explains, in part, why the legislature has progressively increased the maximum penalties available in relation to this type of conduct. 127 Heerey J went on to observe (at [309]) that many countries with free market economies have enacted laws which make cartel conduct by individuals subject to criminal sanctions, including imprisonment. I note that in April 2003 the Dawson Committee recommended the introduction of criminal sanctions for serious cartel behaviour. I also note that on 2 February 2005 the Treasurer announced proposals for the criminalisation of serious cartel conduct. He stated that the maximum penalties for the new cartel offence would be a term of imprisonment of five years and a fine of $220,000 for individuals, and a fine for corporations that would be the greater of $10 million or three times the value of the benefit from the cartel. Where the value could not be determined the fine would be 10% of annual turnover. 128 Although not all cartel conduct should be viewed as warranting the imposition of criminal sanctions, including imprisonment, plainly that option should be available in relation to serious cases of such conduct. See generally B Fisse, "The Cartel Offence: Dishonesty? " (2007) 35 Australian Business Law Review 235 at 236. I interpolate that in the event such conduct is criminalised in Australia, problems may arise in formulating a cartel offence in terms that would be comprehensible to ordinary jurors. Section 45 is complex enough. The idea, which has been mooted, of simply adding the notion of "dishonesty" to what is already a daunting provision may be counterproductive. As Fisse notes, no country other than the United Kingdom (the Enterprise Act 2002 (UK)) has made dishonesty an element of a cartel offence, and perhaps for good reason. 129 It ought to be possible to define serious cartel conduct in relatively simply terms. Fisse (at 237) makes several useful suggestions as to how this might be done. Whatever else might be said, in appropriate cases imprisonment should be available as a sentencing option. Pecuniary penalties may be seen as simply part of the price of doing business. 130 Nonetheless, there are cases, of which the present is a prime example, where the cartel conduct should be viewed in quite a different light. Heerey J observed that "of its nature" cartel behaviour is likely to occur in secret. That is of course correct as a general proposition. However, nothing could be further from the truth in this case. A feature of the arrangement that lies at the heart of this proceeding is that it was fully documented through a series of meetings that were open to virtually any quota holder to attend. There was no attempt at concealment. Minutes of meetings were kept, and formal resolutions noted. All of these documents were preserved and provided by the respondents, upon request, to the ACCC. 131 That of itself makes this case entirely unusual. 132 Even more remarkable is the fact that a number of lawyers and accountants cast their eyes over the relevant documents, and failed to detect a possible breach of Pt IV of the TPA. In any event, it is agreed that in entering into and giving effect to this arrangement, the respondents believed that what they were doing was lawful. They had no idea that they were engaged in price-fixing of a kind specifically prohibited by s 45 of the TPA. 133 The arrangement was carried out openly and transparently. Not surprisingly, the ACCC learned of it soon after it came into effect. As previously indicated, it wrote to Australian Abalone on 8 October 2004 seeking clarification of the relevant arrangement, and warning the respondents that they might be acting in contravention of Pt IV of the TPA. 134 As indicated above, it is also common ground that on 18 November 2004 Mr Morgan replied to the ACCC's letter, asking for a meeting in order to resolve any concerns that there might be regarding the arrangement. 135 There are other mitigating circumstances. The key documents were executed between 22 July 2004 and 16 September 2004. Australian Abalone received its last fee in February 2005. In broad terms, therefore, the arrangement lasted for only about six months. 136 As I have already indicated, Australian Abalone did not make any significant profit out of the arrangement. 137 There is no evidence as to the amount of loss or damage, if any, caused as a result of the contravening conduct. The ACCC submitted that this is of little weight in the context of contraventions that are illegal per se. In addition, the ACCC submitted that the arrangement was likely to have caused harm to the competitive process for the supply of abalone taken from the central abalone zone. It relied upon the evidence of Dr Williams in support of that inference. 138 Notwithstanding the various mitigating circumstances to which I have referred, it must be remembered that in this area ignorance of the law is no excuse. The respondents had a responsibility to ensure that they knew the law, and that the law was obeyed. 139 In Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 193 ; (2003) 131 FCR 529 at [308] ---[309] the Full Court regarded the fact that legal advice had been obtained as being of little consequence and not as a discounting factor. In that case it was said merely to illustrate that the risk was appreciated. 140 I would regard the principle formulated in Universal Music as being inapplicable to this case. Here it is not so much that legal advice was obtained that is relevant. Rather it is the fact that not one of a bevy of lawyers who were involved in structuring and documenting the arrangement considered for a moment that there might be a breach of s 45. It is that which lends support to the respondents' claim, accepted by the ACCC, that they did not act dishonestly and had no idea that they were contravening that section. In no sense did they "appreciate" the risk, and choose to run it. 141 I am satisfied that all but two of the pecuniary penalties that are agreed are within the permissible range, and that they should be imposed. These penalties are appropriate because they may deter others from engaging in similar conduct. They are not insubstantial, totalling, for example, in the case of Mr North's clients $765,000. 142 The two exceptions are the penalties agreed in relation to Ronda, $65,000, and Mr Bramley, $20,000. Try as I might, and despite the fact that neither of these respondents wished to make any further submissions after discovering what penalties had been agreed between the ACCC and the other respondents, I can see no reason why penalties as severe as these should be imposed upon these two respondents. 143 The difficulty with the penalties agreed in relation to Ronda and Mr Bramley is that they offend the requirement of parity, as between co-offenders. Parity is as much a relevant consideration when dealing with pecuniary penalties as it is when sentencing for a criminal offence. 144 In Schneider Electric (Australia) Pty Ltd v Australian Competition and Consumer Commission [2003] FCAFC 2 ; (2003) 127 FCR 170 at [57] Merkel J (with whom Black CJ and Sackville J relevantly agreed) accepted that the parity principle applies to pecuniary penalties imposed under s 76 of the TPA. His Honour referred to two earlier decisions of the Full Court in support of that proposition, namely NW Frozen Foods at 295, and Australian Competition and Consumer Commission v Ithaca Iceworks Pty Ltd (2002) ATPR |P41-851 at 44,539. See also Australian Competition and Consumer Commission v SIP Australia Pty Limited (2003) ATPR |P41-937 at [57]---[58] per Goldberg J; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 4 ) (2006) ATPR |P42-101 at [71]---[74] per Goldberg J; and Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 3) [2007] FCA 144 at [11] per Tracey J. 145 In Lowe v The Queen [1984] HCA 46 ; (1984) 154 CLR 606 Mason J, as his Honour then was, underlined the importance of the parity principle. It is for this reason that the avoidance and elimination of unjustifiable discrepancy in sentencing is a matter of abiding importance to the administration of justice and to the community. Equal justice requires that like should be treated alike but that, if there are relevant differences, due allowance should be made for them. In the case of co-offenders, different sentences may reflect different degrees of culpability or their different circumstances. If so, the notion of equal justice is not violated. On some occasions, different sentences may indicate that one or other of them is infected with error. Ordinarily, correction of the error will result in there being a due proportion between the sentences and there will then be equal justice. However, the parity principle, as identified and expounded in Lowe v The Queen , recognises that equal justice requires that, as between co-offenders, there should not be a marked disparity which gives rise to "a justifiable sense of grievance". If there is, the sentence in issue should be reduced, notwithstanding that it is otherwise appropriate and within the permissible range of sentencing options. It should be noted, however, that these two respondents were entirely unaware of the pecuniary penalties that were agreed between the ACCC and the other respondents until I raised the matter during the course of submissions. Counsel for Ronda and Mr Bramley had only a brief opportunity to obtain instructions as to whether there were any parity considerations that might have caused his clients to reconsider their position. It was not surprising in these circumstances that neither Ronda nor Mr Bramley sought to revisit the entire question of their agreed penalties. 148 None of this absolves me from having to consider the application of the parity principle to their particular case. I understand full well that they may have had good reason to agree to these penalties, rather than face what was at that stage thought to be a long and very costly trial. I also understand that there are some matters that I may not be privy to which explain why the ACCC sought penalties of this order against these respondents. However, I can only act upon the basis of the material before me. In my view, both Ronda and Mr Bramley would have a justifiable sense of grievance if they were required to pay the pecuniary penalties to which they have agreed, having regard to the greater culpability of other respondents who appear to have been treated far more leniently. 149 It is sufficient to recapitulate briefly some of the factors that operate in favour of these respondents. They clearly played a lesser role in the arrangement than many of the other participants. Their involvement was extremely brief, a matter of days only. They were separately represented, and were likely therefore to have incurred proportionately greater legal costs than those expended by Mr North's clients. Most importantly, they acknowledged their liability, and agreed on penalties before the commencement of this trial. In my view, they are entitled to a considerable discount for that fact alone. 150 The authorities make it plain that this Court should not tinker with an agreed penalty. It is only when it seems to be entirely outside the range, whether because it is too high or too low, that the Court should substitute a different amount. I think parity requires that the pecuniary penalties imposed on Ronda and Mr Bramley be significantly reduced. I consider that in each case a reduction of 50% is warranted. That means that Ronda should pay a pecuniary penalty of $32,500, and Mr Bramley a pecuniary penalty of $10,000. 151 The total of the pecuniary penalties to be imposed in this case is therefore $927,500. The fact that the Court has fixed penalties of that order for cartel conduct that is plainly at the less serious end of the scale should send a message to those who might be minded to enter into arrangements of this nature. It also indicates just how seriously cartel conduct is viewed by the Courts. These costs orders all seem appropriate, including those proposed in relation to Ronda and Mr Bramley. The lesser amounts payable by those respondents reflect the fact that they acknowledged their liability before the trial commenced. I certify that the preceding one hundred and fifty-three (153) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. | restrictive trade practices alleged contraventions of ss 45(2)(a)(i) and (ii) and 45 (2)(b)(i) and (ii) of the trade practices act 1974 (cth) and the victorian competition code respondents connected with supply of unshucked abalone price-fixing exclusionary provision respondents admitted alleged contraventions pecuniary penalties agreement reached on penalties to be imposed factors relevant when fixing penalty principles governing agreed penalties parity principle trade practices trade practices |
The application for review related to the failure of the Minister to make a decision under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) in relation to the applicant's proposed construction of a wind farm at Bald Hills in Gippsland, Victoria. The application contended that the Minister was under a statutory obligation to make the decision by 8 October 2004 and that he failed to do so. 2 After the institution of these proceedings, the Minister announced his decision on 3 April 2006. The making of the decision removes the substratum of these proceedings. In the circumstances, the applicant seeks to discontinue the proceedings, with a specific order as to costs to the effect that the Minister pay the applicant's costs of the proceedings. The Minister consents to the discontinuance of the proceedings but submits that, in all the circumstances, there should be no order as to costs. The applicant submits that the case attracts the principles which permit an order for costs to be made against a respondent where there has been no hearing on the merits, but the applicant has effectively achieved the relief sought by the proceedings. It is not disputed that the Minister's decision has the practical effect of providing the substantive relief sought by the application. 4 The essential basis of the applicant's argument is that a decision was not made by the Minister in a timely way in accordance with the time limits imposed by the Environment Protection and Biodiversity Conservation Act . Indeed, it is submitted that the decision was more than 12 months out of time. 5 The applicable principles are fairly clear. They are discussed at some length by Hill J in Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201; see also 7-Eleven Stores Pty Ltd v Australian Competition and Consumer Commission (1998) ATPR 41-622 (' 7 Eleven' ) at 4821 per Heerey J; Essendon Health Care Pty Ltd v Moylan (1998) 50 ALD 421 per Merkel J. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. This approach has been adopted in a large number of cases. 9 In the present case, the evidence shows that the last contact between the applicant and the Minister took place on 11 May 2005. On that day, the assistant secretary of the Department for Environment and Heritage wrote to the managing director of the applicant stating, in effect, that the Minister's decision would need to await the receipt of information on the cumulative impact of wind farms. The letter said that the additional information was expected by the end of June 2005. The material before me indicates that that timeframe was far too optimistic. The relevant material was not received by the Minister until some time on or about 22 February 2006. However, the letter did make it clear that the Minister would not be able to make an informed decision on the Bald Hills Wind Farm until he received that information. The letter also said that, in the view of the Department, the statutory time frame for making the decision had been refreshed and had not at that time expired. 10 There is no evidence of later communications between the applicant and the Minister. This has some significance, having regard to Heerey J's decision in 7 Eleven . In that case, Heerey J made an order for costs not simply because of the lengthy delay of over two years in making the decision, but also the fact that the applicant, before commencing proceedings, had given notice of intention to bring the proceedings to the Commission and that two promises by the Commission to make a decision had not been fulfilled. 11 In this case, Ms Nance, counsel for the Minister, accepts that the statutory time limit had expired and that the decision was out of time. However she submits that the applicant was aware that the Minister had deferred a decision awaiting a report which, in the event, was not finalised until February 2006. In all the circumstances, I am not satisfied that this is a case where it can be said that the Minister has acted so unreasonably that I should make an order for costs in favour of the applicant. 12 I appreciate the applicant's point that the Minister's lengthy delay, in disregard of a statutory time limit, led to the institution of proceedings. On the other hand, there was knowledge on the part of the applicant that the Minister was awaiting a report and I consider that there was a significant absence of communication (at least so far as the evidence goes) about the intention to commence the proceedings. I will so order. | costs of application for review under the administrative decisions (judicial review) act 1977 (cth) application related to respondent's failure to make decision under environment protection and biodiversity conservation act 1999 (cth) where decision removed substratum of proceedings and proceedings dismissed relevant principles for award of costs where there has been no substantive hearing on the merits whether parties acted reasonably in commencing and defending proceedings evidence of lack of communication between parties regarding commencement of proceedings no order as to costs administrative law |
There has been no order for general discovery and it was accepted by counsel for the respondents that the criteria set out in the Federal Court Rules Order 15 Rule 2(3) confine the extent of discovery in this matter. 4 The respondents also seek ancillary orders including that the time for filing and serving further written reports of experts and which are the subject of orders by District Registrar Jan dated 8 September 2006 be extended for compliance to 2 March 2007. 5 The action in respect of which the applicants seek various relief against the respondents for alleged contraventions of s 52 of the Trade Practices Act 1974 (Cth) concerns the acquisition by the applicants from the respondents of certain property and interests including a Methanol Plant in Laverton, Victoria. The key component of the Plant which is central to the action is the Advance Gas Heated Reformer ("the AGHR"), and its predecessor component, the Gas Heated Reformer ("the GHR"). It was common ground at the hearing before me that the GHR technology included reactor tubes which had been coated with aluminide whereas the reactor tubes installed in the AGHR were not coated with aluminide. A fundamental complaint of the applicants turns on alleged representations concerning the risk of corrosion to the reactor tubes which formed part of the AGHR. This corrosion is described as 'metal dusting'. It is to protect against metal dusting that aluminide coating is applied to reactor tubes. Certain design limitations had been overcome. The objectives of having a reactor which was easy to maintain with the capacity to be scaled up to large single stream plant had been met. As a consequence there was an increased risk of metal dusting. 11 Damages are sought on the basis that the Methanol Plant and associated Intellectual Property were worth less on the date of purchase than the price paid. Accordingly these reasons concern only Categories 1-3. 20 The respondents submit that the issues of representations, falsity, reasonable grounds and loss revolve closely around the state of the technology and its operation, both before and after the time of sale. The state of technology and its implications it is said will be the focus for the opinion of the respondents' technical expert, as it was for the applicants' experts. [11] (Emphasis added). I refer to this below. The respondents have had that information for more than one year. The prospectus of Coogee Resources Limited said that the technology was "proven" (SLF-11, p 19). [12] (Emphasis added). However they submit that they are under no obligation to discover its analysis of the performance of the Plant and mechanisms to improve the technology or the various changes which have been made or proposed with a view to increasing the performance of the AGHR and or to improve its reliability since June of 2003. They say this is because that process has not been directed to ascertaining whether the problems experienced by the Plant in 1999/2000 were caused by metal dusting which the AGHR was subject to, or, to determining the cause of the metal dusting in the reactor tubes at that time. This work was carried out in co-operation with Johnson Matthey and resulted in a variety of changes to the AGHR either to increase its performance or to improve its reliability. See letter applicants' solicitors to respondents' solicitors dated 23 November 2005 ("SLF-6" to the affidavit of Mr Freire sworn 4 December 2006). It is apparent from that discovery that information relating to the operation of the Plant and the technical aspects of the case have only been provided up until about mid 2003. No discovery regarding the on-going development of the technology in the AGHR or the Plant's operational performance has been given or until recently sought in respect of any period after mid-2003. 28 The first request made by the respondents for further discovery relating to the technology and AGHR was in correspondence from the respondents' solicitors Messrs Blake Dawson Waldron dated 31 October 2006 (annexure "SLF-10" to the affidavit of Mr Freire). It is apparent from the terms of that letter that the request emanated from the consideration of an article contained in the 20 October 2006 edition of the " Australian Financial Review" concerning the proposed float of a company called Coogee Resources (Pty Ltd) and a further letter from their solicitors dated 21 November 2006 (annexure "SLF-13" to the affidavit of Mr Freire, Vol 2) raises for the first time a more detailed request for discovery relating to the current state of the technology and its development and testing, as well as to the inability allegedly on the part of the respondents to properly brief their experts. This was served on 7 September 2006. However it has yet to file and serve its expert report in relation to the technical issues. The respondents assert that their expert requires at least four weeks and more safely six weeks in order to complete his technical expert evidence even if further discovery is not ordered but that such additional time ought run from the date when further discovery as sought is produced for inspection in the event that further discovery is ordered. The applicants do not oppose such an extension of time for compliance in either event. The question is whether further discovery ought be ordered. 30 The respondents submit and it is common ground that the issues in the proceedings are complex. They complain that the applicants' expert reports were delivered 12 months after the original date fixed by order of the Court and 14 months after the orders were made with four extending orders during that period. 31 On the other hand it is the case that the respondents consented to orders dated 5 July 2006 for their experts' reports to be provided by 25 August 2006. The respondents then consented to an order made on 8 September 2006 for the provision by them of their experts' reports (including a report on technical issues) by 30 November 2006. It is also to be remembered that the respondents, by consent order of Lee J dated 4 November 2005 were first ordered to file and serve their expert reports on or before 31 March 2006. The applicants served their technical expert reports on the respondents on 5 August 2005, more than 16 months ago. Mr Freire is a solicitor in the employ of the respondents' solicitors. He deposes to the fact that on 31 October 2006 he arranged for a letter to be sent by facsimile transmission to Williams & Hughes the applicants' solicitors in which was enclosed a copy of a newspaper article referring to the upcoming public float of Coogee Resources Limited on the Australian Stock Exchange (annexure "SLF-10" to the affidavit of Mr Freire). We infer from the reference to the Laverton Methanol Plant in the fifth paragraph of the article that the Plant formed part of the assets the subject of the proposed float. We expect that such documents will be in the possession, custody or power of your clients and/or the officers, employees and/or agents. [Emphasis added). This assumption is incorrect. No interest in the Plant nor any interest in the business conducted by the applicants at the Laverton site has been valued or will be included in the float. Our client has for the past six years, been undertaking significant research development and testing in consultation with ICI/Johnson Matthey in an endeavour to improve the technology, and specifically to overcome the flaws in the technology which existed as at the date of acquisition . The further development of the technology is not a matter which is relevant to the current litigation. ... We have not previously given discovery of the documentation relating to the research and development governing the technology other than those documents which evidence the inquiries made to identify the problem which is existed as at the date of acquisition. There is nothing in the intended float of Coogee Resources which would alter the relevance of that information. (Emphasis added). They are clearly relevant material for the consideration of an expert witness. You say that this called into question not only the technology that was implemented into the AGHR but also the technology in the GHR. The Company is in discussions with Kellog, Brown and Root and Johnson Matthey to undertake a FEED study in 2007 and 2008 to evaluate the viability of applying this proven technology in an offshore environment" (p 19) (our emphasis). The respondents' solicitors then asserted that their clients' ability to properly brief their expert who retained by them in the matter had been prejudiced by the applicants' failure to discover such documents and called on them to remedy those deficiencies by providing a supplementary list on or before 30 November 2006. This is the date by which the respondents had agreed to provide their own expert report relating to the technical issues. 41 I have earlier referred to correspondence from the respondents' solicitors to the applicants' solicitors belatedly seeking further discovery ("SLF-10" and "SLF-12" to the affidavit of Mr Freire). 42 There is no statement in this or any other correspondence from the respondents' solicitors or in any submission made by their counsel at the hearing that such documents had been specifically requested by the respondents' technical expert. Indeed the respondents have known since November 2005 that the aluminide coated tubes inserted by the applicants after the Plant's acquisition had on removal disclosed evidence of metal dusting: see letter from applicants' solicitors to respondents' solicitors dated 23 November 2005 ("SLF-6" to the affidavit of Mr Freire). Despite this the orders for provision of expert reports were made by consent in late November 2005 and most recently in September this year. 43 It can be seen then that the concern of the respondents and their request for further discovery communicated by their solicitors arose as a matter of inference. The inferences drawn by them were refuted by the correspondence from the applicants' solicitors dated 14 November 2006 and to which I have referred. It was not contended by counsel for the respondents at the hearing, nor was their evidence to the effect that what was stated in that letter was incorrect. I accordingly have proceeded for present purposes on the basis that it is correct. It is mere assertion by the respondents as to there being relevant further documents discoverable and said to be necessary for the proper and full instructing by them of their expert in relation to the technical issues. Beyond mere assertion however the respondents provided no other bases to support their request for those additional documents. 44 Their request appears to proceed upon a misapprehension as to the nature of the research and development work carried out by the respondents in consultation with ICI/Johnson Matthey as being relevant to the flaws in relation to the technology acquired. 45 It seems to me that the way in which that additional research and development was described by the applicants' solicitors in its letter dated 14 November 2006 on the second page and to which I have referred was somewhat ambiguous in its reference to the nature of the research and development as being "specifically to overcome the flaws in the technology which existed as at the date of acquisition. Mr Dunne is the General Manager of the Laverton Methanol Plant in question. He is the person who was primarily responsible on the part of the applicants for identifying the documents for discovery in this action. When the Plant was acquired by Coogee in or about May 2000, there was a significant problem with its operation, it was ascertained in or about early 2001 that the AGHR had suffered from metal dusting. During the period from then to in or about early to mid 2003, investigation and conferral with Johnson Matthey, the technology providers, was conducted to endeavour to ascertain the cause of the metal dusting and further the metal dusting issues had caused the performance problems the Plant had been experiencing prior to and as at the date of the sale to Coogee. All of the documentation in Coogee's possession, custody or power relating to these investigations, conferrals and analysis including all information relating to the operation of the Plant has been discovered. Discovery was provided of all of these documents up to and until in or about June 2003. Coogee has continued to operate the Plant since that date and in co-operation with Johnson Matthey has been analysing the performance of the Plant and looking at making improvements to the technology. A variety of changes have been made or proposed with a view to increasing the performance of the AGHR and/or to improve its reliability. This process has not been directed to ascertaining whether the problems experienced by the Plant in 1999/2000 were caused by metal dusting which the AGHR was subject to, or , to determining the cause of the metal dusting in the reaction at that time. These efforts have been directed to developing and improving the technology to the point that now the design of the AGHR is proposed to be changed significantly to a Baffled Gas Heated Reformer or BGHR. Those internals did not have a finned design as previous designs had had and both the catalyst tubes and the sheath tube were a different size changing the velocity of the gas passing through reformer. [9] He further said that those tubes suffered from a design fault which required their removal at which time it was noticed that the tubes had been subject to localised metal dusting. 50 The applicants' case in relation to the risk of metal dusting concerns metal dusting occurring where the reactor tubes were not coated with aluminide. It is no part of the applicants' case that metal dusting occurred or there was a risk of it occurring when the reactor tubes were coated with aluminide. In other words their case concerns the substitution of uncoated for coated reactor tubes when the AGHR technology was introduced and the failure on the part of the applicants to disclose this substitution and its effect on risks of metal dusting occurring. 51 The fact that metal dusting occurred subsequently in coated reactor tubes of a different design is relevant to a proposition that there was a risk of metal dusting occurring in relation to that technology employing coated reactor tubes. That is not however relevant, in my view, to the applicants' case as I have explained. 52 The localised metal dusting on reactor tubes of a different design discovered in 2004 cannot impact upon the central allegations in the case namely whether it was represented that the Plant had operated for a period of five years successfully; that all of the proven attributes of the GHR had been included in the AGHR which was thereby a successful and proven technology, and that there was no significant risk of metal dusting utilising that technology. Neither is it relevant to issues of reliance, causation or damages. 53 As the respondents in paragraph 9 of their outline of submissions contend, and I accept, the asserted connection of the subsequent metal dusting which occurred in or about 2004 and which is referred to in paragraph 11 of the respondents' outline of submissions is not relevant to any issue in the case. Indeed in a letter from the applicants' solicitors to the respondents' solicitors dated 20 December 2005 (annexure "SLF-8" to the affidavit of Mr Freire sworn 4 December 2006) it was made clear (at p 3 of that letter, paragraph 4) that no amendment had been made in relation to that subsequent metal dusting, that it did not form part of the applicants' case and that the respondents ought to prepare their case on the basis of the pleadings as they currently stood. This clear statement was made in response to the respondents' concern contained in a letter from its solicitors to the applicants' solicitors dated 19 December 2005 (annexure "SLF-6" to the affidavit of Mr Freire sworn 4 December 2006) that any claim based on that subsequent metal dusting would "represent a fundamental shift" in the applicants' case and would require an amendment to the applicants' pleading. 54 Again as the applicants point out in their outline of submissions [19] the respondents have not provided any detailed explanation as to why they consider that further discovery is critical to the provision of their expert reports. This is despite a written request from the applicants' solicitors by letter dated 29 November 2006 ("SLF-16" to the affidavit of Mr Freire (Vol 2)). 55 In a further letter from the applicants' solicitors the following day, 30 November 2006, it was reiterated that despite having the applicants' technical expert reports since August 2005 it was only on 21 November 2006 that the respondents suggested through their solicitors that the applicants had failed in their obligation to provide discovery in relation to the current status of the technology or on-going research and development processes. That it was said was notwithstanding that on 23 November 2005 the applicants' solicitors advised the respondents' solicitors of further metal dusting issues which were being incurred by the applicants at the Plant. 56 The letter then put forcibly that if the respondents' experts had required updated information in relation to the technology, it is inconceivable that they would not have requested access to such information for more than 12 months after they were instructed. In my view there is much to be said for that proposition. In any event there has been no reply from the respondents' solicitors to either of those quite reasonable requests in the context of complex litigation and where further discovery were it to have been ordered would have been very extensive (see par 14 affidavit of Mr Dunne sworn 18 December 2006) and with the significant extra costs being incurred. 57 Accordingly I am not satisfied that the documents in Categories 1 and 2 satisfy any of the criteria under the Federal Court Rules Order 15 r 2(3). That is a question of fact which will essentially turn on expert opinion evidence. The technology has undergone significant changes since 2000. 59 As Mr Dunne stated in his affidavit further development had been undertaken with the alternative design to overcome design flaws but it was ultimately superseded by a new baffled design, that is to say technology employing a baffled gas heat reformer which although based on the same principal technology of the original GHR and AGHR utilised a quite different mechanical design. [10] and [12]. He then said that tubes installed in 2001 had been reinstalled and were still in operation and that those tubes had been able to be maintained in operation by the use of TMP (Trimethyl Phosphate) and TEP (Triethyl Phosphate) dosing. This process according to Mr Dunn, was identified in 2002 and discovery of TMP and TEP as a dosing material to restrict metal dusting was the subject of discovery of documents up to and including June 2003. He added, in effect, that it was only the use of TMP and TEP which had enabled the AGHR technology to be used on a sustainable basis. 61 Plainly very significant changes were made to the technology between 2000 and 2006 and that statement in the Prospectus is not, in my opinion, a sufficient evidentiary foundation to sustain the motion, in that respect, for further discovery. It requires in any event to be considered in the light of Mr Dunne's unchallenged evidence as to the significant changes to the technology during the relevant period. 62 Beyond submissions made from the bar table there was no evidence before me whether of an expert nature or otherwise as to the reason why it is contended that the current state of the technology some six years after the acquisition of the Plant by the applicants from the respondents is relevant to any of the matters pleaded concerning the position which was obtained in 2000 or is otherwise relevant or necessary for the preparation of the expert technical report by the respondents' expert. 63 I decline therefore to order further discovery under this category. 64 It follows that the motion under paragraphs 1 and 2 ought be dismissed. I will hear the parties in relation to the ancillary orders sought. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour . | further discovery sufficiency of evidence to ground order relevance to pleaded issues discovery |
The trial judge dismissed the applicant's appeal pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the Administrative Appeals Tribunal (the AAT) dated 21 July 2008. The applicant also seeks an order dispensing with Order 52 r 10(2A)(b) of the Federal Court Rules . Order 52 r 10(2A)(b) requires a notice of motion seeking leave to appeal from an interlocutory judgment of the Court to be filed within seven days after the date on which the judgment was pronounced. Under Order 52 r 10(2A)(b) the applicant's notice of motion for leave should have been filed by 2 October 2008. Nevertheless the Court has power to extend the time for filing as the qualification to Order 52 r 10(2A) discloses (by the qualifying words "...or within such further time as the Court or a Judge may allow"). 2 The procedural background to the application for leave is straightforward. On 21 July 2008 the AAT affirmed the respondent's decision of 8 November 2007 under s 605(1) of the Social Security Act 1991 (Cth) to require the applicant to enter into a Newstart Activity Agreement with MAXnetwork employment. 3 The applicant filed a notice of appeal from the AAT's decision on 14 August 2008. On 23 September 2008 the respondent filed a notice of objection to the competency of the appeal (see Order 52 r 18 of the Federal Court Rules ) on the basis that s 44 of the Administrative Appeals Tribunal Act provides that a party may appeal on a question of law but the applicant's notice of appeal failed to disclose any question of law relevant to the decision from which the appeal was brought. 4 The proceedings had a first directions hearing on 25 September 2008. The trial judge, on 25 September 2008, upheld the respondent's notice of objection to competency and dismissed the applicant's notice of appeal as incompetent. 5 The application for leave assumes that trial judge's decision of 25 September 2008 was interlocutory rather than final with the consequence that leave is required to appeal (see s 24(1A) of the Federal Court of Australia Act 1976 (Cth)). This assumption is consistent with the analysis of authorities in SZGAP v Minister for Immigration & Multicultural & Indigenous Affairs (2005) 227 ALR 683 ; [2005] FCA 1785 to the effect that summary dismissal of an appeal, without any final adjudication on the merits, is an interlocutory rather than a final decision. 6 According to the applicant's affidavit in support of the notice of motion for leave he received a copy of the reasons for decision pronounced on 25 September 2008 on 8 October 2008. This appears to be the applicant's explanation for the reason he ought to be granted the extension of time. The respondent submitted that, as the applicant was present when the trial judge delivered judgment, this explanation is an insufficient basis upon which to grant the extension of time. 7 The likelihood of leave being granted is relevant to the exercise of discretion with respect to the application for an extension of time (see the summary in Moshinsky QC, N (ed), Practice and Procedure High Court and Federal Court of Australia (LexisNexis, subscription service) at [47,055.10]). Accordingly, it is necessary to deal with the substance of the application for leave. The respondent's submissions accepted this proposition. Consistently with it I indicated to the parties at the start of the hearing that I proposed to deal with all aspects of the notice of motion at the same time. 8 The first question on the leave application is whether, in all the circumstances, the decision is attended with sufficient doubt to warrant it being reconsidered by the appellate court. The second is whether substantial injustice would result if leave were refused, supposing the decision to be wrong ( Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397). These questions "bear upon each other, so that the degree of doubt which is sufficient in one case may be different from that required in another. Ultimately, a discretion must be exercised on what may be a fine balancing of considerations" ( Sharp v Deputy Commissioner of Taxation (Cth) (1988) 88 ATC 4 ,184 at 4,186). 9 The trial judge identified the decision in issue at [3] (namely, to require the applicant to enter into a Newstart Activity Agreement with MAXnetwork employment). His Honour also identified the source of power for the making of this decision at [4] (s 605 of the Social Security Act ). At [5] the trial judge recorded the relevant parts of the AAT's decision. (ii) The Respondent fails to satisfy the Social Security Act 1991 (Cth) s 606(4) in its acts and omissions in relation to medical and other information of the Applicant. (iii) The Respondent fails to satisfy the Social Security Act 1991 (Cth) s 606(4) in its acts and omissions in regard to the parties that are to be bound by the Activity Agreement. (iv) The Activity Agreement of the 5/12/2007 was signed under duress and therefore invalid. 10 At [13] the trial judge recorded that he decided to deal with the respondent's notice of objection to competency in circumstances where: - (i) the notice was sent by email to the applicant on 23 September 2008, (ii) the email said that the respondent would seek to have the notice dealt with on 25 September 2008, (iii) the email had not bounced back to the sender, (iv) the applicant is aware that his address for service is not a proper address ( Croker v Sydney Institute of TAFE (State of New South Wales) [2003] FCA 942 at [9] and [25]), (v) the applicant is aware that appeals from the AAT must be on a question of law ( Croker v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 971) , and (vi) the applicant is subject to a number of unsatisfied costs orders. His Honour heard but did not accept the applicant's submissions that he had insufficient time to prepare for the argument about competency of the appeal (on the basis that he had been handed the notice of objection to competency at the directions hearing which was the first directions hearing only). 11 The trial judge held that the questions in the notice of appeal were not questions of law and, in any event, concerned the applicant's eligibility for the disability support pension which was not an issue before the AAT (at [19]). 12 The trial judge rejected the applicant's other submissions including an application for time to file an amended notice of appeal raising two questions of law. First, with respect to the foreshadowed claim that the transcript of the AAT's reasons did not amount to reasons within the meaning of s 43(2) of the Administrative Appeals Tribunal Act , his Honour held that the transcript explained "quite clearly" the AAT's reasons for decision. The consequence was that "no question of law or error of law" could be identified in the AAT's approach. He also noted that the applicant was on notice of the requirements of s 43(2) by reason of the decision in Croker v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 971 and thus could have included that ground in his notice of appeal but had not and had provided no explanation for not doing so (at [22] --- [24]). Secondly, with respect to the foreshadowed claim that the AAT proceeded on a wrong factual basis, the trial judge observed that the AAT "had before it a very narrow question". In consequence his Honour considered that there was "no injustice whatsoever in dismissing the Notice of Appeal as incompetent" and no basis for any remittal of any issue to the AAT which did not have before it for decision any of the matters adverted to by the applicant (such as the terms or suitability of the Newstart Activity Agreement) (at [27]). 13 In his affidavit in support of the application for leave the applicant said he was taken by surprise by and not prepared to defend the notice of objection to competency and had sat exams on 23 and 24 September 2008 at Sydney Institute of Technology. He submitted that the respondent had acted in breach of ss 51(xxiv) and (xxv) of the Commonwealth of Australia Constitution Act 1901 for the peace, order and good government of the Commonwealth with respect to due process and equal protection and the Commonwealth model litigant obligations in the Legal Services Direction 2005 issued pursuant to s 55ZF of the Judiciary Act 1903 (Cth) (citing Re Summers and Secretary, Dept of Family and Community Services [2005] AATA 125). Further, that the decision was biased as: - (i) it was predetermined without considering all of the facts and evidence, (ii) the applicant did not have a reasonable opportunity to prepare a defence to the notice of objection to competency, and (iii) 25 September 2008 was listed as a first directions hearing only. The applicant said he still considered that the AAT's decision was affected by legal error. When asked to identify the error the applicant referred to the giving of the transcript as the written reasons for decision. 14 The respondent submitted that the purported appeal was without merit as the trial judge: - (i) was undoubtedly correct in concluding that the appeal grounds did not raise any question of law, and (ii) gave cogent reasons for dealing with the notice of motion objecting to competency at the first directions hearing rather than adjourning the objection to enable an amended notice of appeal to be filed. 15 I am unable to identify any error in or issue of concern about the trial judge's reasons for dismissing the appeal as incompetent. 16 Insofar as the applicant's claims appeared to be based on the fact that the trial judge dealt with the notice of objection to competency at the first directions hearing (rather than adjourning the objection for hearing at a later time), the background facts recorded by his Honour provide cogent reasons for so doing. The additional submission put on the leave application relating to the applicant having sat exams on 23 and 24 September 2008 does not affect the soundness of his Honour's conclusions. 17 Insofar as the applicant's claims related to the respondent's conduct allegedly breaching model litigant obligations in the Legal Services Direction 2005, the submissions did not identify any basis for so concluding. The respondent was entitled (indeed, bound) to take any objection to competency of the appeal as early as possible in the proceedings. 18 Insofar as the applicant's claims related to alleged bias by reason of pre-determination and the applicant having an inadequate opportunity to present his case, the facts do not support the submission. The test for apprehended bias is settled (namely, whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide: see Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 ; [2000] HCA 63 at [6] ). That the trial judge, having heard the applicant's submissions, decided to deal with the objection to competency rather than adjourning the proceedings and, in so doing, found the appeal to be incompetent does not give rise to any suggestion of pre-judgment in accordance with the settled test. His Honour also, as I have said, gave cogent reasons explaining why he did not accept that there would be any unfairness in dealing with the objection to competency at the first directions hearing. 19 The applicant's concern about the inadequacy of the AAT's written reasons for its decision (referred to in the hearing before me) also cannot be sustained. As the respondent submitted and the trial judge found, the present case is not analogous to the circumstances that concerned Stone J in Croker v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 971. In that case, the applicant's request for written reasons of the oral decision (as contemplated by ss 43(2) and (2A) of the Administrative Appeals Tribunal Act ) was answered by providing the applicant with the transcript of the entire proceedings. Stone J considered this "highly undesirable" (at [5]) on the basis that it did nothing to assist in making the basis for the decision understandable. In the present case the AAT provided a written transcript of the oral reasons given (no different from the practice of many courts when reasons are given orally). The transcript, as the trial judge found, clearly explains the AAT's reasons for decision. 20 The applicant identified no other potential questions of law with respect to the AAT's decision. 21 In these circumstances it is apparent that the decision of the trial judge dismissing the appeal as incompetent is not attended by any real doubt. With respect to the question of potential injustice it is relevant that, as observed by the AAT and the trial judge, the relevant issue with which the AAT could deal was within a very narrow compass. The relevant decision was under s 605(1) of the Social Security Act 1991 (Cth) requiring the applicant to enter into a Newstart Activity Agreement with MAXnetwork employment. The other matters to which the applicant referred before the AAT and the trial judge (such as the terms of the agreement and his entitlement to a disability support pension) were not part of the decision the AAT had before it (for the reasons it identified). Hence, I do not consider that any real injustice would result if leave were refused, supposing the decision of the trial judge to be wrong. 22 For these reasons the applicant should not be granted leave to appeal against the trial judge's decision. The notice of motion for leave to appeal should be dismissed with costs. On pronouncement of the orders today the respondent sought a fixed costs order in the amount of $800.00 based on an affidavit of Ms Watson, solicitor, sworn 23 October 2008. In consequence I had the matter called outside the Court (as the applicant had not appeared). The applicant did not appear in response to the call. On the basis of Ms Watson's affidavit I am satisfied that there should be a fixed costs order in the amount of $800.00. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | application for leave to appeal appeal from administrative appeals tribunal dismissed as incompetent no question of law raised applicant claimed inadequate opportunity to prepare for argument on competency of the appeal trial judge's decision not attended by any real doubt and no substantial injustice to applicant. held : application dismissed. leave |
On that day, his Honour dismissed Mr Rahman's application with costs. On the same day, his Honour delivered his reasons for making those orders. The proceedings before his Honour concerned an application for Austudy payments made by the applicant which was rejected by a delegate of the respondent on the ground that the value of the applicant's net assets exceeded the upper limit for the value of assets allowable under the relevant legislation. The time within which the applicant might have appealed from his Honour's decision expired on 25 November 2008. The applicant did not file any Notice of Appeal by 25 November 2008. On 16 February 2009, the applicant filed an Application for Extension of Time to File and Serve a Notice of Appeal in order to enable him to appeal from the decision of Cowdroy J made on 4 November 2008 ( the present application). That is the application with which I am presently dealing. Par 4 of that Application is in the following terms: (Statement indicating whether the applicant wishes to have application dealt with without an oral hearing. As is clear from par 4 of his Application, the applicant sought an oral hearing of the present application. That hearing took place on Monday last (16 March 2009). At the conclusion of the hearing, I reserved my decision until 9.15 am today. The affidavit sworn by the applicant on 16 February 2009 in support of the present application is expressed in language which is difficult to follow, confusing and somewhat rambling. In some respects, the affidavit contains scandalous material. The contention of the applicant is that, notwithstanding the fact that he was present during the entire hearing which took place on that day and was given every opportunity to present his case, he left the courtroom before his Honour delivered his reasons for judgment but after argument had concluded. The applicant says that he did this because his Honour had informed him that his Honour intended to reserve his decision. The applicant says that he was not made aware of his Honour's decision until some time later. The facts noted in subpars (b) to (g) of [9] above are not disputed for the purposes of the present application. However, the position in respect of the facts referred to in subpar (a) of [9] above is somewhat different. The applicant did not challenge this account of what occurred on 4 November 2008. I accept that account of those events. With the exception of the facts noted in [9] above, the applicant's affidavit contains no explanation for his failure to file a Notice of Appeal by 25 November 2008. His delay in bringing the present application in the period after mid-December 2008 has not really been explained either. I infer that the applicant attempted to take steps to challenge the judgment of Cowdroy J given on 4 November 2008 when he lodged his Notice of Motion with the Registry on 17 December 2008. However, he became distracted from the task of challenging that judgment when he sought judicial review of the Registrar's decision not to accept his Notice of Motion. He did not file the present application until 16 February 2009. Later in these Reasons, I will deal with the draft Notice of Appeal annexed to the applicant's affidavit. As a threshold matter, the applicant submitted that the present application involves a matter arising under the Constitution or involving its interpretation and that therefore notices under s 78B of the Judiciary Act 1903 (Cth) ( the Judiciary Act ) must be given to the Attorney-General of each of the States. The applicant informed me that he had already given such notices and that he was awaiting responses from the Attorneys-General of the States. He then submitted that, because such notices were required to be given, I was not permitted to proceed to hear the present application until all of the State Attorneys-General had responded to the notices served by him or, alternatively, until a reasonable time had elapsed for those Attorneys-General to respond to the notices which he had given. I did not agree with these submissions. I rejected them on Monday last. I will now explain my reasons for that decision. He further submitted that, for this reason, the provisions of s 78B of the Judiciary Act were engaged so that notices under that section were required to be sent to the Attorneys-General of the States. No notice would be required to be sent to the Commonwealth Attorney-General because the Commonwealth was, in effect, a party to the action (see s 78B(3)(b) and Inglis v Commonwealth Trading Bank of Australia [1969] HCA 44 ; (1969) 119 CLR 334). As mentioned in [18] above, the applicant informed me that he had already sent notices pursuant to s 78B of the Judiciary Act to the relevant Attorneys-General. A copy of the form of Notice sent by the applicant appears to have been filed in this Court. The fact that the applicant has already sent a form of notice does not pre-empt proper consideration by me of the question whether s 78B has truly been engaged in the present case. In my view, no constitutional matter is involved in the present case. Section 78B of the Judiciary Act is not engaged. No notices pursuant to that section ought to have been given by the applicant. No such notices are required to be given. At the time that I made the ruling to which I have referred at [19] above, I indicated to the parties that I would publish my reasons for that ruling as part of these Reasons for Judgment. (4) The Attorney-General may authorize the payment by the Commonwealth to a party of an amount in respect of costs arising out of the adjournment of a cause by reason of this section. (5) Nothing in subsection (1) prevents a court from proceeding without delay to hear and determine proceedings, so far as they relate to the grant of urgent relief of an interlocutory nature, where the court thinks it necessary in the interests of justice to do so. This document is difficult to understand. A Full Court, in this context, means a bench comprising three or more judges (s 14 of the Federal Court of Australia Act 1976 (Cth) ( the Federal Court Act )). The present application, in substance, being ancillary to or part of the exercise of the Court's appellate jurisdiction, cannot be heard by a single judge but must be heard by a Full Court. The applicant submitted that, when a Registrar of this Court declined to accept his Notice of Motion lodged with the Registry of the Court on 17 December 2008, that Registrar was impermissibly purporting to exercise the judicial power of the Commonwealth and did so by relying upon Or 46 r 7A. On 13 March 2009, the applicant filed Written Submissions in support of his contention that s 78B of the Judiciary Act was engaged in the present case. In those submissions, the applicant advanced an additional contention that the Social Security Appeals Tribunal and the Administrative Appeals Tribunal " have no authority for judicial reviews " and thus that he had a right to bring and have determined the application which Cowdroy J had dismissed. The applicant further contended that the right which he had to invoke judicial review of the respondent's adverse decision concerning his Austudy claim included an entitlement to have his application heard and determined after a full hearing of his claims. He submitted that his application could not be rejected summarily on discretionary grounds. A summary rejection of his application on discretionary grounds was said to be unconstitutional. I did not detect any additional arguments advanced by the applicant in relation to s 78B during oral submissions. The matter noted at subpar (a) of [27] above is not, in my view, a matter which is covered by s 78B of the Judiciary Act . There is nothing in the Constitution or the Judiciary Act governing the way in which this Court should exercise its appellate jurisdiction. That subject matter is dealt with by Pt III , Div 2 of the Federal Court Act (especially s 24 and s 25). My power to deal with the present application derives from that subsection. The points raised by the applicant involve only the interpretation of the Federal Court Act. He did not argue that s 25(2)(b) of the Federal Court Act was invalid for some constitutional reason. The matter noted at subpar (b) of [27] above does not arise in the present application. At most, the only possible relevance which this matter could have to the present application is in relation to the question of delay and in relation to the applicant's explanation for that delay. The applicant does not challenge the Registrar's decision of 18 December 2008 in these proceedings. He has already done that in separate proceedings and failed. The final matter raised by the applicant which I have noted at [27] above does not involve any relevant constitutional question. Whilst he may have a right to seek judicial review of a decision of the type made by the respondent in the present case, that right does not extend so far as to exclude the exercise of a judicial discretion to decline relief summarily in appropriate circumstances (for example, for the reasons determined by Cowdroy J in the present case). For these reasons, I do not think that the present matter involves a matter arising under the Constitution or involves the interpretation of the Constitution . There was and is no warrant for s 78B notices to be issued. Reasons for that decision were provided by the respondent to the applicant in a letter dated 4 April 2008 sent by the respondent to the applicant. Centrelink had rejected the applicant's claim for Austudy because the total value of his assessed assets exceeded the assets value limit prescribed for Austudy under the relevant legislative provisions. In Rahman [2008] FCA 1634 at [5] , his Honour said: The applicant has provided written submissions to the Court which, together with his application, raise numerous matters. The applicant claims that an ' unlawful act, transgress and abuse of power ' has occurred; that the rules of natural justice have been breached; that the respondent made the decision of 27 March 2008 ' based on forgery and false instruments ' relating to the applicant's financial assets; and that the decision of 27 March 2008 ' involves an error of law and must be void as the determination was affected by into [sic] corroboration of false instruments ' relating to the financial assets of the applicant. The applicant also submits that the respondent's decision constitutes an attempt to disadvantage the applicant's Austudy claim ' by making a statement known to be false or misleading "in a material particular" or made with reckless disregard as to whether it is '. At [11] of his Honour's reasons his Honour held: Under the Social Security (Administration) Act 1999 (Cth) ('the Social Security Act') the applicant has the option of seeking review by an Authorised Review Officer: see ss 129 and 135. If the review proves to be unfavourable to the applicant, he is entitled to appeal to the Social Security Appeals Tribunal: see s 142 of the Social Security Act. From that tribunal the applicant is entitled to seek review in the Administrative Appeals Tribunal: see s 179 of the Social Security Act. After reviewing the authorities of McGowan v Migration Agents Registration Authority [2003] FCA 482 ; (2003) 129 FCR 118 and Transport Workers' Union of New South Wales v Australian Industrial Relations Commission [2008] FCAFC 26 ; (2008) 166 FCR 108 , his Honour declined to entertain the applicant's Application and dismissed it summarily on discretionary grounds. His Honour did so in the exercise of this Court's undoubted discretion to decline to entertain such an application in circumstances where there were ample alternative avenues available to the applicant for a full merits review of the respondent's decision to reject his claim for Austudy and where the applicant had not yet pursued any of those avenues. It contains many irrelevant references and assertions. These are very serious allegations indeed, especially when made (as here) against a sitting judge. In oral submissions made in support of the present application, the applicant gave inconsistent responses to direct questions from me designed to ascertain whether the discrimination allegations referred to in subpar (e) of [41] above and subpar (a) of [42] above would be pressed. In the circumstances, I must assume that those allegations will be pressed if the applicant is successful in the present application. On the material before me, there is no prospect that any of these allegations would be made out at the hearing of any appeal. I will return to these allegations later in these Reasons. Accordingly, the applicant had a right to appeal from that decision provided that he did so within the time limited by the Federal Court Rules for such an appeal. (2) Notwithstanding anything in the preceding subrule, the Court or a Judge for special reasons may at any time give leave to file and serve a notice of appeal. Accordingly, the applicant must satisfy the test for leave to file and serve a Notice of Appeal out of time embodied in O 52 r 15(2) of the Federal Court Rules . That subsection requires that " special reasons " must exist which justify the grant of such leave. In Parker v The Queen [2002] FCAFC 133 , at [6] in the reasons of the Court, a Full Court of this Court said: In the civil jurisdiction, Wilcox J discussed at some length the matters which, in his opinion, were deserving of consideration when considering an application for leave to extend the time within which to file a notice of appeal: see Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 , a decision under the Administrative Decisions (Judicial Review) Act 1977 (Cth). The matters which attracted his Honour's attention were set out at 348-349: applications for an extension of time are not to be granted unless it is proper to do so; the legislated time limits are not to be ignored. The applicant must show an "acceptable explanation for the delay"; it must be "fair and equitable in the circumstances" to extend time; action taken by the applicant, other than by way of making an application for review, is relevant to the consideration of the question whether an acceptable explanation for the delay has been furnished; any prejudice to the respondent in defending the proceedings that is caused by the delay is a material factor militating against the grant of an extension; however, the mere absence of prejudice is not enough to justify the grant of an extension; and the merits of the substantial application are to be taken into account in considering whether an extension of time should be granted. In the same case, their Honours reviewed a number of other authorities which explained the basis upon which the Court will exercise its discretion to extend time for a litigant to appeal from a judgment of a single judge of the Court. Their Honours made clear that the overriding consideration is the interests of justice. The prima facie strength of the proposed appeal needs to be considered. There must also be an acceptable explanation for the delay ( QAAH v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 9 at [7] ). Even where special reasons can be identified, the Court has a discretion to grant or refuse to grant the extension of time sought (per Branson J in Howard v Australian Electoral Commission [2000] FCA 1767 at [7] . The affidavit sworn by him and filed in support of the present application does not address the matters required to be addressed by subrules (3)(c)(i) to (iii) of O 52 r 15. This non-compliance is a matter of substance not merely a matter of form. There are good reasons why the Court needs evidence going to the matters referred to in that subsection. Generally speaking, the Court should insist upon such evidence being tendered at the hearing of applications of this sort. There are suggestions in the affidavit filed by the applicant in support of the present application that, at least from 17 December 2008, he was endeavouring to make an application for leave to file a Notice of Appeal out of time but was having difficulty ascertaining precisely how to do this. It must be remembered that he did not make an appropriate application until the middle of February 2009. The evidence which might support such a conclusion is somewhat scant. In my view, it falls short of what would be required to make good such a contention. As I have already observed there is no explanation or no satisfactory or sufficient explanation for the delay between 25 November 2008 and 14 December 2008. It must also be remembered that the applicant chose to absent himself from Court at 2.15 pm on 4 November 2008 when Cowdroy J delivered his oral judgment. If the applicant had attended Court on that occasion, he would have known then and there that his application had been dismissed by his Honour and would also have been apprised of the reasons given by his Honour for the orders which he then made. The applicant's failure to attend at Court on that occasion contributed to his failure to lodge his Notice of Appeal within time. However, I will assume, for the moment, in favour of the applicant that, at all times since 14 December 2008, he has been genuinely and diligently trying to make application to the Court for leave to file a Notice of Appeal from the judgment of Cowdroy J out of time. He did not, in fact, file the necessary application until 16 February 2009. I will make the assumption to which I have referred in order to give full consideration to the remaining factors referred to in Parker [2002] FCAFC 133 and to the interests of justice in the present case. The delay might not weigh heavily against the applicant in the present case if the applicant were able to persuade me that his appeal had some prospect of success and that, to deny him his right of appeal, would be to cause him serious injustice. For the moment, I will also assume that the delay referred to has been satisfactorily explained or, alternatively, is not of such duration as to weigh heavily in the balance against the grant of the leave sought. I will now consider the strength of the appeal foreshadowed in the draft Notice of Appeal attached to the applicant's affidavit. I have noted at [41], [42] and [46] above the grounds of appeal which I have been able to distil from that draft Notice of Appeal and the additional matters raised by the applicant in oral argument. The first of these grounds involves the contention that his Honour's discretion miscarried when his Honour declined to entertain fully the applicant's application for judicial review. I think that his Honour correctly encapsulated the principles from McGowan [2003] FCA 482 ; 129 FCR 118 and Transport Workers' Union of New South Wales [2008] FCAFC 26 ; 166 FCR 108 and that it was plainly open to his Honour to exercise his discretion in the manner in which he did. Unless it could be established that his Honour applied the wrong principles or invoked the correct principles but applied them in an obviously incorrect way, his Honour's exercise of discretion could not be overturned on appeal. The decision which his Honour made was clearly open to him especially as the gravamen of the applicant's complaint against the respondent concerned the valuation of his assets made by the respondent. This was a matter apt for merits review. His Honour correctly identified the merits review pathways open to the applicant. Further, the approach which his Honour took was advocated to his Honour by the respondent both in the written submissions made on behalf of the respondent to his Honour and in oral submissions made during the hearing which took place before his Honour. Notice of that approach was fairly given to the applicant. For these reasons, in this case, the applicant has failed to demonstrate that he has any prospect of establishing that Cowdroy J committed error of the relevant kind. This ground is hopeless. As to the second ground of appeal (the contention that the decision under review before his Honour had not, in fact, been made by the Secretary of the relevant Department), given the approach which his Honour took to the application before him, his Honour was not called upon to decide this point and did not do so. His Honour was either right or wrong in the approach which he took. At [69] above, I have held that his Honour's decision was based upon a correct appreciation of the relevant principles and would not be disturbed on appeal. A consideration of the point now raised formed no part of his Honour's reasoning. If, contrary to these views, it is necessary to consider this ground of appeal for the purposes of the present application, I will now do so. The relevant decision was made by a delegate of the respondent and not by the respondent personally. As far as I can tell, the applicant tendered no evidence before his Honour that would support a submission that the person who actually made the relevant decision did not have the power to do so. In order for such a contention to have succeeded, the applicant would need to have proven that the relevant decision maker had no authority to make the decision which he or she made. There is no evidence at all to suggest that this was the case. Nor is there any substance in the applicant's contention that the relevant decision had to be made by the respondent personally and, therefore, that the power to make that decision in the present case could not be validly delegated. As to the third ground of appeal (no power in the respondent to investigate the applicant's claim), I do not think that this contention can possibly succeed. Section 192 of the Social Security (Administration) Act 1999 (Cth) gives ample power to the respondent to gather information for the purpose of considering whether a person who has made a claim for a social security payment is or was qualified for the payment. Further, the respondent is required to assess a claim for a social security payment and is not bound to accept such a claim on its face as being valid without investigation. This ground cannot be sustained. As to the fourth ground (the subpoena ground), it is very difficult to understand the applicant's complaint in relation to the subpoena issued by him. The applicant did issue a subpoena to the respondent. Technical objections were taken to it. Nonetheless, at a listing which took place before 4 November 2008, the respondent did his best to produce the documents called for by the subpoena. No further call under the subpoena was made during the hearing before Cowdroy J. No application was made to Cowdroy J in respect of the production provided by the respondent in answer to the subpoena. There is no substance in this ground. As to the final ground of appeal (actual bias), I am not prepared to regard that ground as having any substance whatsoever in the absence of some evidence tending to support the various assertions of bias made by the applicant. The assertions which underpin this broad ground of appeal constitute very serious allegations against a judge of this Court. They must be distinctly made and, even at this early stage, must be demonstrated to have some proper basis both in fact and in law. Such allegations ought not be made in a Notice of Appeal or in a draft Notice of Appeal as bare assertions unsupported by any evidence whatsoever. Reasons for decision reflect conclusions reached at the end of the decision making process, and if the decision is against the party complaining, the expression of adverse findings on credit and fact are an inevitable part of the expression of the reasons. The mere fact of adverse findings at the end of the matter give rise to no inference as to the state of mind of the decision maker before and whilst the matter was under consideration, nor of prejudgment of the issues that fell for decision. Even where it is possible to show that the adverse findings or some of them are contrary to the evidence or unreasonable, or that the reasoning process is hopelessly flawed, that without more is unlikely to demonstrate that the decision maker had embarked on the case with a closed mind, not open to persuasion. However, where the party alleging actual bias can point not only to an adverse judgment containing demonstrable error but also to conduct by the decision maker antithetical to that party's interests such as a hostile attitude throughout the hearing ( Sun Zhan Qui at 135 referring to Gooliah v Minister of Citizenship and Immigration (1967) 63 DLR (2d) 224) , or a failure to enquire into and to obtain readily available and important information relating to central matters for determination ( Sun Zhan Qui , and SBAN v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 591 at [26] - [27]) an inference of actual bias by prejudgment might then be more readily drawn. But even then the circumstances are likely to be rare and exceptional that the combination of factors and circumstances will clearly prove actual bias. I have under consideration the grant of an indulgence to the applicant, ie whether he should be permitted to file a Notice of Appeal out of time. A factor in my consideration of the present application, however, is the strength of the proposed appeal. In my view, in considering that aspect of the matter for the purposes of the present application, if allegations of this nature are to be made, I am entitled and, indeed, obliged, to require much more from the applicant than mere assertions made by him unsupported by any evidentiary material. In an application such as the present application, the Court will require admissible and probative evidence in support of such serious allegations before it will regard those allegations as having any substance at all. The nature and extent of that evidence will depend upon all of the circumstances of the case, including the seriousness of the allegations; the identity of the person against whom they are made; the circumstances in which they are made; and the time at which they are made. There is no evidence before me which would support the allegations of bias sought to be made by the applicant in the present case. In my view, no weight should be given to the bald assertion made by the applicant that his Honour was biased against him. This is particularly so when one of the reasons for this alleged actual bias is said to be racial prejudice. This Court should not permit allegations of that kind to be bandied about unless, even at this early stage, some proper basis for them is established to the satisfaction of the Court. In those circumstances, I do not think that the grounds of appeal foreshadowed in the draft Notice of Appeal have any prospects of success. To allow a Notice of Appeal to be filed in the form of the applicant's draft Notice of Appeal, would be to do no more than to allow unsubstantiated, unsupported and scandalous allegations to be made against a judge of this Court. I am not prepared to give the applicant free rein to conduct litigation in this way. In my view, no " special reasons " exist for the grant of leave sought in this case. The delay in filing the Notice of Appeal has not been satisfactorily explained; the requirements of the Rules of Court have been ignored; and there is no substance in the appeal in any event. The interests of justice are served by refusing the leave sought by the applicant. I propose to dismiss the Application with costs. I make the following orders: Order that the Application be dismissed. Order that the applicant pay the respondent's costs of and incidental to the Application. I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | application for leave to appeal out of time "special reasons" required meaning of "special reasons" (o 52 r 15(2) of federal court rules ) allegations of actual bias against trial judge requirement that there be a proper basis to support such an allegation practice and procedure |
The respondent is part of the IGT Group whose parent company is International Game Technology Inc, a company with headquarters in the United States. The respondent is one of its wholly-owned subsidiaries. 2 On 20 May 2008 the applicant filed an application in the Court claiming compensation and other relief under ss 5 , 6 and 15 of the Disability Discrimination Act 1992 (Cth). There are issues raised in that application in relation to bullying and other treatment alleged by the applicant which did not arise for consideration on the interlocutory application which was argued before me today. That the Court order that the Respondent by its servants or agents or otherwise not take disciplinary action (including, but not limited to, termination of employment) against the applicant for failure to attend the psychiatric assessment mentioned in [paragraph] (1) as specified in clause 5.2 of their letter to the applicant dated 14 May 2008. The Court make an interim order that the Respondent per its servants or agents or otherwise be restrained from disciplining the Applicant for failure to attend for psychiatric and/or psychological assessment. Such further or other order as the Court deems appropriate. 6. Costs. The relevant test, well established by authority, is that I have to determine whether there is a serious question to be tried on the issues raised by the applicant and if I am satisfied that there is such a serious question to be tried then I have to consider the balance of convenience in favour of, or against, the grant of injunctive relief. 5 The circumstances giving rise to the application for interlocutory injunction arise out of a letter sent by the respondent to the applicant on 14 May 2008. The appointment was originally scheduled for 11 December 2007 but you failed to attend. Our concerns remain those that we have addressed in previous correspondence. Bus Fares, Taxi Fares etc). Certificates provided with 'medical condition' are not satisfactory do not assist IGT in complying with its obligations under occupational health and safety laws and its duty of care at common law. The medical certificate must include a statement as to the specific reason(s) why you will be unfit for work during the period covered by the certificate and provide specific details of the illness, injury or condition. Any certificate provided by you which does not include this information will be deemed unsatisfactory. Should there be any shortfall or medical certificates which do not address our direction then this will be processed as 'leave without pay' or 'leave without pay --- without valid reason' respectively. We hope that this will not continue, but please note that we reserve our position in relation to those earlier breaches of your employment contract. You should be aware that this could include termination of your employment. The applicant has sworn an affidavit in which he contends that over the past twelve months he has had increasing levels of difficulty with the respondent and that he believes that the respondent's treatment of him constitutes discrimination as "it is clear that the respondent's conduct has been by reason of my need to take time off due to my back problems. " Some of the propositions advanced by the applicant are contested by the respondent. 7 The background to the applicant's complaint is as follows. The applicant has had a history of back pain resulting in surgery and migraine headaches which date back to before his employment commenced with the respondent. In March 2003, he had two discs removed from his neck which the surgeon did not relate to his previous back surgery. In 2004, the applicant underwent open heart surgery to resolve a condition of cardiopulmonary fistula which was apparently congenital. Both procedures required him to take time away from work. At the beginning of 2006, the applicant began to experience further degenerative back symptoms much like those he had experienced prior to his employment with the respondent. These symptoms required him to take further time away from work over the subsequent two years for treatment, including periods of hospitalisation. 8 Between March 2001 and May 2008, the applicant has been away from work on a number of occasions. Some of those occasions related to personal leave which were either sick leave or carer's leave. Some of that leave was compassionate leave, some was leave without pay, some was unspecified leave. There was also special leave and there were a number of occasions when the sick leave which was taken by the applicant was amended to, and taken as, annual leave or leave without pay because of a lack of accrued sick leave entitlement available. 9 Ms Baldo has sworn an affidavit in which she sets out in some detail the periods of leave which the applicant has taken. A number of those periods of leave have been leave without pay. Not all of them are relevant to the proceeding before me for interlocutory relief, but I will refer to such as are particularly relevant in due course. 10 In May 2007, Ms Baldo was made aware of the applicant's absences from work which were considered to be excessive. Ms Baldo became aware that the applicant had had a history of absences due to various medical and personal issues and she noted that the applicant had, on some occasions, used his annual leave accruals and leave without pay for periods of illness due to insufficient balances of accrued personal or sick leave. Ms Baldo was concerned about the absences of the applicant from work. Over the ensuing period after May 2007, Ms Baldo received information about the applicant's condition which was contradictory. During the same period the applicant took amounts of leave, some of which were without pay, which were considered by the respondent to be excessive and some of which were unexplained. I will come to these in due course. 11 On 17 September 2007, the applicant had a meeting with Ms Baldo and Mr David Slattery, his supervisor or line manager. The applicant says that this meeting was very hostile to him. Ms Baldo denies that the meeting was hostile. Whether the meeting was hostile or not is not relevant for present purposes; what is relevant is a number of the matters which were raised and discussed in the meeting. " Discuss request to obtain detailed medical report. Discuss ongoing issue of leave usage. She said that she would write to the applicant after the meeting to confirm the details requested. According to the file note, the applicant agreed at the meeting to work with the respondent to obtain and provide this information. ... Those conditions are not presently relevant. 16 On 9 October 2007, Ms Baldo sent a letter to the applicant headed "Medical Clarification". IGT will ordinarily approach the employee to discuss the injury/illness and concerns about capacity. The employee may be invited to provide information about their capacity and matters that impact upon capacity (including medical information). A report from your treating practitioner is not mandatory but in our view will assist. IGT may refer the employee to an independent medical practitioner who is not an employee of IGT and is not part of an ongoing relationship with IGT. In addition, if you also choose to obtain a medical report from your treating practitioner/s, then IGT will cover the reasonable costs of your treating practitioner/s for producing such a report. I acknowledge the meeting that I was called in to with you and David Slattery but given the content of your follow up letter I do not believe you took on board what I said. I pointed out to both you and David (facts that David already knew), that my current health issues, as referred to by you, and David, were largely resolved. All of the effort and expense I went to resolve this problem (of which David was kept completely up to date) appear to have come to fruition and I am now enjoying robust health and have been able to return happily and successfully to my work. On the same day, he had a meeting with Mr John Duffy, the General Manger (Product Development & Compliance) of the respondent. In the course of that meeting, according to a minute of the meeting prepared by the respondent, the applicant referred to medication he was taking. Requires 5 times over two years but for obvious reason cancelled latest appointment. Hospital treatment is IV. Once disconnected any effects dispate [sic] within half an hour, side effect is a severe headache for one day afterward and then completely normal. Couple more of this treatment is required. His health matters were discussed. The matters set out in the minute appear to be inconsistent with his statement on 19 October 2007 that he was in "robust health". 21 On 8 November 2007, Ms Baldo wrote again to the applicant in similar terms to her letter of 9 October 2007. IGTs concerns are not unfounded, and I note that, at the Meeting on 31 October 2007, you stated that: (a) You have a 'slightly prolapsed disk which triggers pain'. (b) You take 'Anti-epileptic medication for neurogenic pain'. (e) You undertake exercises at home. This year so far, your total leave has been in excess of 50 days (or 10 weeks). ... Moving forward and for the foreseeable future, IGT is seeking specific details for future occurrences of leave where possible prior to it occurring especially in a case of annual leave. Additionally, as IGT are on notice of your ailment/s and medication, we will require a medical certificate to accompany each application of leave relating to illness or injury and these certificates are to provide specific details of your ailment/s. Certificates provided with 'medical condition' are not satisfactory do not assist IGT in complying with its obligations under occupational health and safety laws and its duty of care at common law. Dr Schutz sent a report to the respondent's solicitors on 22 November 2007 in which he set out the history that he had obtained from the applicant. Following the treatment to that point Dr McCarthy considered he would 'be right by September 2007' and according to Mr Thompson that has been the case. Mr Thompson did have an appointment to see Dr McCarthy in September 2007 but that appointment was cancelled. Mr Thompson made reference to this being in some way determined by 'how I was being treated ...(at IGT)' as his reason for cancelling that appointment. Apparently it was planned that he have several more Ketamine or similar injections but this was not necessary because he recovered and he stated his result as being 'stunning' and he believes he is practically normal to all intents and purposes. ... Having had 35 days off work for reasons of his low back in 2007 he believes he has now concluded his course of medical treatment. He is cautious about lifting. He has bought himself an ergonomic chair which he finds very comfortable and supporting. On the current findings and on the history given of improvements/practical recovery from the back pain commencing in mid 2006, and the treated and resolved neck and cardiac conditions, it is considered he has recovered and is fit to perform the full range of duties. In a medical report, commissioned by the Respondent, Dr Schutz states that further appointments with Dr McCarthy were indicated for management. Dr Schutz uses terms like 'near normal' but does not state cured. I have never claimed that my condition was anything other than ongoing. What I have said is that there are times of near normality and that with the Respondent's support I definitely have the ability to perform the inherent requirements of my job. It is sufficient for present purposes that there is an issue about the state of the applicant's health and his absences for work. 25 On 30 November 2007, the respondent's solicitors confirmed to the applicant's solicitors the appointment with the psychiatrist on 11 December 2007. On 6 December 2007, the applicant's solicitors said the applicant would not be attending the appointment on 11 December 2007 and that intimation was repeated on 10 December 2007. In the meantime, on 5 December 2007, the applicant took leave without pay for what were said to be "medical reasons". The respondent was not given any details of what the medical reasons were and the certificate which was supplied to the respondent simply stated: "Medical condition. " Subsequently, the respondent deducted money from the applicant's pay in respect of his absence that day. We note that the Report states that your recent extensive absences from work are attributable to receiving treatment for low back symptoms which presented in about mid 2006. In this regard, our records indicate that you have been absent from work during 2007 as follows: • Paid personal leave: 5 days • Unpaid leave: 39 days. We are pleased to note that Dr Schutz has indicated that your treatment has progressed well and that your condition is recovered satisfactorily. In particular, we note that Dr Schutz has stated that you are currently fit to perform the full range of your duties as a Computer Animator. ... I refer to the medical certificate you have provided, dated 5 December 2007, which states you are suffering from a 'medical condition' when you failed to attend for work on 5 December 2007. Certificates provided with 'medical condition' are not satisfactory and do not assist IGT in complying with its obligations under occupational health and safety laws and its duty of care at common law. IGT requires you to provide a medical certificate that complies with the above by 12noon on Thursday 20 December 2007 otherwise, IGT will consider you were absent without a valid reason and you will not be paid for that day. 27 On 18 December 2007, the respondent's solicitors wrote to the applicant's solicitors. Dr Schutz's report dated 22 November 2007 indicates that Mr Thompson is physically fit to perform his duties. Despite this assessment, your client was absent on 5 December 2007 citing a 'medical condition'. In these circumstances, it is entirely appropriate that our client request a medical certificate which indicates the nature of Mr Thompson's 'medical condition' and how it is referable to his duties. Given privacy considerations, the certificate does not have to disclose personal information but should assist our client to understand why Mr Thompson is medically unfit to perform his normal duties or other modified duties. No medical evidence was provided and subsequently pay was deducted. 29 On 25 January 2008 the applicant took leave without pay. No medical evidence was provided and pay was subsequently deducted. 30 On 29 January 2008 the applicant sent an email to Mr Slattery saying that he required treatment for seven to ten days. It had been my intent to delay treatment, until Easter, so that IGT was minimally disturbed however it would appear it is both my and IGTs best interest to proceed sooner rather than later. As discussed with John Duffy previously, this may require a period of between to [sic] 7-10 days, away from work, to undertake the surgical and/or medical treatment required. 32 On 7 February 2008 Ms Baldo again sought clarification as to why leave was sought from 7 to 15 February 2008, but that clarification was not given. Between 7 and 15 February 2008 the applicant took leave without pay and he gave no reason why he was taking that leave. 33 On 29 February 2008 the applicant took leave without pay and again no reason was given for the taking of that leave. 34 On 18 March 2008 the applicant took leave but gave medical reasons and provided a sufficient medical certificate to the respondent as to why the leave was being taken. In substance, the reason for the leave was "severe back pain. " This was in contrast to the five earlier occasions, and two subsequent occasions, when the applicant took leave without pay but gave no medical reason for the taking of the leave. 35 On 9 April 2008 the applicant took leave without pay and again no medical reason was given. On 5 and 6 May 2008 the applicant took leave without pay and no medical reason was given. 36 On 14 May 2008 Ms Baldo wrote to the applicant requiring him to attend an appointment with Dr Lester Walton, a psychiatrist, on 17 June 2008. That letter is set out in par [5] above. 37 The applicant objects to seeing the psychiatrist. He says he can see no reason for it. The scope of the psychiatrist's assessment falls far beyond what is relevant to my condition, which is entirely physical in nature. I believe that I have been discriminated against by the Respondent through such requirements having been made of me. ... No other employee of the Respondent, to my knowledge, has been required to have a psychiatric assessment. Since my condition is a purely physical one, such a requirement is clearly unnecessary differential treatment. Whether it is appropriate or necessary for him to have a psychiatric assessment or to have a meeting with a psychiatrist is a matter ultimately for the doctors to determine, but having regard to his history and the matters to which I have referred, I do not consider that it is unreasonable that there be such a request made by the respondent. 39 On the material before me there are inconsistencies in the statements made to, and received by, the respondent as to the applicant's state of health. There is a considerable history of absences from work. More recently, between 5 December 2007 and 6 May 2008 absences have occurred which have been unexplained. The respondent has only been told by, or on behalf of, the applicant that he is away due to a "medical condition". The applicant could quite easily have responded to Ms Baldo and said something along the lines, if it be the fact, "I am absent because of my back condition", but he said nothing on those occasions. That is to be contrasted with what the respondent was told by, or on behalf of, the applicant on 18 March 2008 that he took leave because of severe back pain. 40 Having regard to all the matters to which I have referred, I am satisfied that the respondent is entitled to be concerned about the reasons for the unexplained medical absences of the applicant and the inconsistencies in the information that it has received in relation to his health to which I have already referred. I observe in relation to this last submission that the applicant did not say that this was the reason for his absences on and after 5 December 2007, save for his absence on 18 March 2008. 42 The applicant submitted further that the time he has taken off since 5 December 2007 is consistent with the reason being that it relates to his back injury. The difficulty with that submission is that the applicant has not said so, nor has he supplied medical certificates to that effect. So it does not follow that I should conclude that the time taken off since 5 December 2007 is consistent with the reason being for his back injury. 43 The applicant also submitted that the request for the psychiatric examination is not rationally connected to the history of his back injury. As I noted earlier, that is not a matter in respect of which he is necessarily competent to judge. Certainly, having regard to the history to which I have referred, it is not an unreasonable request by the respondent. 45 The respondent submitted further that there was no discrimination in relation to what it called the causation issue and the comparator issue. This terminology picks up what the High Court identified as two of the the three issues involved in determining whether there has been a contravention of the Disability Discrimination Act in Purvis v State of New South Wales (Department of Education and Training) [2003] HCA 62 ; (2003) 217 CLR 92 at 152, and in particular, [194]. The answer to that question depends upon the entitlement of the respondent to require the applicant to undergo an examination by a psychiatrist. 48 The following principles are well established. An employer may give an employee a lawful and reasonable direction, and it is the common law obligation of an employee to obey the lawful and reasonable commands or directions of the employer. ... In other words the lawful commands of an employer which an employee must obey are those which fall within the scope of the contract of services and are reasonable. The need for some such limitation is patent: employment does not entail the total subordination of an employee's autonomy to the commands of the employer. The servant does not commit a breach of duty if he refuse[s] to attend a particular church, or to wear a certain maker's singlets. The common law right of an employee is a right to wear what he chooses, to act as he chooses, in matters not affecting his work. These need not be laboured here although they are of no little significance in the resolution of this case. In Victoria, duties are cast upon employers by the Occupational Health and Safety Act 2004 (Vic). The importance of occupational health and safety is also reflected in the Act. Whilst an AWA, in general, prevails over conditions of employment specified in State laws to the extent of any inconsistency, provisions which relate to certain matters, such as occupational health and safety, operate subject to any relevant State law (see s 170VR(2) of the Act). It is in my opinion, essential for compliance with the above duties, that an employer be able, where necessary, to require an employee to furnish particulars and/or medical evidence affirming the employee's continuing fitness to undertake duties. Likewise, an employer should, where there is a genuine indication of a need for it, also be able to require an employee, on reasonable terms, to attend a medical examination to confirm his or her fitness. This is likely to be particularly pertinent in dangerous work environments. Abattoirs entail obvious risks, among other things, of injuries from the repetitive use of knives at speed, and to the spinal column from the necessity to twist, bend and/or lift. The question whether it is reasonable for an employer to request an employee to attend a medical examination will always be a question of fact as will the question of what are reasonable terms for the undertaking of the medical examination. The matters will generally require a sensitive approach including, as far as possible, respect for privacy. Nevertheless, I assume that there now should be implied by law into contracts of employment terms such as those set out in the first two sentences of the preceding paragraph, on the basis that such terms pass the test of 'necessity' accepted by McHugh and Gummow JJ in Byrne v Australian Airlines Ltd [1995] HCA 24 ; (1995) 185 CLR 410 at 450. 51 As I have already noted, an employer has an obligation under the Occupational Health and Safety Act 2004 (Vic) to provide a safe place of work. In carrying out and discharging that obligation, an employer may, from time to time, need to assess and determine whether an employee suffers from a disability that might affect his work. The employer might need to have regard to the nature and consequences of the employee's disability in relation to the workplace in which the employee works. 52 As I noted earlier, s 15(4)(a) of the Disability and Discrimination Act does not render a dismissal unlawful where the disability prevents the employee from carrying out inherent requirements of his or her work. It is because of those matters that it is appropriate that an employer be able to obtain medical information about an employee that might be relevant to the performance of his or her work. It follows, in my view, that there are circumstances in which a requirement to provide medical information to one's employer, provided it is made on reasonable terms and is shown to be reasonably necessary, does not constitute a detriment in employment but is, as Madgwick J observed, a necessary part or an incident of the employment. 53 I consider such circumstances to be present here, where there is a history of absences due to a medical condition, where there are inconsistencies in the information available to the employer in relation to the state of the employee's health, and where there are a number of absences for which no details or reasons have been given. In this respect, I refer again to the absences that occurred on and between 5 December 2007 and 6 May 2008. 54 In my opinion, it was reasonable, and probably necessary, for the respondent in this case to find out more about the applicant's condition, which included the obtaining of a report from a psychiatrist, especially having regard to the unexplained absences. 55 I am satisfied that there is no serious issue to be tried as to whether the respondent has subjected the applicant to a detriment within the meaning of that expression in s 15(2) of the Disability Discrimination Act . 56 Even if there was a serious issue that the respondent has subjected the applicant to a detriment, it is necessary also for the applicant to establish that there is a serious issue to be tried as to whether the requirement of the employer entails discrimination on the ground of the disability. In this respect, I refer to s 5(1) of the Disability Discrimination Act , which requires there to be established that the applicant has been treated less favourably than the employer would treat a person without the disability. This raises what I called earlier the causation issue and the comparator issue. 57 The material before me shows that the requirement to attend the two medical examinations, with a general surgeon and a psychiatrist, was not made because of a disability, which I take to be the back injury which the applicant had sustained, but rather, for other reasons: first, to find an explanation for the continued absences, particularly those which had occurred without reasons being given; secondly, to enable the respondent to comply with its occupational health and safety obligations and duties; and thirdly, to find out about the extent to which the applicant can perform inherent requirements of his work. 58 This is made clear, in my view, from the letters Ms Baldo sent to the applicant setting up the various medical appointments. I refer in particular to the meeting held on 17 September 2007. As I noted earlier, even if that meeting was hostile, such hostility as existed does not detract from the issues which had been raised. The reasons to which I have referred for the requirement for the applicant to attend the medical examinations was also made clear in the letters of 25 September 2007, 9 October 2007,and 8 November 2007, as well as the meeting on 31 October 2007. In relation to the requirement for the applicant to have the psychiatric assessment, it is also relevant to take into account the examination by Dr Schutz on 13 November 2007 and the matters dealt with in his report. 59 I am satisfied that there is no serious issue to be tried as to whether the respondent has discriminated against the applicant on the ground of his disability. 60 With respect to the comparator issue, the applicant also must show that there has been differential treatment meted out to him --- that is, differential from the treatment that would be otherwise meted out to a person in similar circumstances but without being burdened by the same or any disability. In this particular case, the person with whom the applicant is to be compared would be an employee who had taken a large amount of leave, including a large amount of unexplained and periodic leave. I consider that in those circumstances it is clear that, having regard to the leave to which I have referred, the respondent would still have required an employee without any disability to provide a particular explanation and to provide evidence which excluded a medical condition. Accordingly, I am satisfied there is no serious issue to be tried as to whether the applicant has been shown, or has been subjected to, differential treatment within the terms of s 5 of the Disability Discrimination Act . 61 It follows that the applicant does not satisfy the first requirement in seeking to obtain an interlocutory injunction; that is, that there is a serious issue to be tried in the material respects to which I have referred. On that basis, there is no need to address the balance of convenience because that issue only arises in circumstances where the court is satisfied there is a serious issue to be tried. 62 For all of these reasons, the application for interlocutory relief will be refused and dismissed. 63 The respondent seeks an order that the applicant pay its costs of the application for interlocutory relief. A distinction needs to be drawn between cases where an application for interlocutory relief succeeds and cases where an application for interlocutory relief is refused and dismissed on the application of the principles applicable to the grant or refusal of interlocutory relief. If the interlocutory relief is granted all the Court has determined is that there is a serious question to be tried in respect of the particular relevant matter. In those circumstances the ultimate merits remain to be determined at final trial on examination of all the facts. In those circumstances the usual order in relation to the costs of the successful application for interlocutory relief is that the costs either be costs in the cause or that the costs be reserved. 64 Where an application for interlocutory relief is refused and dismissed, different considerations apply, particularly where the application is dismissed having regard to the discrete set of principles applicable to applications for interlocutory relief. That is the general two-barrel test; whether there is a serious issue to be tried in relation to relevant matters and, if so, whether the balance of convenience is in favour or against the grant of interlocutory relief. 65 Once the matter is determined adversely to the applicant in relation to those principles, the principles which inform the decision of the court do not arise again in the subsequent final hearing; the interlocutory stage of the proceeding is concluded. In those circumstances I consider it is appropriate that the applicant pay the respondent's costs of and incidental to the application for interlocutory relief and I so order. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | allegations by employee of discrimination arising out of employee's medical disability relating to back condition and employer's response thereto whether direction of employer to employee to undergo medical examination constitutes a detriment within the meaning of s 15(2)(d) of the disability discrimination act 1992 (cth) causation issue circumstances to be considered in determining whether employer's direction to attend medical examination is made because of disability comparator issue whether the relevant comparator to use in determining whether differential treatment has been meted out to an employee whether requirement to provide medical information to one's employer that might be relevant to the performance of one's work is a necessary or incident part of the employment relationship whether a direction to provide such information by submitting to psychiatric assessment is lawful and reasonable where employee has a history of unexplained absences and there are inconsistencies in the information available in relation to the state of the employee's health costs whether a costs order should be made where an application for interlocutory relief is dismissed pursuant to the generally applicable principles governing the grant or refusal of such relief whether a costs order should be made where an application for interlocutory relief succeeds discrimination law industrial relations preliminary injunctions |
2 The appeal was heard on Tuesday morning at 10.15am and in light of some of the submissions that were put to me by the appellant, I further considered the issues raised by the appeal against the background of the Appeal Book and the appellant's claim of a continuing apprehension of real and serious harm should he return to Bangladesh. Having considered those matters in some detail, I propose to express these observations about the matter. 3 This is an appeal from orders and a judgment in support of those orders made by Nicholls FM on 6 December 2007 dismissing an application for orders for review and the issue of constitutional writs concerning a decision of the Refugee Review Tribunal ("the Tribunal"), which affirmed a decision of the Delegate of the first respondent to refuse the appellant a Protection Visa under the provisions of the Migration Act 1958 (Cth). 4 The grounds of appeal recited in the notice of appeal filed on 24 December 2007 at AB30 and AB31 are the same grounds relied upon by the appellant in his amended application for relief before the Federal Magistrates Court of Australia, at AB9 and AB10. There seems to be an increasing practice on the part of those assisting otherwise unrepresented appellants in appeals to the Federal Court of Australia under ss 24 and 25 of the Federal Court of Australia Act 1976 (Cth), from decisions of the Federal Magistrates Court in the disposition of applications challenging decisions of the Tribunal, to invite the Federal Court to consider whether the Tribunal fell into error on one ground or another thus giving rise to a jurisdictional error, rather than whether the Federal Magistrate erred either in terms of the process of reasoning applied, the analysis of the applicable law or for some other identified error. 5 The practice seems to be to simply contend that the Federal Magistrate fell into error by failing to find the contended error on the part of the Tribunal. No attempt is made to isolate the particular error on the part of the Federal Magistrate. So it is in this case that the grounds of appeal before this Court are precisely those grounds of review before the Federal Magistrates Court, except to say one thing. The appellant has, in support of the grounds of appeal to this Court, provided written submissions which, plainly enough, have been prepared on his behalf by a third party and although those written submissions speak to the grounds of appeal as such, the submissions also add a further matter, namely, that the Tribunal made its comments in bad faith. 6 No particulars of bad faith are advanced and nor is there any argument addressed on the question of bad faith. Therefore, the grounds are, in truth, those precisely raised before the Federal Magistrates Court. Nevertheless, since the appellant is self represented and the ultimate question for this Court in considering an appeal is whether the interests of justice are served by discerning whether there is, in fact, an error, whether or not the self represented litigant is able to articulate that error, or identify it in writing, what I propose to do is examine the grounds of contended error on the part of the Tribunal as a surrogate for the appellate grounds before this Court. I do that because really the whole appeal proceeds on the footing that the Federal Magistrate erred by failing to identify the contended errors of the Tribunal. 7 The background facts are set out at AB53, AB54, AB55, and AB56 and it is not necessary in these reasons to recite aspects of those background facts. They will become apparent in dealing with some aspects of concern to the Tribunal. For present purposes, it is sufficient to note that at AB54, AB55 and AB56 in response to questions 41, 42, 43, and 44, the appellant concluded his answers in handwriting setting out his concerns of a well-founded fear of persecution and background facts supporting that well-founded fear of persecution with the observation, "I will provide details later. " That matter became a question of some contention because the Tribunal in analysing the factual matrix before it extensively referred to inconsistencies between the contentions and factual matters advanced in the original application at AB53 to particularly AB56, and oral evidence given by the appellant at the Tribunal. 8 The contention advanced by the appellant is that these inconsistencies between the original application and the appellant's oral evidence are not well placed and are overstated because there was a written statement which the appellant said was sent to the Tribunal but was not received by it. I will turn to that in a moment. 9 The application for a Protection Visa was made 26 October 2005 and the Delegate of the first respondent on 12 December 2005 wrote to the appellant advising that the application had been refused. At AB79 the decision maker set out a short summary of the factual claims based on the material contained in the handwritten application document. On 8 February 2006 the appellant wrote to the Tribunal enclosing a range of documents to be considered by the Tribunal in support of the application for review, before the Tribunal, of the Delegate's decision. 10 The Tribunal on 13 January 2006, by its letter to the appellant, had advised that a hearing would be conducted on 13 February 2006 in connection with the review. The letter to the Tribunal of 8 February enclosed a statement dated 6 December 2005, which is the statement the appellant contended was sent to the Delegate of the first respondent. That statement contains a number of matters which I will briefly mention. 11 The appellant said that he was born on 12 February 1979 in Mirpur Dhaka, Bangladesh and was involved with student politics of the Awarmi League when a student at the Dhaka College at the National University of Bangladesh. The appellant said that after finishing student life in 1999, he continued to associate with the Awarmi Juboo League and was decorated as a Vice-President of the Mirpur Thana Juboo League until he fled from Bangladesh. The appellant says he commenced a business in May 1999 operating a general store at Mirpur in Dhaka. 12 In the statement, the appellant said that on 25 September 2001, in the evening, six young men came to his shop. They were said to be followers of a man called Mr Shahadat and they demanded money from him and generally intimidated him. He says in his statement that on 5 October, Mr Shahadat's men attacked him in front of his shop, and put a revolver and a sharp knife to his head and generally intimidated and harassed him. They apparently blindfolded him and took him to an unknown area where, subsequently, demands were made upon his father for money. 13 Money was paid and the appellant was released. In order to continue to operate his store, he was required to pay money to these men, especially in the period after 2001. The appellant said that he tried to organise opposition by other shopkeepers to this conduct. He says that from 15 October 2002, Mr Shahadat ordered the appellant to stop future protests, otherwise things might happen. In particular, he might be shot. He says that on 29 October 2002, he was attacked when leaving a rally. In the statement, the appellant goes on to speak about threats against him and he says that he sought assistance from the Mirpur Awarmi League and Juboo League committees of the Awarmi League. 14 More particularly and more relevant in the present circumstance, the statement goes on to contain some assertions that by reason of these events, the appellant chose to close down his general store on 12 June 2004, the day when BNP leader Kamarul Hasan, Biplob was killed by unidentified terrorists. He says that after the killing of Biplob, Juboo Daal terrorists physically harassed his brother - that is, the appellant's brother - and family members. Members of Biplob family believed that the appellant had been involved in the killing of Biplob. The appellant's home was ransacked and vandalised. 15 The appellant also says that he was an executive member of the Bangladesh Chemical and Perfumery Merchant Association; that in March 2005 he was requested to join World Expo 2005 as a shop operation director in the Bangladesh Pavilion and he did so. He also said in his statement that he was secretary of the Social Welfare Development Committee of F Block in Mirpur. He says that when he was in Japan Shahadat's group killed identified people, including the Vice-President of F Block Social Welfare and Development Committee. The appellant identifies other persons who were killed and harassed and mentions a Mr Uddin, who died on 29 December 2005. 16 That statement goes on to talk about members of the appellant's family advising him of these killings and the appellant's fear of Shahadat's men. 17 I mention those matters in some detail because they go to questions which the appellant challenges in this court, in the way I have described, concerning the failure on the part of the Tribunal to properly deal with and analyse his claims and, in particular, the notion that matters which are said to be inconsistencies are, in fact, contained in the written statement and therefore a comparison between the oral evidence before the Tribunal and the original statement in handwriting seems to misconceive the proper analysis of the factual contentions. 18 As I mentioned, the appellant attended a hearing and gave oral evidence and arising out of the Tribunal's assessment of the oral evidence and the documents before it, the Tribunal sent a letter to the appellant pursuant to s 424A of the Migration Act . That letter raised a series of concerns arising out of perceived inconsistencies between the original application lodged by the appellant and the appellant's oral evidence. Although some of the matters identified by the Tribunal were dealt with in the written statement, some were not. In other words, there were matters which remain matters of inconsistency even if one accepts that the appellant had raised particular matters in the written statement which he claims he sent to the first respondent's Delegate, but which went astray. 19 I will not recite each of the inconsistencies in these reasons, except to mention the central ones. 20 The first was that in the original application the appellant said that he had been approached on 25 September 2001 by Shahadat members and had been kidnapped by them on that same day, yet he later said that he had been kidnapped on 5 October 2001. The Tribunal was concerned that the date of 5 October, of course, post-dated the election date of 1 October 2001, when the political opponents of the appellant had then come to power. The second matter concerned a contention as to the status and position of Mr Shahadat and the Tribunal pointed out that Mr Shahadat did not seem to occupy the position the appellant had contended for. 21 The third matter was that in the original application the appellant said he had not lived in Dhaka City, that is, in Mirpur in Dhaka City, since October 2002, and that he moved around very considerably in November 2002 to July 2003, again in August 2003 to May 2004, and again in June 2004 to December 2004, and further in the period January 2005 until March 2005. The Tribunal was concerned, however, that the appellant had been able to start a new business in Mirpur in October 2002, and in October 2003, and he had been able, on his evidence to engage in activities as Vice-President of the Mirpur Thana Juboo League in October 2002 and thereafter. 22 The next matter going to credit, involved aspects of the contention that from October 2002 the appellant was the Vice-President of the Mirpur Thana Juboo League and also formed a committee to do social work for the F Block Anti-terrorism and Social Welfare Committee. There seemed to the Tribunal to be contradictions between the oral and written evidence of the agreement. The Tribunal sought clarification on all these matters, as to credibility. The Tribunal in its letter made mention of its concern that in the original application, the appellant had said he would try to obtain documents to demonstrate that he had been harassed with a forgery case by the ruling party but had made no mention of a claim subsequently made that he had been falsely charged with the murder of Biplob on 12 June 2004. The failure to make mention of that matter seemed to be a matter of great concern to the Tribunal. The Tribunal further raised questions about the appellant's participation in the Welfare Development Committee I have mentioned and a number of other matters concerning documents and particularly press reports lodged by the appellant with the Tribunal. 23 Finally, the Tribunal in its letter noted inconsistencies in relation to the contention that the appellant was sought for the murder of Biplob in June 2004, yet the appellant was able to remain in Bangladesh until March 2005 and then seemingly without restriction go to Japan for participation in Bangladesh's pavilion at World Expo in 2005. That seemed to be something which cast doubt upon the contentions of the appellant more generally. On 8 March 2006, the appellant responded and I will not identify each of the responses. It is sufficient to say that some of those matters were explained on the basis of spelling mistakes in the original application form; confusion about particular matters; and most particularly by reference to the statement that a number of the original answers to questions were concluded with the statement: "I will give you particulars later" or "particulars will be provided later". 24 The Tribunal proceeded to consider all of these matters in its reasons. In the course of its reasons, the Tribunal analysed the foundation claims in the original application. It looked at each of the matters of concern reflected in the s 424A letter and stepped through each concern, the oral evidence given by the appellant and written responses. I do not propose to recite all of those matters in these reasons. I will mention these matters by way of focus upon the findings and conclusions of the Tribunal. 25 The Tribunal at AB218, noted that a written statement had been submitted. The Tribunal as a matter of principle considered that it was reasonable to expect that the appellant would mention at least in outline, the most important of his claims. 26 The Tribunal noted that in the present case, the appellant claimed that it was after Biplob was killed on 12 June 2004 and he was falsely charged with the killing that he was forced to close his business. People threatened him and he found it very difficult to hide, he said. The Tribunal noted that there was no mention of this contention that he had been charged with Biplob's murder in the original application. Of course, the written statement does mention Biplob and mentions Biplob's murder in the context of apprehension and threats by Biplob's family of the appellant's participation in those events, but there is no mention of any charge of the appellant with the crime. 27 Therefore, the Tribunal was expressing its concern, in the evaluation of the factual matrix, about the failure to mention that centrally important matter in the original handwritten document. The Tribunal also noted the oddity, to it, that despite supposedly having been charged in relation to the killing of Biplob in June 2004, the applicant continued to live in Bangladesh until March 2005 when he went to Japan. The Tribunal concluded that it considered that the fact that the appellant did not leave Bangladesh sooner was a matter which reflected upon his credibility. The Tribunal then referred to the matters concerning the other man who had been killed and their role in the committee. In that context the appellant dealt with the conflict between the kidnapping initially said to be on 25 September 2001 and then later on 5 October 2001, although it should be remembered that the written statement later lodged mentioned the date of 5 October 2001. The Tribunal deal with the inconsistency about the appellant's evidence of not having lived in Mirpur in Dakar since October 2002, yet he was able to start, organise and run businesses well after that period, which was explained by the appellant on the basis that his family ran those businesses. 29 And thus the Tribunal was not satisfied about those explanations. 30 The Tribunal also said that it was not satisfied that the appellant was telling the truth about his reasons for leaving Bangladesh and not wishing to return there. A number of other matters ought to be briefly mentioned. In support of the oral evidence the appellant lodged a number of documents with the Tribunal as corroboration of the oral evidence. The Tribunal says expressly in its reasons at AB222 that it considered a letter dated 25 November 2005 from Mr Mohammed Haneef, a mayor and presidium member of the Bangladesh Awarmi League attesting to the engagement of the appellant in the Awarmi League. The Tribunal also considered a translation of a deposition made on 12 June 2004 produced by the appellant and also a document apparently prepared by the Police in relation to the killing of Biplob. For the reasons given above, I do not accept that he was falsely charged with killing Biplob in June 2004, nor that there is a real chance that he will be arrested for this reason if he returns to Bangladesh now, or in the reasonably foreseeable future. 31 Moreover, the Tribunal did not accept that the appellant was a member of the Awarmi league or the Juboo league in Bangladesh, nor that any member of his immediate family was a member, worker or supporter of the Awarmi league. The Tribunal did not accept that the appellant had been harassed with a forgery case by the ruling party, or other cases. Moreover, the Tribunal did not accept that the appellant had been the subject of extortion claims or that he had been attacked on 25 September 2001. Ultimately, the Tribunal came to the conclusion that the evidence was, to use its language, a "fabrication. That, of course, is a fundamentally false view of the role of the appeal court, and what is necessary is for the appellant to demonstrate, either legal, factual or a discretionary error on the part of the primary judge. Since the real grounds of appeal are a surrogate of the earlier challenge and because the applicant is unrepresented, I have spent some time examining the underlying contention going to ground 1 of the appeal. 33 However, the notion that the duty or obligation of the appellant is to demonstrate legal, factual or discretionary error on the part of the primary judge is well established by authority ( Abeyesinghe v Minister for Immigration and Multicultural & Indigenous Affairs (2004) FCA 1558 at [4] ; MZWVH v Minister for Immigration and Multicultural & Indigenous Affairs [2006] FCA 1016 at [10] ). In relation to ground 1 of the appeal to this Court, which is that the Tribunal "constructively failed to exercise its jurisdiction" and thus, fell into jurisdictional error, there is simply no foundation for the ground whatsoever. 34 The Tribunal comprehensively examined the material put to it, and against the totality of the evidence came to a clear conclusion that the evidence of the appellant was a fabrication. That conclusion was open on the evidence and rationally based on an assessment of a number of inconsistencies some of which I have mentioned and the implausible nature of the claims. One thing is perfectly clear and that is that those matters referred to the Tribunal were logically probative of the issue of credibility. The assessment of the inconsistencies as a logically probative foundation for the determination of the issue of credibility is made plain by Kopalapillai v Minister for Immigration & Multicultural Affairs [1998] FCA 1126 ; (1998) 86 FCR 547 , and particularly at p 552, where O'Connor, Branson and Marshall JJ note the observations of Merkel J in Emianator v Minister for Immigration and Multicultural Affairs (V.G. 721 of 1996, 3 December 1997), referring to the determination by the Tribunal of issues of credit, on the basis of logically probative material of credit arising out of inconsistencies between evidence and documents. 35 That view is embraced more generally in a discussion by their Honours, at pages 558 and 559, and especially at 559, where the views of Merkel J in Emianator are expressly adopted. A similar position is taken by McHugh J, in the well known case of Minister for Immigration & Multicultural Affairs ex parte Durairajasingham at (2001) 168 ALR 407 , and particularly the famous paragraph at 67, where his Honour makes reference to the proposition that findings on credibility are the function of the primary decision maker par excellence. Similar observations are made about the role of superior court supervisory review of administrative decisions in Attorney-General (NSW) v Quinn [1990] HCA 21 ; (1991) 170 CLR 1 , at pp 35 and 36. 36 In particular, it should be noted that at p 36, Brennan J makes the observation contextually, in a discussion of the role of supervisory intervention that the scope of judicial review must be defined in terms of the "legality of the exercise of power". That is a useful statement because it highlights that the issue here is whether there is an error, not whether or not there is a different view which might have been formed on the facts by the Court. The important consideration in this particular case is that the finding on credibility was fundamental to the disposition of the claims within the Tribunal. The Tribunal was not obliged to make findings of fact in respect of each and every piece of evidence before it. 37 It was sufficient for the Tribunal to consider whether the evidence of the appellant could be accepted and if, in the light of the inconsistencies, the evidence could not be accepted, it was open to the Tribunal to reject the claims. There was no sequential obligation to treat every piece of evidence in a dispositive way by findings. That position is made clear by Minister for Immigration & Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at [68] , [73] to [74] and [91]; Durairajasingham, as I have mentioned at [65], Appellant 169 of 2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 8 at 24; WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184 ; (2003) 75 ALD 630 at [47] . 38 Other matters of principle might be mentioned briefly, and they are these. The weight the Tribunal accords the material before it is ultimately a factual matter for the Tribunal ( Lee v Minister for Immigration and Multicultural and Indigenous Affairs , (2005) FCA 464 ; Minister for Aboriginal Affairs and Another v Peko-Wallsend Limited & Ors [1986] HCA 40 ; (1986-1986) 162 CLR 24 ; Tefonu Pty Limited v Insurance & Superannuation Commission [1993] FCA 412 ; (1993) 44 FCR 361 ; and NBKT v Minister for Immigration and Multicultural Affairs [2006] FCAFC 195 ; (2006) 93 ALD 333. 39 Whatever the boundaries of jurisdictional error might be, they do not comprehend errors of fact as to the merits of the case put to the Tribunal, nor the weight to be attributed to evidence going to the issues raised before the Tribunal ( NAHI v Minister for Immigration and Multicultural and Indigenous Affairs (2004) FCAFC 10 per Gray, Tamberlin and Lander JJ at [10]. Accordingly, there is no substance in ground 1. 40 In relation to ground 2, concerning excess of jurisdiction, the allegation is entirely unparticularised. The question of whether the findings of the Tribunal are fair or correct, are a matter for the Tribunal to determine within its fact-finding jurisdiction. 41 The merits of the determination ought not to be examined by this Court, or for that matter, the Federal Magistrates Court, unless there is a properly identified ground such as "no evidence" or other jurisdictional error. Challenges to the merits of the determination or arguments as to conflicting views about how the Court might decide things or another decision-maker might have decided things are not to the point. The merits in that sense are not open to challenge here ( Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 , and particularly at 281 to 282 and 291 to 292). 42 The further ground in the written submissions is one of bias. 43 There is no evidence of either apprehended bias or actual bias, and no support is advanced for the contention orally or in written submissions. Nor is it part of the formal grounds in the Notice of Appeal. 44 The final ground is a matter going to the relationship between the original application and the statement at the foot of three answers in the original application that the appellant would provide other material later. The Tribunal, of course, was not obliged to accept the appellant's explanation of the inconsistencies. The Tribunal made it perfectly plain that it was rejecting the appellant's evidence on credibility grounds for a number of reasons. As to the original application itself, the Tribunal was, plainly enough, very concerned that a significant matter such as an allegation that the appellant had been charged with the murder of Biplob was not mentioned in the original handwritten application. That seemed to suggest that the evidence of the appellant was unreliable. 45 The Tribunal concluded that that evidence of the appellant proved to be unreliable for a number of other reasons as well. Those findings were open. It therefore follows, from all of these observations, that the appeal must be dismissed with costs. The appeal is dismissed. 2. The appellant shall pay the costs of the first respondent, of and incidental to the appeal. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of contentions that a federal magistrate fell into error in failing to identify jurisdictional error on the part of the refugee review tribunal consideration of the practice of framing contended errors on the part of a federal magistrate simply on the footing of a failure to identify jurisdictional error on the part of the tribunal rather than properly framing contended errors on the part of the federal magistrate migration |
In its substantive application filed in June 2009, the applicant (the ABCC) seeks relief in respect of alleged breaches by the respondents of s 38 of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act ), a civil penalty provision, which prohibits a person engaging in unlawful industrial action. On 29 September 2009 I delivered reasons for judgment in relation to the application by the ABCC for an interlocutory injunction to restrain the respondents from engaging in further unlawful industrial action in which I concluded that interlocutory relief ought be granted: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2009] FCA 1092. At that time, however, I deferred making orders as the respondents indicated that they wished to be heard on the form of those orders. I heard the parties in this respect on 16 December 2009. The applicant seeks relief in terms that will restrain the respondents from unlawful conduct in respect to all building work being performed for Diploma throughout Western Australia. The central submission of the respondents is that the interlocutory relief ought be confined to restraining unlawful conduct at the Site. This is so, they submit, because the originating Application, properly construed, seeks relief only in relation to the Site. This turns on the definition of "Diploma Workers" in para 1 of the Application under which declarations of contravention are sought. The respondents correctly submit that a Court, in granting interlocutory injunctive relief, should generally grant the minimum relief necessary to do justice between the parties: Cardile v LED Builders Pty Ltd [1999] HCA 18 ; (1999) 198 CLR 380 at 409. The question then is what will achieve that result in this case between these parties. It is important, in this respect, to bear in mind that the applicant is not a private litigant. It is not in respect of any interference with any legal right of the ABCC. The legislature plainly conferred on the ABCC powers to obtain interlocutory injunctions, damages and penalties as instruments for effecting that improvement: ICI Operations [1992] FCA 474 ; 38 FCR 248 per French J at [268]. Rather, the Court may make any order "that it considers appropriate". The question of what is appropriate also arises were the power sourced in s 23 of the Federal Court of Australia Act 1976 (Cth). Wide though that power is, it is subject to both jurisdictional and other limits. It exists only "in relation to matters" in respect of which jurisdiction has been conferred upon the Federal Court. Even in relation to such matters, the power is restricted to the making of the "kinds" of order, whether final or interlocutory, which are capable of properly being seen as "appropriate" to be made by the Federal Court in the exercise of its jurisdiction [emphasis added]. Further, the respondents submit that the only evidence concerning other Diploma sites adduced by the ABCC at the hearings on 17 and 20 July 2009 was from Mr Paul Day, project manager of the construction project at 915 Hay Street, Perth. Mr Day gave evidence by statement that he heard the third respondent, Mr Michael Buchan, say he was going to "raise a petition for all of the Diploma sites with regards to general safety concerns and send it to John Norup (a Diploma Director)". By contrast, Mr Buchan gave evidence by statement that it was Mr Wes Francis, the Diploma Site Manager, who suggested that there should be a petition when he (Buchan) was telling the meeting about "issues" on other Diploma sites. The ABCC submits that it is not germane whether it was Mr Francis or Mr Buchan who first suggested such a petition. What is significant, he submits, is that before the petition was mentioned by anyone, Mr Buchan had begun addressing issues on other sites, a matter which appears clearly from Mr Buchan's affidavit. Paragraphs 24 and 25 of his affidavit are in these terms: As I was telling the meeting about issues on other Diploma sites, Wes Francis, the Diploma site manager, suggested that we get a petition up. In respect of the rest of paragraph 15, it is correct to say that I was discussing issues , not just at Hay Street, but at other Diploma sites. As I said at [59] of my earlier reasons Mr Buchan did not expressly deny what he is alleged to have said but only that it was Mr Francis who (first) raised it. The respondents submit that, in any assessment of this evidence, neither version is anything more than a comment about raising a petition of complaint and that such comments, even if followed up with a petition, could never amount to unlawful industrial action on other sites, without more. They further contend that there was no evidence that such a petition was ever raised and that Mr Buchan was not cross-examined on the point. In any event, there is a basis for reading the Application in a more expansive way. The ABCC submits, concerning his Application under Part B that relief 1(a)(i) and (ii) applies to all sites for two reasons. First, he submits, the words are quite general and apply to workers failing or refusing to attend for building work or failing or refusing to perform any work after attending for building work, and placing a ban, limitation, restriction on the performance of building work adopted in connection with industrial dispute. Second, the ABCC submits that (a) is plainly intended to apply to all sites because of the contrast made between 1(a) on the one hand and 1(b) on the other hand. It is unnecessary for me to resolve this aspect of the parties' submissions as to the proper construction of the terms of the application. I do not regard the respondents' construction argument concerning the application, even if correct, as imposing a strait jacket on the court's wide discretionary powers to grant injunctive relief in light of the evidence and the findings which I have made. The appropriate relief to be granted should be fashioned against the principle of proportionality in achieving a fair result. The respondents placed reliance on the case of CBI Construction v Abbott 177 IR 134. I do not accept this submission for the following reasons. First, the interests of third parties are not affected by the orders I propose to make which merely restrain the respondents from engaging in unlawful industrial action. Second, s 76 of the BCII Act provides relevantly that, in proceedings under s 49, as in this case, the Court cannot require the ABCC, as a condition of granting an interim injunction to give an undertaking as to damages. I regard the use of the word "interim" as referrable to any injunction granted prior to the final disposition of the substantive proceeding. The injunction here sought is, accordingly, an interim injunction. It follows that the ABCC does not have to provide nor can the Court require him to provide an undertaking as to damages. I will now turn to important findings I made in my earlier reasons. I rejected the respondents' claims, at the interlocutory hearing, that their conduct was justified or excused under s 36(1)(g)(i) of the BCII Act by reason that the industrial action was based on a reasonable concern by the employees about an imminent risk to health or safety. These reasons may well have been the motivation behind the strikes. It is unnecessary that I form a view as to this even on a prima facie basis. It is enough that I have concluded that there is a prima facie case established by the ABCC that the respondents engaged in unlawful industrial action. Whatever the real reasons I am satisfied to the necessary degree that they had nothing to do with any reasonable concern as to any imminent danger to the health or safety of any employee on the Site . It is the very behaviour which the Commonwealth Parliament has made clear should be eradicated from the building industry in this country. It is conduct that directly undermines the main object of the BCII Act (s 3(1)) which is to provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole. That the action was taken at the Site was incidental. It could have been at any other Diploma site in Western Australia. The action taken was directed not at the Site, given my rejection of the respondents' claims made at the hearing of the interlocutory application for interim injunctive relief. No other reason was advanced by the respondents which confined their action to the Site. These findings place the evidence that Mr Buchan and Mr Day gave, concerning a petition in relation to safety issues at Diploma sites, in a particular context. I am not prepared to conclude, even provisionally, that any such alleged safety issues even existed in June 2009. It is a reasonable inference to draw then, as I do, that the target of the respondents action was Diploma itself and not matters peculiar to the Site. The relief ought then extend to any building work being performed for Diploma throughout Western Australia. This, in my opinion, is appropriate to do justice between the parties in relation to the findings I have made, on a prima facie basis, as to the true nature of the issues between them exposed by the evidence. I received minutes of proposed orders from both parties. In each case, proposed order 1(a) concerns the extent of the restraint to be imposed subject to certain lawful exceptions. The Respondents seek the inclusion of the words " or action by an employer that is authorised or agreed to, in advance and in writing by or on behalf of employees of the employer " in Order 1(a) for the sake of completeness. They submit that those are the words of section 36(1)(f) of the BCII Act, and constitute one of the statutory exceptions to what constitutes "building industrial action" in the BCII Act. For this reason, it is inappropriate and unnecessary for the terms of the injunction to be extended in the manner suggested. I accept the submission of the respondents that since the applicant only intends to enjoin unlawful conduct, and for the avoidance of any ambiguity, it is appropriate that the terms of the injunction precisely reflect the statutory scheme for unlawful conduct sought to be prohibited, together with all the exceptions to that definition which may constitute lawful conduct. (b) attending or organising or procuring any person or persons, to attend, within 100 metres of any entrance to the Diploma construction site located at 915 Hay Street, Perth, Western Australia, save for such entry to the site as may be authorised by law pursuant to the provisions of Part 3-4 of the Fair Work Act 2009 , for the purpose of using a public road for reasons unconnected with the said site or for the purpose of complying with these orders. (c) Costs reserved. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | scope of interlocutory injunction s 49 of the building and construction industry improvement act 2005 (cth) minimum relief necessary to do justice between the parties fact that applicant invested with important statutory role toward improving the building and construction industry is a relevant consideration. industrial law |
Neither Mr Moore nor Oxford has ever held an Australian financial services licence or an appointment as the Authorised Representative of the holder of an Australian financial services licence. 3 The parties have tendered to the Court an Agreed Statement of Facts and proposed consent orders. At all times during this period Mr Moore was authorised to act on Oxford's behalf in relation to the conduct of its business and affairs. He was the sole director of Oxford from 17 November 2004. 5 During the relevant period Oxford carried on a business of providing instruction or training, conducted by Mr Moore, in a system of trading futures contracts based on the published works of W D Gann and other authors on the subject of market analysis and strategy. This system is referred to in these reasons as "the Methodology". Mr Moore conducted both one-to-one instruction and seminars for up to 10 participants. The price charged by Oxford for this instruction was typically in the range of $33,000---$38,000 although not all customers paid the full amount. 8 A principal component of the Methodology was the "ABC Pattern Analysis". Mr Moore instructed customers in techniques of interpreting charts produced from data about recent trading in share price index futures to identify from swings in the price of the relevant contract the points at which the direction and extent of the next movement of the price could be predicted. 9 Oxford provided its customers with historical data relating to the Sydney Futures Exchange Share Price Index (SPI) and regular updates of that data together with a licence to use computer software written on its behalf and known variously as "Gann Analytical Software" or "Stocks" (the Software) and intended for use in interpreting the data and applying the Methodology. 10 Written materials provided to the customers by Oxford included statements articulating principles to be applied in successful trading and rules for trading in share price index futures. By using the proper tools to analyse this movement, an accurate forecast for future direction can be made. The proper use of the various Gann analysis tools will help you to determine when these major moves are most likely to occur. The midline is set to 1 and the high/low lines set to 0. A legitimate ABC pattern formation based on a two or three day swing must be present. 2. The opening price must be within 25-30% of the blue hi/low moving average line (Blue being the default colour). The % is calculated from the range of a confirmed C day. 3. Only trade with the major or intermediate trend. The basis of the trading plan is the swing chart. You will construct your daily and weekly swing charts exactly as I have shown you previously. 2. Only trade with the trend. An up trend is defined as a market in which the most recent swing high is higher than the swing high which preceded it, ands the most recent swing low is higher than the swing low which preceded it. A downtrend is the opposite, that is, a lower swing high and a lower swing low. 3. In respect of trades on the long side, the intended trade is identified by the formation of a Point C. Point A is the start of the immediately preceding up move. Point B is the termination of the first up move and is identified by a swing down. Point C is the termination of the counter-trend, corrective move and is identified by a swing up. Point B must be above the previous swing top. 4. The distance between Points A and B is measured for three reasons. Firstly, the long trade must be entered at, or before, the market has traveled up a distance equal to 25% of the A-B range, from Point C. Secondly, the progressive 25% moves are used for the placement of stop-loss levels and the exiting of positions. Thirdly, we rate the strength of a market by its retracements against the main trend. In a strongly trending market the retracement will usually be 50% or less of the A-B range. 5. In a strongly trending market, we will add to our position when, an old top is crossed by 3 points. In this case, we will place out stop loss below the low of the previous day. 7. Upon the market reaching 50% of the A-B range, a stop is placed 5 points below the 50% level. Instruct your broker to act on an intra-day basis and not just at the end of the day. 8. As the market moves up, each time it passes through the next 25% barrier, the stop is raised to 5 points below that barrier, ie, 75%, 100%, 125% and so son. For example, when the market passes through the 75% level, which is, say, at a price of 3119, out stop would be moved to 3114. 9. Profits are taken the first time the progressive stop is triggered. 10. Trading short positions is the exact opposite of the above rules for trading long positions. The following paragraphs require that either the principal or the provider holds an Australian financial services licence covering the provision of the services, or the principal is exempt under s 911A(2). 14 "Financial services business" is defined in s 761A of the Corporations Act as "a business of providing financial services". According to s 766A(1) a person provides a financial service if, inter alia, they provide "financial product advice". However, for the purposes of this case it is admitted by the defendants that the SFE SPI Index Futures Contract is an arrangement that satisfies the conditions of the definition of "derivative" in s 761D(1) of the Act. As a result it is one of the things that is specifically included in the definition of "financial product" by s 764A(1)(c). It is admitted by the defendants that Oxford carried on a business of providing instruction or training in the Methodology. If that training involved the provision of financial product advice, then it must follow that Oxford was carrying on a financial services business. 17 The business which Oxford and Mr Moore carried on involved a recommendation or statement of opinion. The statements they made necessarily implied that Mr Moore held the opinion that application of the Methodology would enable the user to trade profitably. It is not to the point that the defendants did not advise a client as to particular transactions, as for example whether to buy, sell or hold a particular security. It is sufficient that their system would "influence" such a decision, in the sense of making available information, and a system of analysing that information, which would be seen by a recipient as relevant to the making of a decision. 18 A similar issue arose in Re Market Wizard Systems Ltd [1998] 2 BCLC 282. A company marketed a computer system and provided purchasers with daily information. The system analysed that information to generate buy, sell or hold signals in respect of options in each of 12 traded stocks. The signals showed the customer whether they should be neutral, long or short on a given day, and whether they should buy, sell or hold. 19 On behalf of the company it was argued that the system was simply a matter of calculation based on historical data and the updates put in by the customer and was no more than a "sophisticated and technologically based 'calculator'". Carnwath J in the English High Court rejected this argument (at [35]). In his Lordship's view, the argument might have had some substance if the program only provided a convenient means of extracting and analysing data as to historical movements in the market without offering any interpretation of that information as a guide to future action. The promotional material of the company, however, was inconsistent with the limited function suggested. The whole purpose of the program, as described by its inventor, was directed towards "the use of parabolas in determining the future direction of market price". 20 Market Wizard was followed by Moynihan J in Australian Securities and Investments Commission v Online Investors Advantage Inc [2005] QSC 324. 21 Market Wizard is supportive of the decision in the present case. Indeed, the legislation under consideration in Market Wizard (the Financial Services Act 1986 (UK) Sch 1, Pt II, par 15) was more restrictive than the Corporations Act provision in that it was expressed in terms of giving to investors "advice on the merits of their purchasing, selling, subscribing for or underwriting an investment". As already mentioned, "financial product advice" as defined in s 766B is not limited to recommendations or opinions directed towards any particular transaction or any particular course of action the recipient might have in mind. 22 In the present case there has been, first, an expression of opinion that, in specified circumstances arising from a particular kind of market analysis, trading in a particular way is likely to be profitable. Secondly, there is the provision of technical aids that assist in identifying those circumstances from day to day. The combined effect is the provision of financial product advice within the meaning of the statute. 23 As to the intent element of "financial product advice", there could be no doubt, and the defendants admit, that the statements and conduct of Oxford and Mr Moore could reasonably be regarded as being intended to have the relevant influence; that is to say the objective test of par (b) of the definition is satisfied. 24 I find therefore that Oxford and Mr Moore have contravened ss 911A and 911B of the Corporations Act . 26 The representations detailed in [6] above were clearly made in trade or commerce. The defendants have admitted that they were incorrect or misleading. Although made by Mr Moore, Oxford's responsibility for them is established by s 12GH(2) of the ASIC Act, Mr Moore being authorised to act generally on its behalf in relation to the conduct of its business and affairs, including (it should be inferred) the securing of customers for the business. 27 Making the representations will therefore have been a contravention of s 12DA if they were made in relation to financial services. A separate set of definitions for this purpose is contained in ss 12BA, 12BAA and 12BAB of the ASIC Act. In addition, the ASIC Act picks up the definitions in s 761A of the Corporations Act of expressions which are not defined in the ASIC Act (for example, the definition of "derivative"): ASIC Act, s 5(2). 28 A derivative is specifically included in the expression "financial product" by s 12BAA(7)(c) of the ASIC Act and the definitions of "financial service" and "financial product advice" in s 12BAB are relevantly the same as in the Corporations Act . Were the representations made "in relation to" the financial product advice that Oxford was proposing to supply to the intended customers to whom the representation was made? Clearly they were. The representations bore upon the potential value of the advice to the recipients. 29 The admissions establish contraventions by Oxford and Mr Moore of s 12DA of the ASIC Act. The facts stated in these reasons are findings of fact for the purposes of s 12GG of the ASIC Act. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | share trading system involving methods based on market analysis provision of software whether "financial product advice" representations regarding system " financial product advice " corporations words and phrases |
2 On 7 August 2008 I had ordered under s 411(1) of the Act that the plaintiff, Independent Practitioner Network Ltd (IPN), convene a meeting of the holders of ordinary shares in IPN excluding Sonic Healthcare Ltd (Sonic) (IPN Shareholders) to be held on 11 September 2008 for the purpose of their considering and, if thought fit, agreeing to a scheme of arrangement (with or without modification) between IPN and the IPN Shareholders (Scheme). As well, I approved the draft explanatory statement to be given by IPN to the IPN Shareholders. 3 My reasons for the making of those orders of 7 August are found in Re Independent Practitioner Network Ltd [2008] FCA 1229. I will take those earlier reasons as read. They form part of my present reasons. I will use the forms of abbreviation that I used in them. 4 The Scheme Meeting was held on 11 September 2008. By statutory majorities satisfying the requirements of s 411(4)(a) of the Act, the IPN Shareholders agreed to the Scheme. 5 Section 411(6) of the Act provides, relevantly, that the Court may grant its approval to an arrangement subject to such alterations as it thinks just. At the second court hearing IPN asked that I approve the Scheme subject to certain alterations. The purpose of the alterations was to substitute for Sonic a wholly owned subsidiary of Sonic as the entity that would take title to the IPN shares and pay the Scheme Consideration. 6 I was told that Sonic had come to the view that it would be preferable for taxation reasons that the acquisition be by the subsidiary, which is incorporated in New Zealand, Sonic Healthcare (New Zealand) Limited. The substitution was to be effected by alterations to the Scheme which would introduce "Sonic Purchaser" as a new defined term, and change the reference from "Sonic" to "Sonic Purchaser" in respect of certain clauses in the Scheme . The term "Sonic Purchaser" would be defined as Sonic or the New Zealand subsidiary if Sonic should nominate it prior to 8.00 am on the "Implementation Date" identified in the Scheme (in the events that happened, the Implementation Date was 30 September 2008). 7 The proposed change of transferee had implications for a Deed Poll dated 6 August 2008 that Sonic had executed in favour of each "Scheme Participant" (being each IPN Shareholder as at the "Record Date" other than Sonic). By the Deed Poll, Sonic had undertaken to each Scheme Participant to comply with Sonic's obligations under the Scheme, and, in particular, to provide the consideration due to the Scheme Participant. Clause 7.1 of the Deed Poll provided that the Deed Poll might be varied by Sonic only if (a) the variation was agreed to by IPN, and (b) the Court indicated the amendment would not, of itself, preclude approval of the Scheme. By cl 7.1, Sonic also undertook, in order to give effect to any such amendment, to enter into a further deed poll in favour of the Scheme Participant giving effect to the amendment. 8 On 15 September 2008, IPN and Sonic entered into an "amendment agreement" by which it was agreed that the Scheme and the Deed Poll be amended. This satisfied condition (a) in cl 7.1 of the Deed Poll. There was included in the orders that IPN sought at the second court hearing a declaration (which, in the event, I made) satisfying condition (b) in cl 7.1 of the Deed Poll. 9 By a Supplementary Deed Poll dated 15 September 2008 executed by Sonic, the Deed Poll was amended, subject to (a) the Court's having indicated that the amendments would not of themselves preclude approval of the Scheme, and (b) the Court's granting approval of the Scheme as altered. By the Deed Poll as amended, Sonic undertook to each Scheme Participant to procure that the Sonic Purchaser would comply with its obligations under the Scheme and provide the Scheme Consideration. It will be noted that the Deed Poll as so amended still expressed obligations undertaken by Sonic itself in favour of each Scheme Participant. 10 The power to approve subject to alterations was introduced in the form of s 181(3) of the Uniform Companies Acts of 1961-1962. The provision was retained in s 315(6) of the Companies Code and in s 411(6) of the Act. 11 The authorities contain little discussion of the provision. Properly, they do not purport to limit the circumstances in which it would be appropriate for the Court to exercise the power. 13 In Re H Craig Pty Ltd (1971-1976) CLC 40-026, Mitchell J approved of a scheme subject to several minor alterations. 14 In Re Permanent Trustee Co Ltd [2002] NSWSC 1177 ; (2002) 43 ACSR 601 , Barrett J approved a scheme subject to alterations which his Honour described as "peripheral" (at [21]). His Honour stated that the scheme in respect of which approval was sought differed in certain respects from the form of scheme that had been sent to members in accordance with the orders of the court previously made. 15 In Re Investorinfo Limited [2005] FCA 1848 , Gyles J approved a scheme subject to an alteration that was designed to overcome what his Honour described as "a technicality arising from the drafting of the scheme" (at [8]). 16 I do not purport to define or circumscribe the circumstances in which the Court may properly exercise the discretion to approve subject to alterations. The circumstances in which the Court may be asked to exercise the power vary. For example, the purpose may be to overcome minor technical errors or oversights present in the scheme as agreed to by the shareholders (see, for example, Re H Craig Pty Ltd ); to bring the scheme as agreed to by them into line with the explanatory statement that was sent to them (see, for example, Re Permanent Trustee Co Ltd ); or to protect creditors (see, for example, Re Evandale Estates Ltd ). The alterations may be suggested by the plaintiff or by the Court. Apparently, however, the plaintiff would be entitled, if faced with alterations on which the Court insisted but to which it did not agree, to withdraw its application for approval. 17 At least one thing is clear: the Court will not approve subject to alterations unless it is satisfied that the scheme as proposed to be altered would still have been agreed to by the requisite statutory majorities. 18 I turn now to the alterations sought in the present case. In one sense it may be suggested that the change in the identity of the acquiring entity is fundamental. In the circumstances of the present case, however, I do not think it is. 19 The acquiring entity was not, of course, a party to the Scheme. The parties to the Scheme were IPN and the Scheme Participants. IPN requested approval subject to alterations which IPN advanced in the interests of Sonic. 20 I could see no disadvantage to Scheme Participants in the substitution of the wholly owned Sonic subsidiary as the recipient of their shares in IPN. It was not as if the original consideration was or included the issue of shares in Sonic which was to be changed to the issue of shares in the Sonic subsidiary. On the contrary, the consideration was and remained wholly cash. 23 If the IPN Shareholders had been asked at the Scheme Meeting whether they had any objection, in the above circumstances, to title to the IPN shares being transferred to the Sonic subsidiary rather than to Sonic itself, they would certainly have said "no". 24 The Australian Securities and Investments Commission (ASIC) had issued a letter providing evidence of the kind contemplated by s 411(17) of the Act. ASIC's letter took the alterations into account. 25 It seemed to me that the Scheme should be approved subject to the alterations. 26 For the above reasons I made the orders on 15 September 2008. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | schemes of arrangement court's power given by s 411(6) of corporations act 2001 (cth) to approve scheme subject to alterations application for court to approve scheme subject to alterations substituting subsidiary of company for company as entity to take title to shares considerations relevant to exercise of discretion to approve scheme subject to the alteration whether shareholders protected whether shareholders would have agreed to scheme as altered corporations |
2 The effect of the preliminary questions is to ask whether the applicant is estopped from alleging that the respondent's trade mark "Healthplus" ("the respondent's mark") is substantially identical or deceptively similar to the applicant's trade mark "Inner Health Plus" ("the Inner Health Plus Mark"). 3 The respondents contend that the estoppel arises from a decision of Cooper J in Health World Limited v Shin-Sun Australia Pty Limited [2005] FCA 5 ("the decision") which was handed down on 11 January 2005. 4 The decision was an appeal under s 56 of the Trade Marks Act 1995 (Cth) ("the Act ") from a decision of the Registrar of Trade Marks dismissing the applicant's opposition to the respondent's mark. The applicant and the first respondent were parties to the decision. Cooper J dismissed the appeal. 5 In the proceedings which were the subject of the decision, the applicant relied upon the grounds of opposition stated in ss 42(b) and 60 of the Act . Those grounds raised the issue of whether the respondent's mark was substantially identical, or deceptively similar to the Inner Health Plus mark. 6 Cooper J found that the respondent's mark was not substantially identical, or deceptively similar to the Inner Health Plus Mark. 7 In the present proceedings, the applicant seeks, inter alia , an order under s 88 of the Act rectifying the Register of Trade Marks by cancelling the respondent's mark. Section 88(2)(a) of the Act provides that one of the grounds on which such an application may be made is "any of the grounds on which the registration of the trade mark could have been opposed". 8 The applicant relies in support of its application for cancellation upon, inter alia, ss 42 and 60 of the Act . It asserts that the respondent's mark is substantially identical or is deceptively similar to, the Inner Health Plus Mark. 9 The respondent contends that the applicant is estopped, by reason of the decision, from making this assertion or allegation in reliance on ss 42 and 60 in these proceedings. 10 The applicant seeks to meet this contention by pointing to the structure of the Act which provides in Division 2 of Part 8 for rectification proceedings on grounds which include grounds on which the registration of the mark could have been opposed. The applicant also points to the observations of a Full Court in Lomas v Winston Shire Council [2003] AIRC 91-839 (" Lomas ") at [17] --- [19]. 11 In Lomas it was not necessary for the Court to consider the nature of opposition proceedings or the standard of proof to be applied. However, the Court, at [18], described such proceedings as summary in nature. In an expungement proceeding, the validity of a trade mark can be fully explored. His Honour pointed out at [13] that the consequence of the approach stated in Lomas is that a party can oppose registration and, even if unsuccessful on an appeal under s 56 , can then bring expungement proceedings on precisely the same ground. 14 The respondent submitted that it was unnecessary for me to resolve the dilemma posed by the remarks of Gyles J in Clinique . Counsel for the respondent, in support of this submission, relied upon an express finding made by Cooper J at [6] of the decision. 15 There, Cooper J found that the applicant failed to make out its objection on the balance of probabilities. I will deal later in my judgment with the significance of this finding. Is the applicant estopped in these proceedings by the decision of Cooper J delivered in Health World Limited v Shin-Sun Australia Pty Limited [2005] FCA 5 delivered 11 January 2005 (the 'Decision') from alleging that the trade mark 'HEALTHPLUS', the subject of Australian trade mark number 874755 (the 'Respondents' Mark'), is substantially identical with, or deceptively similar to, the trade mark 'INNER HEALTH PLUS' in relation to which the pro-biotic products 'Inner Health Plus' and 'Inner Health Plus Dairy Free' manufactured by the applicant were marketed, sold and offered for sale in the period March 2000 to 7 May 2001. Nevertheless, before making the orders, I raised with the parties my concern about the utility of the order in the present case. 18 Notwithstanding my doubts, I was persuaded by the submissions of the parties that the factors to which Branson J pointed in Reading Australia Pty Limited v Australian Mutual Provident Society [1999] FCA 718 , favoured the making of an order. 19 However, in light of an issue which emerged in the arguments of counsel on the hearing of the preliminary questions, I have serious doubts about whether the order should have been made. I appreciate that the issue which emerged was not apparent when the orders were made and no criticism is directed at counsel or their instructing solicitors. 20 It is simply an example of the problems which are sometimes thrown up by the desire to shorten proceedings through the mechanism of an order under O 29 r 2. 21 Here the difficulty is not merely the existence of the debate between the Lomas and Clinique views. The difficulty arises from a recent decision of a Full Court in Woolworths Limited v BP plc [2006] FCAFC 52 (" Woolworths v BP "). 22 In Woolworths v BP , Sundberg and Bennett JJ (Black CJ dissenting) considered that the question of the standard of proof to be applied by a single judge in considering an appeal under s 56 of the Act is an open question. Their Honours said at [84] that it was appropriate for this question to be considered by a Full Court and granted leave to appeal. 23 The standard of proof to be applied in an appeal against an unsuccessful opposition is central to the question of whether an estoppel arises in proceedings such as the present one. It goes to the nature of the opposition proceeding, the structure of the Act and the question of whether the decision on the appeal is final or interlocutory. 24 Thus it would appear that a central plank on which the estoppel question turns will be determined in the not too distant future, by a Full Court. That determination will of course be binding upon me. 25 Nevertheless, I do not intend to await the outcome of the decision of a Full Court. 27 In coming to that view his Honour referred to Lomas and to the decision of Bennett J in Torpedoes Sportswear Pty Limited v Thorpedo Enterprises Pty Limited [2003] FCA 901 ; (2003) 132 FCR 326 (" Torpedoes") in which her Honour applied the "should clearly not be registered" test. Cooper J also referred to the remarks of Gyles J in Clinique at [12] --- [13] that the question is treated as open. Having said that I am satisfied for the reasons which appear below that the applicant does not make out its grounds of objection on the balance of probabilities. Accordingly, it has not been necessary to apply the higher standard that a ground of objection is clearly or undoubtedly correct. 30 Thus, his Honour rejected the grounds of opposition under ss 42(b) and 60 of the Act. 32 There was no dispute about satisfaction of the third requirement. The dispute between the parties was as to the first and second requirements. 33 The question of whether an issue estoppel arises in the present case flows as a matter of logical inference from the debate in the authorities about the standard of proof which applies in an appeal from a Registrar under s 56 of the Act. 34 In Clinique , Gyles J recognised that it is a consequence of the reasoning in Lomas and Torpedoes that a party can oppose the registration of a mark and, even if unsuccessful on appeal, can then bring expungement or revocation proceedings based on the same ground as was unsuccessfully relied on in the opposition proceedings. 35 Indeed his Honour specifically pointed out that it is difficult to see how an estoppel can prevent this consequence from occurring if opposition is a summary proceeding decided by reference to a special high onus. 36 Lomas and Torpedoes were followed by Lander J in Cowa Company Limited v NV Organon (2005) 223 ALR 27 although his Honour had reservations about the test to be applied; see [123] --- [141]. Nevertheless, he considered that he was bound to follow the decisions that had applied the test stated in Lomas. This is revealed in the description in Lomas at [18] of such proceedings as "quasi summary". 40 Two Full Courts have stated in plain terms that if opposition proceedings fail, the validity of the trade mark can then be fully explored in revocation proceedings; see Lomas at [18] --- [19] and Woolworths v BP at [55]. 41 The same approach has been applied in patent proceedings; see Imperial Chemical Industries PLC v EI Dupont De Nemours & Co [2002] AIPC 91-818 at [6] --- [7]. 42 In trade mark proceedings this approach seems to me to follow from the scheme of the Act and in particular from ss 88(1) and (2). Those subsections grant to an aggrieved person the right to seek rectification of the Register on "any grounds on which the registration of the trade mark could have been opposed under Division 2 of Part 5". 43 What follows from this, and from the observations in Lomas is that the decision on an appeal under s 56 does not necessarily decide the same issue and it is not a final decision. 44 Thus, in the present case, it would follow that the first two requirements for an issue estoppel have not been satisfied. 45 In my view, while recognising the force of Gyles J's remarks, it seems to me that I should follow the observations of the Full Court in Lomas. It is true that those observations were dicta, but they were clearly considered observations which I should follow, at least as a matter of judicial comity. 46 It is true as Ms Baird, for the respondent, forcefully submitted, that Cooper J's reasons for the decision did not depend upon whether the higher test of "should clearly not be registered" applies. Instead, his Honour was satisfied that the applicant failed on the balance of probabilities. 47 It is also true that this finding necessarily established the legal foundation or justification for the conclusion which his Honour reached; it was legally indispensable to the conclusion; see Blair v Curran at 531 --- 532. 48 However, the effect of what was said in Lomas is that under the statutory scheme which relates to opposition proceedings, the decision cannot be said to be final. Because of the nature of opposition proceedings, a decision in an appeal under s 56 of the Act cannot, as a matter of law, finally determine the rights of the parties; see Carr v Finance Corporation of Australia [1981] HCA 20 ; (1980) 147 CLR 246 at 248, 253-254; Computer Edge Pty Limited v Apple Computer Inc [1984] HCA 47 ; (1984) 54 ALR 767 at 767 --- 768. The respondent must pay the costs of the O 29 r 2 hearing. 51 Nevertheless, whilst of course expressing no concluded view, the considerations pointed to by Gyles J in Clinique may well suggest that if the applicant fails at the final hearing on the grounds under ss 42 and 60, it would be appropriate for me to order that the costs of the final hearing, at least in relation to those issues, be paid by the applicant on an indemnity basis. | [2006] fca 647 |
The questions concerned the rights of OPS' clients. The persons for whom Mr Sweeney appeared were a number of those clients. Another group of OPS clients, represented by Mr Bennett, also sought leave to intervene. 2 At the time the leave applications were made there was a request that the names of the clients, which were contained in lists filed in court, be kept confidential. I acceded to the application because it was not opposed and on the basis that, in due course, evidence would be tendered to justify the continuation of the confidentiality order. 3 When the administrators' application came on for hearing Mr Sweeney said that he appeared for only one person in his list, namely Dover Gardens Pty Ltd. I was told that the other clients on whose behalf leave had originally been sought no longer pressed their application to be heard. Nonetheless they still wanted their identity to be kept confidential. I temporarily extended the confidentiality order to allow time for an affidavit in support of the application to be filed. 4 In due course the affidavit was filed. It is sworn by the clients' solicitor. The affidavit explains the grounds upon which the confidentiality order is sought. Before referring to those grounds, there is one point that should be corrected. In the affidavit the solicitor asserted that the list of the names of her clients "had not passed into evidence or been filed". It is true that the list had not been tendered as part of the evidence. The names of intervening parties are not usually tendered in evidence. The position is that the list was handed up when leave was sought and it was then placed on the court file and marked "FILED IN COURT ON 1/8/08". It is, therefore, part of the court record. 5 Returning to the affidavit, the solicitor deposed that most of her clients "are mum and dad retail sharemarket investors who have been traumatically affected by the collapse of Opes Prime". She said that one client was so affected that he committed suicide. She noted that others had to sell their home and other investments and that any publicity of their names as OPS clients would cause further pressure on them financially. She claimed that publicity of her clients' names would also affect their ability to maintain normal banking relationships and that their existing lenders would seek to recall the loans which they currently had. She also said that some of her clients had invested funds on behalf of family members "which has caused them intense grief and [a] sense of guilt". She deposed to being very concerned about the mental wellbeing of some clients. She put it this way: "[i]t is impossible for me to know exactly the extent to which each client is at risk, the severity of that risk and the degree of individual anxiety which varies greatly in individuals from time to time". Still, she said that in the case of some clients she held "a deep fear for their wellbeing ... having noticed a deterioration in their ability to cope and wild fluctuations". She deposed that some of her clients appeared to have lost interest in discussing any subject and that they had become depressed, very flat and lacklustre. 6 The solicitor then provided a good deal of personal information about the clients she regards as being the "most vulnerable". I do not propose to go into the details of the affairs of each client, for nothing would be served by that course and it would no doubt embarrass many of them. Having considered all the concerns that are set out in the affidavit, I have come to the conclusion that I am justified in withholding only two names. 7 The starting point is the common law rule that civil actions must be heard in open court. It is the keenest spur to exertion and the surest of all guards against improbity. It keeps the judge himself while trying under trial. " (Benthamiana, or Select Extracts from the Works of Jeremy Bentham (1843), p 115). 8 Although its purpose may have been to discipline the judiciary (or as Lord Diplock put it in Harmon v Secretary of State for the Home Department [1983] 1 AC 280, 303 "to keep the judges themselves up to the mark") the rule has other equally important objects. This rule has the virtue that the proceedings of every court are fully exposed to public and professional scrutiny and criticism, without which abuses may flourish undetected. Further, the public administration of justice tends to maintain confidence in the integrity and independence of the courts. The fact that courts of law are held openly and not in secret is an essential aspect of their character. It distinguishes their activities from those of administrative officials, for "publicity is the authentic hall-mark of judicial as distinct from administrative procedure". To require a court invariably to sit in closed court is to alter the nature of the court. The example that is relevant here is found in s 50 of the Federal Court of Australia Act 1976 (Cth). That section provides that an order may be made "forbidding or restricting the publication of particular evidence, or the name of a party or witness, as appears to the Court to be necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth. I accept that it would be contrary to the interests of justice, and detrimental to the welfare of the members of the deceased's family which include two young children, were they to read anything about their father and the circumstances of his death. Moreover, no public interest is served by disclosing his identity. The same is true of another client who is under such enormous stress that he is at risk. 11 As to the other clients, the solicitor makes out a good case for them to be shown sympathy. Many are suffering badly, both financially and otherwise, because of their failed investment in OPS. But that is not a sufficient basis for keeping secret the fact that they have made an application to a court. 12 The issue that troubles me is not so much whether I should keep their identity secret, but what to do with the affidavit filed in support of confidentiality order. It seems to me that the solicitor filed the affidavit in the mistaken belief that whatever the outcome of the application the contents of the affidavit would be kept confidential. Indeed in the affidavit the solicitor said that "[i]t [the affidavit] contains extremely confidential material and is filed and provided to the administrators, the receivers and the ANZ Bank on the basis that it is not to be disseminated". Yet the affidavit has been filed and read. Nonetheless, I think, in fairness to all concerned, I should restrict access to those parts of the affidavit that contain specific information about an individual client. 13 Accordingly, I will make orders that will keep confidential the names of two persons who originally sought leave to appear as interveners and restrict access to certain parts of the affidavit. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | names of applicants whether appropriate to keep confidential applicable principles practice and procedure |
The appellants are husband and wife. Only the appellant wife made substantive claims for the visa. 2 The appellant claims to fear persecution in Russia because of race. She claimed to be of Chechen ancestry and appearance and said that for this reason she had been detained and beaten on occasions between 1994 and 2002. The Tribunal found that the claims were neither plausible nor credible after giving detailed reasons. The Tribunal did not accept that she was of Chechen background and decided that her application should be considered on the basis that she is of Russian nationality. 3 The credibility issue turned, in important respects, on the applicant's assertions that visa stamps for travel to the Maldives and Panama had been entered without her knowledge and consent in her passport or that of her husband by a travel agent. She said that they have never travelled to these places. When she was asked by the Tribunal about the name of the travel agency in Moscow she could not remember the name and said that her husband would probably know because it was in his notebook. No further evidence concerning this notebook was provided to the Tribunal from either the applicant or her husband. The husband did not attend the hearing to support her case because she said he 'had to go to work'. 4 On 6 January 2006 the Tribunal wrote two letters to the applicant seeking information and further evidence to support her claims. The letters noted that, according to country information, visas were sometimes deliberately forged. She was requested to provide a Statutory Declaration from her partner verifying that is what happened to their passports. No declaration was provided. There was no reason to believe that she did not communicate with her husband. 5 On 17 January 2006, the appellant's representative replied by referring to articles and to the web, and in particular to statements that there were often false visas stamped on passports in Russia. Importantly, however, no evidence was provided by her husband as requested. 6 On the hearing the appellant said again that she and her husband had not travelled abroad and that the visas were false. The Tribunal raised the issue with her and said that the applicant's husband had not provided any statement or support for the claims that the visas were false and that this was contrary to her assertion. 7 The applicant asked if the Tribunal would itself check the visa stamps in the passport. The Tribunal declined to make its own enquiries and stated that the passport was very strong evidence. The Tribunal refused to contact foreign countries to itself verify her case because this would be tantamount to advising countries of the fact she was a refugee applicant and the Tribunal did not want to disclose that fact. The Tribunal not unreasonably state that she and her husband could make any necessary inquiries. 8 The Tribunal in reaching its conclusion relied heavily on the fact that the applicant's husband did not produce any evidence to corroborate her claim that the visas, although regular on their face were false, despite having been invited to do so. The Tribunal found that the applicant's husband did not support the applicant's claims although it accepted that false visas could be entered in passports for the aim of achieving refugee status or to travel to Australia. It considered the decisive factor was the fact that he was "not prepared" to provide evidence although he had been informed of its request. The Tribunal then found the applicant's husband could not or would not substantiate the applicant's claim and therefore it did not consider it should make any further investigation or refer the matter for verification of the visa nor was it prepared to make inquiries with the Document Examination Unit as that would not resolve the question whether the visas had actually been used for travel or whether they were placed at a later stage for the purpose of deception. 9 Because of its finding that the passport visa stamps had not been shown to be false, the Tribunal found that the applicant in fact had travelled to the Republic of Panama and the Maldives in early 2001. Consequently the applicant was found not to be a credible witness and her evidence was rejected. 10 Having found that the applicant, contrary to her assertion, had travelled to Spain, Italy, France, Finland and Sweden during the period she claimed she was persecuted and did not seek protection, but returned to Russia, the Tribunal found the applicant did not have a genuine fear of persecution. The first is that the Tribunal failed to comply with s 424A(1) of the Migration Act 1958 (Cth) when it did not inform the applicant wife of particulars of the absence of corroborating information from her husband's protection visa application on which it relied, or give her any opportunity to comment on it or appreciate its relevance. 12 The appellant contends that she should have been informed that the failure of her husband to provide a Statutory Declaration or any information to corroborate her case would be used adversely to her case. 13 The absence of a response by her husband in my opinion was not 'information' but rather an observation and part of the reasoning process about the deficiency in the evidence before the Tribunal: see WAGP of 2002 v Minister for Immigration & Multicultural Affairs [2002] FCAFC 266 ; (2002) 124 FCR 276 at [26] - [29] . 14 A failure to deal with or raise the matter in a protection visa application is not 'information': Applicant S301/2003 v the Minister for Immigration and Multicultural Affairs [2006] FCAFC 155 at [19] . The reference in the present case to non-provision of a statement when an applicant is specifically asked to do so, given the close relationship between the parties, can properly be treated as part of an appropriate reasoning process to reach the conclusion made in this case on her credibility. The absence of the corroboration is a fact and is not information. It has been used as a step in the reasoning process and not as information. The fact is that the request was not met. It was open on this material for the Tribunal to form the view that the appellant must have been aware of the fact that it was not provided. 15 Accordingly, the challenge made under s 424A must fail. It is thus not necessary to deal with the second ground of appeal, namely whether s 424A(3)(b) applies to information given by the husband. This issue raises a question as to whether the applications of the applicant and her husband should be treated as a joint application or as separate applications. There are different views in the Court on this aspect and, because it is not necessary for me to determine this question, I do not make any decision on this part. 16 The third ground of appeal relates to an asserted duty of the Tribunal to make inquiries under s 427. The reason why the Tribunal did not make inquiries in this case are set out in the reasons and I can see no error in them. The reasoning is to the effect that the husband had been specifically requested to provide information and a Statutory Declaration as to passports and visas, and yet for no apparent reason failed to do so, notwithstanding that he was aware of the request. The Tribunal could properly consider that before it made any investigation of its own it should be persuaded that the appellant had provided all relevant evidence at her disposal or at least explain why it is not provided. There is no general obligation on the Tribunal to make further inquiries and in my view the circumstances of this case were not such as to generate an obligation on the Tribunal to make further investigations in the absence of any indication that such enquiries would be futile. 17 On the state of the evidence before the Tribunal it was open to it to find that the husband was not prepared to corroborate the wife's case, and given that lack of co-operation, I can see no error in the Tribunal's reasoning to the effect that the visas were valid. I have not been referred to any appellable error in the reasons of the Federal Magistrate given the approach taken by the Tribunal on the findings open to it. 18 Accordingly, this appeal is dismissed with costs. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | meaning of "information" failure by one applicant to reply to tribunal questions not information for another applicant discretion of the tribunal migration act 1958 (cth), ss 424a(1) , 424a (3)(b), 427 . migration law |
A party's oath that a particular document was irrelevant (which would include an indirect statement imputed from the omission of a document from an affidavit of documents) was conclusive unless the court was reasonably satisfied from certain definite sources that the party had in his possession other relevant documents: Lyell v Kennedy (1884) 27 Ch D 1, 20. The sources to which the court could turn were the affidavit of documents itself ( Hall v Truman, Hanbury, & Co (1885) 29 Ch D 307, 319), a document referred to in the affidavit ( Lyell v Kennedy ), the pleadings ( Jones v Monte Video Gas Co (1880) 5 QBD 556) and documents referred to in answers to interrogatories. British Association of Glass Bottle Manufacturers, Limited v Nettlefold [1912] 1 KB 369 extended the sources to include any that contained an admission of the existence of a discoverable document. 2 Generally speaking, it was not possible to file a contentious affidavit to show that a party had not discovered all relevant documents: Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55, 61. The only remedy which a party had in order to show that an adversary's affidavit of documents was deficient was to obtain leave to administer interrogatories for that purposes: Jones v Monte Video Gas Co (1880) 5 QBD 556, 558; Newall v Telegraph Construction Company (1866) LR 2 Eq 756. The circumstances in which leave to administer interrogatories would be allowed were considered in Hall v Truman, Hanbury, & Co (1885) 29 Ch D 307. When the court was satisfied that a party might have other relevant documents, it could order a further affidavit confined to the particular documents believed to have been omitted ( Vyse v Foster (1872) LR 13 Eq 602) or a further general affidavit ( Saull v Browne (1874) LR 17 Eq 402). 3 To relax the conclusiveness of the affidavit of documents a rule was introduced allowing the court to order specific discovery by requiring a party to state whether one or more specified documents are or have been in his possession or power: White v Spaffard & Co [1901] 2 KB 241; Weir v Greening [1957] VR 296, 298. In the Federal Court the rule is O 15, r 8. The requirements to be met by a party applying for particular discovery were considered in Beecham Group Ltd v Bristol-Myers Co [1979] VR 273, 278-282. In substance, to justify the making of an order the party applying must identify the document in issue and satisfy the court that there is a "reasonable ground for being fairly certain" that the document is relevant and is (or has been) in his opponent's possession. 4 The issue here is whether the applicant should make particular discovery in relation to its claim of insufficiency, one of the grounds upon which the validity of the patents in suit are challenged. The sufficiency of a patent (as to which see s 40(2)(a)) is a pure question of fact in respect of which there may be discovery ( F Hoffman-La Roche AG v Chiron Corporation (2000) 171 ALR 295, 299). The question to be answered is whether "the disclosure [will] enable the addressee of the specification to produce something within each claim without new inventions or additions or prolonged study of matters presenting initial difficulty": Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd [2001] HCA 8 ; (2001) 207 CLR 1, 17. There is some uncertainty regarding the date at which sufficiency is to be determined. According to Blanco White's Patents for Inventions (1983) at [4-508] it is the date of the publication of the specification. On the other hand in Pfizer-Overseas Pharmaceuticals v Eli Lilly and Co [2005] FCAFC 224 , [328] the Full Federal Court decided that sufficiency should be assessed in light of the common general knowledge and the art immediately before the priority date. The priority dates of the patents in suit are 19 July 1993. 5 The present application has come about in the following way. The applicant has developed (outside Australia) and sells (outside Australia) a stent, known as "the CoStar stent" which the respondents contend, if it were to be manufactured and sold in Australia, would fall within several claims of one or more of the patents in suit. On that basis the respondents assert that it is likely that documents describing the development of the CoStar stent will bear on the sufficiency of the patents in suit. In particular they contend that it is relevant to know whether the applicant produced a prototype of the CoStar stent "without undue experimentation or inventive ingenuity" and that this information may be gathered from reports that relate to the research, development or experimental work leading to the production of a workable prototype of the CoStar stent. Particular discovery is sought of these documents. 6 The applicant has tendered evidence that it did not rely on the patents in suit to design the CoStar stent. Mr Shanley, Chief Technical Officer and a director of the Applicant, described in detail the process of research and experimentation leading up to the CoStar stent prototype. He said that "[n]either the Respondent's Patents or the [Respondent's stent] could have assisted our development effort. " Mr Litvack, the Applicant's CEO, said "we did not obtain our first sample of the [Respondent's stent] until 2003, after we had independently designed our product and were already in human clinical trials. " Moreover, the Applicant says that since its stent was developed in 2002, as the relevant date for testing sufficiency is the priority date (19 July 1993), the documents which are sought to be produced would be at least six years old and so could not possibly be relevant. The applicant also says that the substantial time and expense involved in locating and examining the documents would be disproportionate to any benefit that might be gained from their production. 7 That the applicant may not have copied the respondents' patents is important but not determinative of the issue. I think that Ms Howard is correct when she says that the nature of the work undertaken by the applicant in developing its own prototype stent may (and I emphasis the word "may") be relevant to what work would be required by a person skilled in the art to make something within the claims. The relevance of the work (if it be relevant at all) in large measure will be dependent upon the respondents establishing, first, similarity between the CoStar stent and the stent the subject of the patents in suit and, second, that the state of knowledge of the relevantly skilled person was the same in the United States (where the applicant's work was undertaken) as it was in Australia at the priority dates. I have no means of knowing whether these propositions will be established. In any event, they are matters that cannot easily be determined on an application for particular discovery. 8 I am also not much persuaded by the applicant's points relating to time and expense. The first does not deny relevance, though it does cast some doubt on the utility of the exercise. The second goes against the applicant. 9 The position I have reached is this. I am neither satisfied that the applicant has nor that it does not have in its possession documents which bear on sufficiency. But I suspect that the applicant may not have undertaken a sufficiently thorough examination of the documents that are in its possession to determine whether any might bear on sufficiency. This suspicion is based on the applicant's evidence about the time and expense involved in making further discovery. This suggests to me that nothing along these lines has been done thus far. There is therefore the possibility that the applicant has not made proper discovery. 10 In these circumstances it is appropriate that there be an order for particular discovery. The order that best meets the circumstances of this case is one that requires the applicant to file an affidavit in which it states either that it has no documents in its possession that relate to the issue of sufficiency, or, if it does (or did) have such documents, to identify the documents so that (if available) they may be inspected. | insufficiency party making allegation manufactures similar product whether required to discover documents relating to development of its own workable prototype patents |
On 24 January 2006, receivers and managers were appointed to the company. On the same day the sole director of the company, Mr Norman Carey, appointed Mr Ian Francis and Mr Michael Ryan, of Taylor Woodings, as administrators of the company and they have acted as administrators of the company since then. 2 The application for winding up is brought by the Australian Securities and Investments Commission ('ASIC'). The ground upon which the application is brought is that the company is insolvent. The application is supported by the Australian Taxation Office, a major creditor, and is also supported by the receivers and managers of the company. The administrators do not oppose the making of the winding up order. 3 The affidavits which are relied upon by ASIC and the various parties that have been given leave to appear are as follows. ASIC relies upon the affidavits of Mr R Gomm of 19 December 2005, Mr K Chin of 19 December 2005, 23 December 2005 and 20 January 2006, Mr S Mullins of 7 February 2006, Mr D Jackson of 7 February 2006 and the affidavit of Mr J Herbert of 16 February 2006. The Deputy Commissioner of Taxation relies upon the affidavits of Ms N Rice of 23 December 2005 and 6 February 2006. The receivers and managers of the company rely upon the affidavit of Mr O Zohar of 10 February 2006. Mr O Zohar is one of the receivers and managers of the company. 4 I have given leave to two companies, North Sydney Finance Limited (In Liquidation) ('North Sydney Finance') and Emu Brewery Mezzanine Limited (In Liquidation) ('Emu Brewery Mezzanine') to appear and make submissions at this hearing. Mr Jones and Mr Weaver have been appointed as the liquidators of each of the respective companies. Each company is one of a number of companies within the Westpoint group of companies, referred to in the papers as mezzanine companies. The mezzanine companies are companies that borrowed money from members of the public and on-lent that money to companies within the Westpoint group of companies. The mezzanine companies are the beneficiaries of guarantees by the company for the repayment of those loans so that the mezzanine companies, and claim to be creditors of the company. The liquidators have filed proofs of debt of $12,370,370.40 in respect of North Sydney Finance and $25,288,098.98 in respect of Emu Brewery Mezzanine. 5 The reason why I have given leave for those companies to appear today is because there is a controversy as to who should be appointed as liquidators of the company. The liquidators of those companies wish to make submissions only in relation to this controversy. 6 The controversy arises because Mr Herbert and Mr Read, with the support of ASIC, have consented to act as liquidators of the company; and the administrators, Mr Francis and Mr Ryan have also indicated that they are prepared to act as liquidators of the company. Mr Jones and Mr Weaver in their capacity as liquidators of North Sydney Finance and Emu Brewery Mezzanine support the appointment of Mr Francis and Mr Ryan as liquidators of the company. They rely upon the affidavits of Mr Jones of 14 February 2006 and two affidavits of Mr Francis dated 9 February 2006 and 15 February 2006, respectively. 7 There were also notices of intention to appear given by some persons claiming to be creditors to oppose the winding up, but no appearance has been made by those persons today and so no affidavits are read. 8 Mr Colvin SC, on behalf of ASIC, has asked me to exercise my discretion under s 467(3) of the Corporations Act 2001 (Cth) to dispense with the requirement under r 5.5(3) of the Federal Court (Corporations) Rules 2000 ('the Corporations Rules'), with respect to the time for the filing and serving of the consent by Mr Herbert and Mr Read to act as liquidators of the company, which was filed and served one day late. I will make the order dispensing with compliance with r 5.5(3) of the Corporations Rules. 9 There is no opposition to the making of an order winding up the company. On the undisputed evidence of Mr Zohar, the company is what he describes as 'hopelessly insolvent' with an estimated deficit of $451 million. I will, therefore, make orders for the winding up of the company. 10 It is necessary to now consider the question of who should be appointed as the liquidators of the company. The relevant evidence in relation to this issue is as follows. Mr Herbert and Mr Read are the provisional liquidators of Westpoint Management Pty Ltd, a company which is one of a large number of companies which are related to the company and which are referred to as the Westpoint group of companies. He has stated that there are at least seven separate loan accounts between the company and Westpoint Management Pty Ltd in its own right and in its capacity as trustee of the 297 Murray Street Trust, the 60 Market Street Trust, the Paragon Apartments Trust, the Warwick Cinema Syndicate Trust, and in its capacity as the responsible entity of two separate managed investment schemes being the Warnbro Fair Syndicate Trust and the Paragon Commercial Syndicate Trust. Mr Francis goes on to depose that the balance of those loan accounts, as set out in the books and records of the company to which he has had access, appear to be as follows. In its own right, Westpoint Management Pty Ltd is a creditor for $1,010,446.91, the 297 Murray Street Trust is a debtor of $14,358,045.90, the 60 Market Street Trust is a debtor of $16,458,041.56, the Paragon Apartments Trust is a debtor of $324,065.96, the Warwick Cinema Syndicate Trust is a debtor for $20,729.41, the Warnbro Fair Syndicate Trust is a debtor for $1,457,463.85 and the Paragon Commercial Syndicate Trust is a creditor for $954,781.36. 12 Mr Francis also says that there are some charges which have been given in relation to those debts which may not be valid. 13 Further, Mr Francis says that on 3 February 2006 he was approached by Mr Greg Nairn. Mr Greg Nairn said words to him to the effect that, he was the only director of Westpoint Management Pty Ltd, and he was going to apply to Court on 6 February 2006 for the appointment of a provisional liquidator to Westpoint Management Pty Ltd and that he wanted Mr Ryan and Mr Francis to act as provisional liquidators of Westpoint Management Pty Ltd. Mr Francis says that, after having given the matter some consideration, he said to Mr Nairn on 3 February 2006 words to the effect that given the position of the loan accounts between the companies and the issues of the charges, he and Mr Ryan would not be able to accept the appointment because he considered there was a conflict of interest given their role as administrators of the company. 14 Further, in his evidence, Mr Francis says that his firm, Taylor Woodings, has undertaken a considerable amount of work since the commencement of the administration. He says that he and his staff have performed in excess of 1000 hours of work in relation to the administration of the company, and he says that in particular, they have spent over 590 hours investigating the affairs of the company, and reporting to the creditors. Mr Shaw, on behalf of North Sydney Finance and Emu Brewery Mezzanine, has taken me to an annexure to the affidavit of Mr Francis which indicates that the amount of money which is said to be chargeable in respect of those investigations is $153,230.00. 15 As a consequence of carrying out that work, Mr Francis has produced a draft report to creditors which he has exhibited to his affidavit. This indicates that a fair amount of work has been done. However, and significantly, Mr Francis has included the following paragraph in his executive summary of that report. Given the limited time since our appointment, the size and complexity of the Westpoint Group, in respect for which the Company acted as a central treasury and conducted most cash transactions, and the books and records being held by the Receivers who have limited our access to the relevant financial information, it has not been possible to conduct a complete review. As such this report should be considered as a preliminary report of our findings. A more detailed investigation will be undertaken by the Liquidator, should one be appointed. Mr Herbert has said that he believes that the appointment of himself and Mr Read as liquidators will not lead to further costs to the creditors of the company. One reason he gives for this view is that if appointed he and Mr Read propose to request the files of Taylor Woodings, the administrators' firm, and use the information on those files. He also says that, to the extent that there is a need to undertake work to replicate work undertaken by Taylor Woodings, he undertakes to the Court that he and Mr Read will not seek approval of costs or fees from creditors of the company in respect of this work. I believe that my appointment as liquidator, together with Mr Read, will allow significant synergies to be offered to the creditors, reducing costs of the liquidation. 19 Senior Counsel for ASIC, made submissions in support of the appointment of Mr Herbert and Mr Read as liquidators. He submitted that the company is part of a group comprising a large number of companies and Mr Herbert and Mr Read were already in control of Westpoint Management Pty Ltd - another of the companies in the group. He submitted that a factor which should be taken into account in considering whether to appoint Mr Read and Mr Herbert, is that the affairs of Westpoint Management Pty Ltd and the company are substantially intertwined, and that the on-going investigations would be assisted if there was one set of liquidators in respect of both companies. Further, he submitted that the appointment of the same persons as liquidators to the companies in a group of companies would be more efficient and would reduce the costs of the administration. It was in the interests of creditors, generally, if expenses were reduced. 20 Senior counsel also submitted that there was no real conflict between the roles which Mr Herbert and Mr Read might have to perform as liquidators of the company and as provisional liquidators of Westpoint Management Pty Ltd. He submitted that the authorities are to the effect that it is desirable that where companies in a group go into liquidation, to the extent that it is possible to do so without there being a real conflict of interest, one liquidator should be appointed to the companies in liquidation. Mr Colvin SC also submitted that it is well accepted that the courts would appoint a single liquidator to a group of companies, notwithstanding that there might be some possible theoretical conflict, on the basis that if a real conflict emerged during the course of the administration, that the liquidator could then make alternative arrangements as to how to deal with the real conflict. The fact that there might be a theoretical conflict should not be an inhibition on the appointment of a single liquidator. 22 Further, senior counsel for ASIC, submitted that a relevant consideration to be taken into account is the expressed position of the creditors. He said that the secured creditor, represented by the receivers and managers of the company and the Australian Taxation Office both supported the appointment of Mr Herbert and Mr Read as liquidators. 23 Mr Colvin SC also acknowledged that in their capacity as administrators Mr Francis and Mr Ryan had carried out work in relation to the affairs of the company. However, he said that there is a difference in the nature of the work performed in discharge of the duties of an administrator, and the work that a liquidator would be required to perform. He said that a substantial amount of the work which was carried out by Mr Francis and Mr Ryan was in discharge of their duties as administrators. 24 Mr Colvin SC also submitted that the Court should take into account that these administrators were appointed to their position by a director of the company and this could give rise to the spectre of a lack of independence on the part of Mr Francis and Mr Ryan. 25 Mr Thomson who appeared on behalf of the receivers and managers of the company, also made submissions in support of the appointment of Mr Herbert and Mr Read. He said that in the event that there were two sets of liquidators appointed, one to the company and one to Westpoint Management Pty Ltd, the receivers and managers would have to deal with two firms of insolvency practitioners. This would increase the costs of the receivership with the consequence that on the termination of the receivership there would be less money available to the unsecured creditors. He submitted that having different liquidators would result in inefficiencies. 26 Mr Thomson also referred to Sisu Capital Fund Ltd v Tucker [2005] EWHC 2170 (Ch) ('Sisu Capital') particularly at pars 103-115, of the judgment of Warren J, in support of the proposition that courts are not inhibited by the fact that there might be theoretical conflicts, where considering whether to appoint a single liquidator to a number of companies within a group of companies. 27 Mr Thomson made the similar arguments to those advanced by Mr Colvin SC against the proposition that because Mr Francis and Mr Ryan had already undertaken work in investigating the affairs of the company, it would be more efficient if they were appointed as the liquidators. He also submitted that if Mr Francis and Mr Ryan were appointed there might be some suspicion that they were not sufficiently independent of Mr Carey, because Mr Carey had appointed them to the position of administrators. 28 Mr Shaw, for North Sydney Finance and Emu Brewery Mezzanine, made submissions in support of the appointment of Mr Francis and Mr Ryan as liquidators. 29 Firstly, he submitted that there could be no perception of lack of independence on the part of Mr Francis and Mr Ryan arising from the fact that they and been appointed as administrators by the sole director of the company. He submitted that was a frequent occurrence for administrators who had been appointed by the directors with the object of putting together a deed of company arrangement, subsequently to become liquidators. He then pointed to the fact that there were already a significant number of insolvency practitioners appointed to the various companies in this group that are in external administration. 30 He also submitted that the appointment of Mr Francis and Mr Ryan would promote efficiency. He said that much of the work in respect of the investigation of the company's affairs has been done and that there was, therefore, an advantage in appointing the incumbent administrators. He said that Mr Herbert and Mr Read recognised that if they were appointed they would have to undertake further work to catch up. He submitted that it would be more efficient to appoint persons who did not have to catch up. 31 I have come to the view that Mr Herbert and Mr Read should be appointed as liquidators for the following reasons. 32 Firstly, I agree that the observations made by Lehane J in Chilia , referred to above, state the principles to be applied in this case. That does not usually deflect the court from appointing a single firm of insolvency practitioners in the first instance to deal with the whole insolvency of the group, leaving the question of potential conflict of interests to be dealt with if and when it arises. 34 I am not satisfied that on the evidence that is before me that there is any real conflict in the sense that that concept is recognised in the cases. There is no evidence the appointment of Mr Herbert and Mr Read to the position of liquidators of the company would adversely affect the interests of external creditors or other external interests. The evidence of Mr Francis as to the inter-relationship between Westpoint Management Pty Ltd and the company does not demonstrate any such prejudice. 35 I am also confident that in the event that any real conflict does emerge that the liquidators will approach the Court and seek directions in relation to how to deal with that conflict, as is foreshadowed in the authorities. 36 Secondly, as to the question of the extent of work that has already been done, I accept that the administrators have done some good work in relation to the investigation of the affairs of the company as is evidenced by the draft report to creditors of 13 February 2006, exhibited to the affidavit of Mr Francis. However, as is recognised in that document itself, the amount of work which will be required to be done in the conduct of a liquidation of this size and of this complexity would be substantially more than has already been done. Therefore, the fact that there has been some work done in investigating the affairs of the company, does not, in my view, operate as a decisive factor in favour of appointing the administrators as liquidators. 37 Further, the position that is deposed to by Mr Herbert in his affidavit that no fees will be claimed in relation to any catching up, operates as a significant factor to counter any concerns relating to any duplication of work that may arise from appointing Mr Herbert and Mr Read as liquidators. In my view, the synergies which will be achieved by appointing them as liquidators to the company outweigh any difficulties that might be associated with any catching up. 38 Thirdly, I accept that whilst the expressed views of the creditors are not decisive they should be taken in to account. In this case, however, there are some creditors who opposed the appointment of Mr Herbert and Mr Read, and some who favoured it. Accordingly, I do not regard this factor as a decisive factor in my determination. 39 Finally, it was submitted that Mr Francis and Mr Ryan should not be appointed because, having been appointed by Mr Carey, there would be a perception of lack of independence. I do not take that factor into account because I do not accept that submission. I accept the submission of Mr Shaw that it is often the case that administrators are appointed as liquidators, notwithstanding that they are initially appointed as administrators by the directors of the company. There is no evidence before me which could cause me to question the independence of Mr Francis and Mr Ryan. 40 I will make orders in terms of the minute of orders provided to me by ASIC. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | winding up application insolvency winding up proceedings commenced by asic whether one set of liquidators should be appointed to companies which are part of a group of insolvent companies company insolvent winding up orders made on insolvency grounds one set of liquidators appointed corporations |
The Tribunal upheld a decision of a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs ("the Minister") made on 30 April 2003 refusing the applicant's application for a protection visa. 2 The application for an extension was filed on 28 March 2006. The time limit for filing and serving a Notice of Appeal is 21 days: O 52 r 15, Federal Court Rules . 3 The applicant is a citizen of Fiji who arrived in Australia on 6 October 2002. In her primary application, the applicant describes herself as an Indo-Fijian citizen. She was born in September 1970 in Fiji and was divorced in September 2000. She states that she feared harm from her former husband who had subjected her to physical and emotional abuse during their marriage and continued to stalk, harass and intimidate her after their divorce. Her case was that she had a well-founded fear of persecution if returned to Fiji as a person who had been subjected to domestic violence by her former husband and as a member of the social group of "women at risk in Fiji. The draft Notice of Appeal discloses no specific grounds of review but contains a single ground, namely, that the RRT failed to make the necessary finding that she belonged to a particular social group and also failed to make the relevant factual findings. 5 To succeed on an application for an extension of time it is necessary to show that there are special reasons: O 52 r 15(2) of the Federal Court Rules . When the matter came on for hearing before me, the appellant advanced no submissions of substance in support of the application for extension of time and nor did she give any adequate explanation as to the six month delay in filing the application to this Court. She did however say that she had made an application to the Minister for a more favourable exercise of discretion and that this had been refused in late February 2006. She said that this was the reason for the delay but I am not satisfied that this is a "special reason". 6 In the circumstances, however, I considered that it was appropriate to examine the RRT decision. 7 In the RRT reasons, consideration is given to Minister for Immigration and Multicultural Affairs v Khawar [2002] HCA 14 ; (2002) 187 ALR 574 (" Khawar" ). At page 26 of its reasons, the RRT concluded that, in the present case, the State was prepared to protect its citizens, and I can see no error in the reference to, or application of, the principles set out in Khawar . This was the sole ground relied on by the appellant. The RRT was prepared to accept that she was a member of the social group but did not accept that there was a lack of state protection. Therefore, the reasons of the RRT are consistent with Khawar . There is no substance in the ground of appeal raised. 8 Notwithstanding that the explanation for delay is not sufficient and that the applicant has made no submission of substance disclosing special reasons, I consider that the RRT reasons on their face do raise a question as to whether s 424A of the Migration Act 1958 (Cth) ("the Act ") has been breached. 10 In this case, it is apparent from the reasons of the RRT that it had before it the Department's file, which included the original Protection Visa Application and a record of the delegate's decision. The reasons disclose that the RRT had regard to the material referred to in the delegate's decision, and also to other material available to it from "a range of sources". This range of sources is not specified. This is unsatisfactory. The sources should have been specified, however, in this case I do not consider that the failure to do so invalidates the decision because we do not know what those sources indicated. 11 In the RRT reasons, there is a reference to extensive country information, much of which is quoted. 12 The RRT found that the applicant and her witnesses gave credible evidence. It accepted that she had suffered as she had claimed and would be in fear of her former husband if she returned to Fiji. It accepted that she would be at further risk of harm from her husband given that she had remarried. The RRT accepted that this was a fact that would further enrage her husband and thwart her commitment to gain custody of the children. The RRT concluded that the independent information indicated that family related violence was a significant problem in Fiji. 13 After referring to Khawar , the RRT concluded on the country information that the government in Fiji had made a commitment to redressing gender discrimination and the law, particularly as it related to women and domestic violence. The RRT also noted that a new police commissioner had been appointed to increase the professionalism of the police force with an independent complaint mechanism, and that reports in the press indicated that the Fijian courts made judgments against male perpetrators of violence against women, including those in family situations. Accordingly, the RRT concluded that the case did not come within the principle set out in Khawar . The RRT also noted that there are non-government organisations of women's groups in Fiji who help women in domestic violence situations. The RRT concluded that, on the basis of the evidence before it, there was no real chance that the applicant would face persecution for any Convention reason should she return to Fiji. The reasons then proceed to note that she is married to an Australian citizen, that she is terrified of her former husband and that she is determined to gain custody of her children. The RRT reasons also state that the case merits consideration on humanitarian grounds. 14 On a reading of the RRT decision as a whole, it is not apparent whether or how the RRT used the material on the Departmental file. It is apparent that the RRT accepted that the applicant had suffered as she claimed and that she was a credible witness. The RRT decision turns on its acceptance and application of the principles laid down in Khawar in relation to state protection. Having regard to country information, which it cites in detail, the RRT concluded that there was no real chance of persecution if the applicant were returned to Fiji. In my view, the reasons for decision do not indicate that the RRT used the material in the file as a reason or part of any reason to reach its decision. The considerations discussed by the RRT in its decision indicate that the RRT used the file in the applicant's favour as to credibility. Accordingly, the primary obligation of s 424A(1) --- to make information that may be used by the RRT to affirm the decision under review available to the applicant --- has not been established in the present case. Therefore, there has been no breach of s 424A. 15 A second question that requires consideration in relation to s 424A is whether it can be said that the applicant or her agent have incorporated, adopted, or relied on the material in the departmental file before the RRT so that it can be said that the departmental file was information which the applicant gave to the RRT in the review application. 16 In the applicant's Application for Review to the RRT, there is a reference to the departmental file number and to reasons given by the applicant as to why she considers herself to be a refugee. In those reasons, she asserts that the case officer deprived her of the opportunity of an interview to enable her to explain her situation and the persecution she had suffered in Fiji. She says the case officer, on the application and information before him, was not able to fully understand the degree and seriousness of her claims. In my view, the fact of the file reference, of itself, does not amount to incorporation, adoption, or re-presentation of the material in the departmental file by the applicant or on her behalf to the RRT. 18 The end result is that there is no evidence to support a possible contention that the Protection Visa Application material or the departmental file were used by the RRT in reaching its decision, as part of its reasons or as part of the reasoning process in a manner adverse to the applicant. Therefore, I do not consider that there has been any breach of s 424A in the present case. 19 For the above reasons, the application for an extension of time is refused and dismissed with costs. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | application for an extension of time to file and serve a notice of appeal fijian citizen argued she had a well-founded fear of persecution subjected to domestic violence and claimed to be member of social group "women at risk in fiji" refugee review tribunal had regard to material referred to in departmental file s 424a of migration act 1958 (cth) whether letter from applicant's solicitors sufficient to constitute an incorporation, adoption or re-presentation of protection visa application material migration |
On 10 September 2009, 16,300,000 fully paid ordinary shares in Chalice were issued. That issue arose as a result of Chalice entering into an agreement with Southern Cross Equities Limited (Southern Cross), the holder of Australian Financial Services Licence 247027 under which Southern Cross was required to raise $4.4 million of new equity by way of placement of 16,300,000 fully paid ordinary shares to institutional and sophisticated investors at a price of 27 cents per share. The funds from that placement were to be used to fund general working capital requirements, principally in relation to a project in Eritrea, north eastern Africa. On the following day, Southern Cross advised it had agreements in place with institutional and sophisticated investors to subscribe for 16,300,000 fully paid ordinary shares in Chalice. There were 22 investors who participated in that placement to varying degrees but some of them, quite extensively (the Placees). At the same time, Chalice made an announcement to the ASX concerning the placement. Chalice advised that it had raised $4,401,000 before issue costs to fund the ongoing development of the Zara Project in Eritrea through the placement of the 16,300,000 shares at 27 cents per share to be made pursuant to the 15 per cent allowance under the ASX listing rules and to be completed on or around 10 September 2009. On 10 September 2009, all of the placement shares were issued and allotted to the Placees. Shortly before the placement, Chalice had completed a merger via a scheme of arrangement with Sub-Sahara Resources NL (Sub-Sahara) also listed on the ASX. On 12 August 2009, the scheme of arrangement was Court approved under s 411 of the Act. That scheme of arrangement became effective on 26 August 2009. The principal asset of Sub-Sahara is a 68.8 per cent participating interest in the gold exploration project in Eritrea called the Zara Project. Mr Richard Keith Hacker is the Company Secretary of Chalice. Part of the duties of Mr Hacker as Company Secretary of Chalice was to oversee the successful integration of Sub-Sahara and its business with Chalice following completion of the scheme of arrangement. This was a particularly busy time and his workload increased substantially once the merger became effective at the end of August 2009. He had primary responsibility for implementing the merger with Sub-Sahara in relation to accounting systems, staff and overseeing many of the other administrative issues associated with the absorption of the business of Sub-Sahara into Chalice and the relocation of its corporate records to the offices of Chalice. At the same time, in September 2009, he was heavily involved in the completion of Chalice's annual report to its shareholders which was lodged with the ASX on 24 September 2009 and was also fulfilling duties as Company Secretary to other ASX listed companies. Although Mr Hacker is assisted on accounting matters by one other person, he remains solely responsible for all secretarial and associated administrative functions within Chalice. Therefore, it was his responsibility to attend to the documentary requirements in connection with the placement which included the lodgement of an Appendix 3B in relation to the placement with the ASX. This was lodged with the ASX on 7 September 2009. He was also responsible for liaising with Chalice's Share Registrars concerning the issue and allotment of the placement shares to the 22 Placees. On the morning of 20 October 2009, Mr Hacker realised, when it was brought to his attention by Southern Cross, that a notice complying with s 708A(6) of the Act had not been given in relation to the placement as required in accordance with s 708A(5)(e) of the Act (the Notice). He has issued such notices in the past and is familiar with their function and purpose. On this occasion, due to his increased workload and involvement in overseeing the implementation of the recently completed merger between Chalice and Sub-Sahara, he inadvertently omitted to give the Notice in respect of any of the placement shares. Immediately after the oversight was brought to his attention, he contacted Chalice's solicitors and sought advice as to the steps available to Chalice to rectify the position. Mr Hacker was advised by Chalice's solicitors that the Australian Securities Investments Commission (ASIC) would not provide a 'modification of law' to allow Chalice to issue the Notice out of time and that the only avenue available to Chalice was to seek an order from this Court under s 1322(4) of the Act to enable the Notice to be given out of time. Accordingly, on the next day, 21 October 2009, Chalice made an announcement to the ASX indicating the situation and foreshadowing the making of this application and instructed the solicitors to write to ASIC notifying ASIC of the circumstances. The solicitors complied with that instruction on the same day. On the next day, Chalice wrote to each of the Placees notifying them of the position and the fact that a Notice in relation to the shares had not been given and of the proposed application. On the same day, Mr Hacker examined a copy of the Share Register of Chalice from which he was able to determine that six of the Placees had sold all of the shares that were issued to them totalling 1,954,584 shares and another four Placees had also sold shares after the placement but in each case the number sold was less than the number held by the relevant Placee prior to the placement and accordingly it is unclear whether the shares sold were part of the placement or shares held prior to the placement. Shortly put, the arguments for Chalice mirror the legislation. They are that the failure to give the Notice was due to inadvertence, not through any act of dishonesty or wilful intention; the placement shares were in a class of securities of Chalice that were quoted securities at all times in the three months before the day on which the placement shares were issued (that being, 10 September 2009); trading in that class of securities in the ASX was not suspended for more than a total of five days during the period of 12 months before the day on which placement shares were issued; no exemption under s 111AS or s 111AT of the Act covered Chalice or any person as director or auditor of Chalice at any time during the period of 12 months before the day on which the placement shares were issued; no order under s 340 or s 341 of the Act covered Chalice or any person as director or auditor of Chalice at any time during the period of 12 months before the day on which the placement shares were issued; at all material times, Chalice has complied with the financial reports and audit provisions under Ch 2M of the Act and the continuous disclosure provisions under s 674 of the Act; and finally, that there was no excluded information as that term is defined in s 708A(7) of the Act which would have required disclosure had the notices under s 708A(5)(e) of the Act been given within five business days of the day on which the placement shares were issued. There is no such excluded information which would now be required to be disclosed if such a notice was now given. The purpose of the Chapter is to ensure that the acquisition of control of shares in the circumstances of takeovers, takes place in an efficient, competitive and informed market. The provisions aim to achieve reasonable and equal opportunities on the part of shareholders within a relevant class to participate in any benefits accruing to holders through any proposals for which a person would acquire a substantial interest in a company, body or scheme. Appropriate procedures are to be followed. To the extent relevant to this application, the Act restricts the on-sale of shares issued without disclosure under Ch 6D unless the sale is exempt under s 708 or s 708A of the Act. The current sale was exempt but it was still necessary to give a Notice to investors (the Placees in this instance) of the matters prescribed in s 708A(6) within the time set out in subs (6). Subsequent to those events occurring, it has been confirmed on behalf of Chalice that none of the parties notified in respect of the relief which Chalice now seeks, has expressed a desire to appear or oppose the granting of the relief. Mr Hacker, the Company Secretary and Chief Financial Officer of Chalice refers to the fact that as at the time of swearing his affidavit in support of the originating process, the Placees have on-sold 1.9 million of the shares that were issued. I accept the explanation as to the other extraordinary activities at the time which gave rise to the oversight. Inadvertence has its normal meaning as suggested in the authorities, for example, Blaze Asset Pty Ltd v Target Energy Limited [2009] FCA 698 per Barker J (at [35]). On the basis of the evidence and applying some common sense, it is plain that the oversight in failing to give the requisite Notice was caused by inadvertence. In addition, at all material times Chalice has complied with the provisions of Ch 2M (financial reporting requirements) and s 674 of the Act (continuous disclosure requirements) as they applied to Chalice; there was and is no excluded information as defined in s 708A(7) of the Act which would have been required to be disclosed or now requires disclosure and, accordingly, no injustice will have been caused to any person by reason of the Notice not having been lodged within five business days of the shares being issued. There is no doubt in the present case that Chalice has taken steps very promptly once the failure to lodge the Notice was identified. There has been no undue delay. Also central to the relief sought by this application is the fact that Chalice would have been exempt in respect of the requirements under s 708A(5) of the Act in respect of the on-sale of the shares had it given a Notice for the purpose of s 708A(5)(e) of the Act within five business days of the issue of the shares. The declaratory relief sought by Chalice under s 1322(4)(a) of the Act to the effect that a Notice given under s 708A(5)(e) of the Act within the extended period be deemed to take effect as if it had been given within the period of five business days from 10 September 2009, that is, within the required five business day period, is consistent with relief granted in the matters of Charter Hall Limited, in the matter of Charter Hall Limited [2007] FCA 1316 , Diversified, in the matter of Diversified United Investment Limited ACN 006 713 177 [2008] FCA 720 and In the Matter of Chameleon Mining NL [2009] NSWSC 660. It also gives clarity for those affected shareholders (the Placees) who on-sold the relevant securities prior to the lodgement of a Notice which complies with the section and thereby to any purchaser from them. Even though these elements are expressed disjunctively, for the reasons discussed above, I am satisfied as to each of the elements of s 1322(6)(a) of the Act. Further, s 1322(6)(c) of the Act provides that the Court must not make an order under s 1322(4)(a) unless it is satisfied that no substantial injustice has been or is likely to be caused to any person. I am satisfied that no substantial injustice has been or is likely to be caused to any person. It is not evident that any injustice at all will be occasioned by granting the relief sought. Indeed, the contrary may be the case if relief is refused. It seems there was no excluded information which should have been but was not disclosed that could have altered the information base of those concerned if the time limits had been met. If that is wrong, a purchaser who is able to prove that there was excluded information which should have been disclosed would presumably have an independent cause of action available and certainly by the granting of liberty to apply, will have additional relief in respect of the orders to be made in this proceeding. There is no reason to think that compliance in the circumstances would have improved the position of a purchaser ( Charter Hall Ltd at [5]). Given the requirements for notice and advertising of the proposed orders, the granting of liberty to apply to vary or discharge the orders within a limited time would appear to accommodate any presently unforeseen potential for injustice ( Chameleon Mining NL (at [12])). Generally speaking, apart from the merger described in [4] the circumstances and reasoning in this application are very similar to those in which I granted similar relief earlier this month in RCR Tomlinson Ltd (ACN 008 898 486); In the matter of RCR Tomlinson Ltd (ACN 008 898 486) [2009] FCA 1130 (6 October 2009) The following orders will be made: In respect of the 16, 300, 000 fully paid ordinary shares in the plaintiff issued on 10 September 2009 (the Relevant Securities ) the period of five business days referred to in section 708A(6) of the Corporations Act 2001 ( Act ) be extended to the second business day after the day on which these orders are entered. The notice under section 708A(5)(e) of the Act given to ASX Limited ( ASX ) in respect of the Relevant Securities within the period provided for in Order 1 be deemed to take effect as if it had been given to ASX within five business days of 10 September 2009. These orders be entered forthwith. A sealed copy of these orders be served on ASIC, ASX, and each person named in the schedule which is annexure RKH-2 to the affidavit of Richard Keith Hacker sworn on 23 October 2009 within two business days of the date of these orders. A copy of these orders also be placed on the website of the plaintiff as soon as practicable and remain there for at least 28 days. Any interested party have liberty to apply within 28 days of the entry of these orders to revoke or vary the orders. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | application for order under s 1322(4)(a) and (d) of the corporations act 2001 (cth) extending the time for the company to give notice of share placement in accordance with s 708a(5) and (6) whether failure to issue notice due to inadvertence whether substantial injustice to any party corporations law |
2 The Tribunal also conducted a review of a preliminary or threshold decision by which the decision-maker decided that no liability arose in the respondent to pay Mr Parker compensation pursuant to s 14 of the SRC Act in respect of the injury to Mr Parker's right eye. The Tribunal set aside that decision and in substitution determined that subject to the provisions of the SRC Act , a liability arose in the respondent under s 14 of the SRC Act to pay compensation to Mr Parker by operation of s 6A of the SRC Act. 3 The Tribunal, in considering other provisions of the SRC Act and particularly s 24, concluded however that no liability arose in the respondent to pay compensation in respect of the injury suffered by Mr Parker resulting in permanent impairment. 4 The applicant appeals from the decision of the Tribunal in respect of the finding concerning the operation of s 24 of the SRC Act and contends that the Tribunal fell into error in reaching its decision. 5 There seems to be some confusion in the materials as to the proper identification of the relevant decisions the subject of the review before the Tribunal. In the Corrigendum the threshold decision concerning s 14 is described as decision Q2004/313 and the decision concerning the operation of s 24 is described as Q2005/572. The threshold or first decision is described as a decision made on 8 March 2004 and bears a reference in the papers of '2004/359'. The second decision is described as a decision made on 16 August 2005 and bears a reference '2006/049'. Nevertheless, it is clear that the decision the subject of the present application is the Tribunal's decision described as 'Q2005/572' that the respondent is not liable to pay compensation in respect of Mr Parker's permanent impairment by operation of s 24 of the SRC Act. 6 On the morning of the hearing the applicant sought leave to file an Amended Notice of Appeal. Leave was not opposed by the respondent and leave was granted. 9 The injury suffered as an unintended consequence of medical treatment provided to Mr Parker is damage to the retina of the right eye described as 'tractional detachment' or 'tractional retinal elevation' caused, in part, by a proliferation of fibrous blood vessels at the site of a shunt or bypass procedure intended to restore blood flow to retinal cells affected by an occlusion and thus deprived of normal blood flow. The injury suffered by Mr Parker is said to have resulted in permanent impairment as Mr Parker lost all sight in the right eye and the eye is now described as a 'dead eye'. 10 The applicant contends that the respondent is liable to pay compensation to him for that injury pursuant to s 14(1) of the SRC Act and that since the injury has resulted in permanent impairment the respondent has a liability to pay compensation in respect of the injury pursuant to s 24(1) of the SRC Act. The applicant contends that having regard to the definition of the terms 'impairment' and 'permanent' in s 4(1) of the SRC Act and the factors to be considered in determining whether an impairment is permanent set out in s 24(2) there can be no doubt that Mr Parker has suffered an injury resulting in permanent impairment by reason of the total loss of the use of his right eye. 11 The applicant contends that nothing in s 24 (nor any other provision of the SRC Act), properly construed, has the effect of extinguishing the respondent's liability to pay compensation to him in respect of an injury resulting in permanent impairment; nor an effect of reducing the amount of compensation payable by operation of the Act properly construed, to nil. 12 The applicant contends that the Tribunal fell into error in construing the proper operation of ss 6A, 14 and 24 the SRC Act in such a way as to conclude that no liability arose in the respondent to pay compensation to the applicant; in construing the application by operation of s 24(5) of the SRC Act of the Guide to the Assessment of the Degree of Permanent Impairment ('the Guide') approved by the Minister pursuant to s 28(3) of the SRC Act and the terms of the Guide to the question to be resolved pursuant to s 24(5); and in concluding that notwithstanding that on the findings of fact the applicant suffered an injury resulting in permanent impairment, the liability of the respondent to pay compensation in respect of that injury did not arise for the purposes of the SRC Act as blindness in the right eye would have inevitably occurred at some time in the future due to the progression of an underlying condition predisposing Mr Parker to a total loss of sight in the right eye. 13 The respondent contends that the applicant may only appeal on a question of law and the subject matter of the appeal can only be the question of law so raised ( TNT Skypak International (Aust) Pty Ltd v Commissioner of Taxation (1988) 19 ATR 1067 at 1069 --- 1070 per Gummow J; Comcare v Etheridge [2006] FCAFC 27 ; 149 FCR 522 at 527 per Branson J, with Spender and Nicholson JJ agreeing); a mixed question of fact and law is not a question of law within the meaning of s 44(1) of the AAT Act; and a broad inquiry as to the construction and operation of a statutory provision is not a question of law within the meaning of s 44(1) of the AAT Act ( Comcare v Etheridge (supra) at p 528 [19]). The respondent notes that in Comcare v Etheridge , Branson J at p 528 observed that 'by inviting the Court to engage in such a broad and hypothetical inquiry the purported question of law extends beyond any controversy between the parties' and is thus incapable of constituting 'a matter' within the competence of the Court's jurisdiction. The respondent says that each of the questions raised by the applicant and the contended errors identified are not errors of law and simply invite the Court to consider factual questions and engage in a broad inquiry as to the construction of particular statutory provisions. 14 The respondent further contends that the reasoning of the AAT is correct; the AAT correctly identified that once the requirements of s 24 of the SRC Act were met the AAT was required to consider the Guide and particularly the consideration identified under the heading 'Aggravation' at page 6 of the Guide; the AAT correctly applied the terms or provisions of the Guide when considering the 'degree of permanent impairment' of Mr Parker resulting from the relevant injury; and correctly concluded that the applicant suffered from a pre-existing or underlying condition described as 'right central retinal vein occlusion' when assessing the degree of permanent impairment resulting from the injury suffered as an unintended consequence of medical treatment; and correctly concluded that the degree of permanent impairment is nil. 15 As to the first ground of contention on the part of the respondent, I am satisfied that the application does not simply seek to frame a question of law as a device for obfuscating what is in truth an invitation to the Court to engage in a broad and hypothetical inquiry extending beyond any controversy between the parties. The question of law raised by the applicant is whether having regard to the facts found by the Tribunal, the Tribunal has correctly construed the statutory provisions at the centre of the controversy between the parties (and particularly the role of s 24(5)) and whether the Tribunal has properly had regard to the relevance and application of the Guide and the terms of the Guide as a subordinate instrument, having regard to the statutory provisions. These considerations are not hypothetical; are central to the controversy; and raise a question of law. 17 The applicant was born on 10 May 1965 and enlisted in the Australian Army in 1984. The applicant has enjoyed a distinguished career in the Australian Army and holds the rank of Lieutenant Colonel. At the time the applicant suffered the injury the subject of this application, he held the rank of Major. 18 In January 2001 (some time during the first week of January), the applicant having returned to Townsville from a posting in Victoria engaged in a training session as part of his military work which was the 'first intensive exercise' he had undertaken since returning to Townsville. During the course of that physical training session (that is, in January, in summer in Townsville in Northern Queensland), the applicant experienced a partial loss of vision in the right eye. The partial loss of vision did not last long; vision returned to normal after a few hours; a similar episode happened a week later while attending a lecture at work; the problem endured for a few hours before vision returned to normal; and thereafter such events occurred with increasing frequency and with longer periods of lost vision on each occasion. 19 On 30 January 2001, Mr Parker attended the Regimental Aid Post after the second event of lost vision. The applicant was referred to Dr Talbot, an Ophthalmologist, on 13 February 2001. Dr Talbot diagnosed the presence of a 'right central retinal vein occlusion' which Dr Talbot described in evidence as analogous to 'a small stroke' with the result that blood flow to the retinal cells was interrupted and blood flow obstructed. Dr Talbot considered that the occlusion was of the non-ischaemic kind and thus the prognosis seemed optimistic. 20 Dr Talbot referred the applicant to an ophthalmic surgeon, Dr John S Ambler. In a report dated 3 April 2001, Dr Ambler said that 'retinal examination of the applicant's right eye revealed a marked central retinal vein occlusion with a few cotton wool spots around the disc. There was marked intraretinal haemorrhage and major dilation and irregularity of the retinal venous systems'. Dr Ambler further observed in his report 'I therefore felt that Major Parker was a reasonable candidate for attempted chorioretinal laser shunting. As you know this procedure is only successful in thirty or forty percent of cases and can be associated with significant complications such as pre-retinal neovascularisation, vitreous haemorrhage, traction detachment etc'. 21 A chorioretinal laser shunting procedure involves the use of a laser to create a bypass around the blocked retinal vein to improve the blood supply to the retina and permit the blood trapped by the occlusion to drain away. In evidence before the Tribunal, Dr Ambler explained that he was hopeful the procedure would save what vision the applicant had left or perhaps even result in improved vision. The intervention was therefore thought to be therapeutic and efficacious. Dr Ambler said there was no alternative if the eye was to be saved and Dr Talbot took a similar view. Dr Ambler suggested that the prospect of serious complications was as low as 5% to 10%. 22 Dr Ambler performed the chorioretinal laser shunting procedure on 2 March 2001. 23 On 23 March 2001, Dr Ambler conducted a review. In his report dated 3 April 2001, Dr Ambler said, 'At review on 23.03.2001 however he had manifested a major vitreous haemorrhage reducing his vision to hand motions'. The Tribunal notes that a major vitreous haemorrhage is to be distinguished from a minor haemorrhage inevitably caused by the use of a laser to create a bypass or shunt around the occlusion. Dr Ambler also reported the presence of 'major fibrovascular proliferation at each attempted shunt with considerable tractional retinal elevation. I was able to dissect off the fibrous tissue and perform extensive laser photocoagulation throughout the retinal periphery'. 24 The Tribunal notes that fibrovascular proliferation is a growth of new blood vessels at the site of the shunt or bypass; fibrovascular proliferation is a product of a normal reaction of the body; the body responds to difficulties in circulation by creating new blood vessels; blood vessels fan out from a central site; they are encased in fibrous or scar tissue; and the scar tissue can pull the retina from the wall of the eye. The Tribunal notes the evidence of Dr Ambler that the blood vessels are apt to haemorrhage which is what occurred in the case of the applicant. Dr Ambler conducted a procedure called a vitrectomy and a procedure called laser photocoagulation to remove the newly formed blood vessels. Unfortunately, these subsequent procedures were not effective. The applicant continued to experience bleeding into his eyeball (intraocular bleeding) and vitreous haemorrhage. The Tribunal notes that there was also some traction detachment. Dr Ambler notes 'considerable tractional retinal elevation' at the review on 23 March 2001. 25 The Tribunal notes Dr Ambler's evidence that fibrovascular proliferation is caused by a combination of factors including ischaemia that had developed (although the occlusion was initially thought to be non-ischaemic) and the shunting procedure as the shunt appears to provide a focus for the growth of fibrovascular material. The Tribunal notes that the applicant's right eye, at the conclusion of these procedures, was 'effectively dead'; the applicant has lost all vision in the right eye; the applicant cannot perceive light in the right eye; and the eyeball has 'shrunken and may need to be removed in due course' [13]. 26 Dr John S Ambler told the Tribunal that he has stopped performing a chorioretinal laser shunting procedure due to the high rate of complications. 27 The Tribunal accepted the evidence of Dr Ambler and concluded, 'It follows I accept the vitreous haemorrhage and the tractional detachment that followed were a consequence of vascular proliferation. The vascular proliferation was a product of the ischaemia, although the shunting procedure may also have played a role in at least providing a focus for the growth' [16]. 28 The Tribunal accepted that the following events occurred. 29 Mr Parker suffered a sudden physiological ischaemic change that was similar to a stroke in the brain. That occlusion was treated by Dr Ambler by the shunting procedure. The shunt site provided a site or focus for the development of fibrous vascular material which led to a major vitreous haemorrhage. The fibrovascular proliferation caused the retina to detach and elevate giving rise to a physical injury of 'tractional detachment' or 'tractional retinal elevation'. Blindness in the right eye occurred 'as a result of this damage to the retina that was evident following the surgical procedure' [31]. The Tribunal also concluded that Dr Ambler clearly did not think it was likely that retinal damage following fibrovascular proliferation would occur. The Tribunal noted that while Dr Ambler 'agreed the success rate of the procedure was not high, he said he believed the damage Mr Parker suffered occurred in a much smaller number of cases. All the medical experts agreed damage to the retina was a known complication, but the consensus appeared to be that it occurred in only 5% - 10% of cases' [35]. Thus, Mr Parker suffered, as a statutory construct, an injury arising out of or in the course of his employment. 31 That injury resulted in impairment as the injury to Mr Parker's right eye resulted in the 'loss of the use or the damage or malfunction of [a] part of the body' of Mr Parker (see the definition of impairment in s 4(1) of the SRC Act) and thus a liability arose to pay compensation to Mr Parker in respect of that injury (s 14(1) of the SRC Act). 32 However, the injury resulted in impairment that was 'likely to continue indefinitely' (see the definition of permanent in s 4(1) of the SRC Act). That state of 'likelihood' was satisfied because Mr Parker's right eye was found to be dead, shrunken and potentially in need of removal [11]. Mr Parker's impairment is thus a permanent impairment. 34 Subject to Part II of the SRC Act, s 14(1) which forms part of Division 1 of Part II (Part II --- Compensation; Division 1 --- Injuries, property loss or damage, medical expenses) provides for a liability in the respondent to pay compensation in respect of an injury resulting in impairment . Section 24(1) of the Part II specifically addresses a liability to pay compensation in respect of an injury where that injury results in a permanent impairment . An injury contemplated by s 6A(2)(b) suffered by a person to which s 6A applies, is an injury for the purposes of s 24(1) if such an injury results in a permanent impairment. A liability arises in the respondent to pay compensation to Mr Parker in respect of that injury . 35 The facts as found establish that Mr Parker suffered an injury which resulted in a permanent impairment. 36 Section 24 is contained in Division 4 of Part II of the SRC Act. Division 4 deals with 'Injuries resulting in impairment' and s 24 deals with 'Compensation for injuries resulting in permanent impairment'. However, s 24(4) renders s 24(5) the central provision. Section 24(5) requires Comcare to determine 'the degree of permanent impairment of the employee'; this is to be expressed as a percentage (s 24(6)). The compensation payable under s 24(1) is the equivalent percentage of the 'maximum amount' (s 24(3), (4), (9)), subject to the threshold in s 24(7). The content of the phrase the 'degree of permanent impairment of the employee' is not specifically stated in the Act; that is left to the 'approved Guide' (s 24(5)). The 'key statutory criterion of the occurrence of "an injury"' resulting in a permanent impairment has been fulfilled as found by the Tribunal. Section 24(5) requires the respondent to approach the 'criteria and methodologies set out in the Guide' through the 'prism' of an injury and assess the degree of permanent impairment of Mr Parker 'resulting from that injury ' ( Canute v Comcare (supra) [14]). In that sense, the terms of s 24(5) are 'quite clear'. ( Canute v Comcare (supra) [14]). 39 Accordingly, s 24(5) requires the respondent to determine the degree of permanent impairment of Mr Parker resulting from an injury, 'under the provisions of the approved Guide'. Prima facie , the Guide as a subordinate instrument cannot alter the burden of the clear statutory inquiry and determination required by s 24(5) by adding a qualification to the question or matter to be determined. For example, the question is not 'what degree of permanent impairment of Mr Parker has resulted from the injury suffered by Mr Parker having regard to whether, had the injury not occurred, Mr Parker would have suffered permanent impairment or the same degree of permanent impairment as a result of other causes (including the progression of an underlying pre-existing condition )'. Since the key criterion of an injury resulting in permanent impairment has been fulfilled, the only inquiry required by s 24(5) is a determination of the degree of permanent impairment of Mr Parker resulting from the injury . That determination requires an acceptance of the 'fulfilled' nexus between the injury and permanent impairment and directs reference to the provisions of the approved Guide for the purpose of calculating the degree of permanent impairment of the individual in order to give voice to the percentage and thus the amount of compensation to be paid having regard to s 24(3) and s 24(4). 40 Section 28 provides that Comcare may from time to time prepare a written document to be called the Guide under the title previously mentioned [12]. 42 Section 28(9) provides that ss 48 (other than paragraphs (1)(a) and (b) and subsection (2)), 49 and 50 of the Acts Interpretation Act 1901 (Cth) apply in relation to an approved Guide or an instrument varying or revoking the Guide approved by the Minister, as if, in those sections, references to regulations were references to such a document and references to a regulation were references to a provision of such a document. Section 28(10) provides that for the purpose of the application of the provisions of the Acts Interpretation Act 1901 in accordance with s 28(9) , a document referred to in s 28(9) shall be taken to have been made on the date on which it was approved by the Minister. 43 Sections 48, 49 and 50 of the Acts Interpretation Act 1901 were repealed from 1 January 2005 by the Legislative Instruments (Transitional Provision and Consequential Amendments) Act 2003 (Cth) (No. 140, 2003) and subsections (7), (9) and (10) of s 28 of the SRC Act were repealed from 13 April 2007 by the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2007 (Cth) (No. 53, 2007). 44 The first edition of the Guide was approved by the Minister of State for Industrial Relations by Notice dated 27 July 1989. That Guide, described as the first edition of the Guide, was revoked pursuant to s 28(2) on 1 September 2005 in respect of claims made under s 24 received after 28 February 2006. The second edition of the Guide dated 1 September 2005 was approved by the Minister on 30 September 2005. Since Mr Parker's claim was made prior to 28 February 2006, the first edition of the Guide is the applicable instrument (see pp (iii) and (iv)) of the second edition of the Guide). 45 The Guide, of course, is a Guide to a particular task, namely, the assessment of the degree of permanent impairment of an individual resulting from an identified injury. Part A of the Guide sets out 12 categories of permanent impairment of functional aspects of the human condition, for example, the cardiovascular system (Item 1), skin disorders (Item 4), the visual system (Item 6), ear, nose and throat disorders (Item 7), neurological function (Item 12). Item 13 sets out some miscellaneous matters to be considered and Item 14 is a combined values chart which sets out decimal equivalents of impairment ratings. Part B of the Guide deals with non-economic loss and addresses matters such as pain and suffering, loss of amenities of life, loss of expectation of life and related matters. The Combined Values Chart enables an impairment to be expressed as a percentage value of the individual's 'whole person impairment' based upon an adoption of 'concepts' used by the American Medical Association in formulating particular Guides for similar purposes, relevantly adapted however to suit the specific needs of relevant Commonwealth legislation. 46 Pages 3 - 6 of the Guide set out the principles of assessment and pages 7 and 8 set out the glossary of terms which adopt defined terms from the SRC Act. Throughout this guide emphasis is given to loss of function as a basis of assessment of impairment and as far as possible objective criteria have been used. The measure of 'activities of daily living' is a measure of primary biological and psychosocial function such as standing, moving, feeding and self care. It includes pain and suffering, loss of amenities of life, loss of expectation of life and any other real inconveniences caused by the impairment. when the full and final effects of convalescence, the natural healing process and active (as opposed to palliative) medical treatment has been achieved. Thus a percentage value can be assigned to an employee's impairment by reference to the relevant description in this guide. In particular, regard shall be had to an employee's unreasonable failure or refusal to act in accordance with medical advice or to submit to medical treatment which would reduce the degree of impairment. If the employee's impairment is entirely attributable to a pre-existing or underlying condition, or to the natural progression of such a condition the assessment for permanent impairment should be nil. The method is to strike that degree of permanent impairment to the individual as a percentage of whole person impairment as a measure of the diminution in function of a normal healthy person. The respondent relies upon the provision of the Guide that address aggravation. The respondent says the Tribunal properly construed and applied the provision of the Guide addressing aggravation on the footing that Mr Parker's permanent impairment is attributable to the natural progression of a pre-existing or underlying condition of a 'right central retinal vein occlusion'. The respondent says Mr Parker would have suffered permanent impairment in the form of a permanent loss of sight in the right eye in any event by reason of the natural progression of a loss of sight as a result of the occlusion causing a deprivation of blood flow to the retinal cells. 48 There seems to me to be two difficulties with this construction. 49 First, the section of the Guide dealing with aggravation contemplates that the individual's impairment must be 'entirely attributable to a pre-existing or underlying condition' or alternatively to the 'natural progression of such a condition'. As a matter of construction, it may be that permanent impairment must be either entirely attributable to a pre-existing or underlying condition or 'entirely attributable' to the natural progression of such a condition. In other words, it is not clear whether the phrase 'entirely attributable' governs the notion of the natural progression of such a condition. Clearly, Mr Parker's impairment is not 'entirely attributable' to a pre-existing or underlying condition because the medical evidence accepted by the Tribunal and the finding of the Tribunal is that Mr Parker suffered an injury in the form of a tractional retinal detachment or retinal elevation as an unintended result of a medical procedure. In other words, there is a direct nexus between an injury and resultant permanent impairment not an impairment entirely attributable to a pre-existing or underlying condition. 50 The second difficulty is that the impairment is neither attributable nor entirely attributable to the natural progression of a pre-existing or underlying condition because the medical evidence is clear and the findings of the Tribunal are to the effect that Dr Ambler recommended and conducted a therapeutic intervention which he hoped would be efficacious in stabilising and possibly restoring sight to the right eye but which resulted in an unintended consequence of an injury resulting in permanent impairment. As a matter of textual construction, neither limb of the provision dealing with aggravation applies to Mr Parker's circumstances. 51 In this case, there is an identified injury to Mr Parker which has resulted in a permanent impairment. 52 The key statutory criterion has been satisfied and the question the respondent must determine is the degree of permanent impairment so as to enable a percentage calculation to be struck so as to bring about the calculation of the amount of compensation to be paid. The criteria and methodologies set out in the Guide must be applied through the 'prism' of the injury Mr Parker suffered resulting in permanent impairment. Reliance by the respondent on the 'aggravation' provision of the Statement of Principles in the Guide fails to recognise that Mr Parker suffered an injury resulting in permanent impairment and not impairment entirely attributable to a pre-existing or underlying condition, or to the natural progression of such a condition. In relying on the aggravation provision of the Guide, the respondent is essentially postulating that permanent impairment has not resulted from an injury and that the 'key criterion' in reliance upon which the determination under s 24(5) is to proceed is not satisfied. However, the Guide only operates in circumstances where an injury has been suffered by an employee resulting in permanent impairment. 53 To the extent that the Guide seeks to operate in circumstances where an individual has suffered an injury resulting in permanent impairment, by qualifying the determination of the degree of permanent impairment by asking, additionally, whether Mr Parker would have suffered blindness in the right eye had the injury not occurred, the Guide cannot do so. As a subordinate instrument, the Guide cannot alter or qualify the statutory burden imposed upon the respondent by s 24(5) of the SRC Act by introducing into the determination a notion of what would have occurred but for the injury. Nor can the respondent refuse to make the determination of the degree of permanent impairment of the individual as required by s 24(5) by considering that matter or, having considered that matter, reduce the compensation to nil by finding a 0% (degree) of permanent impairment. 54 There is nothing in ss 24 or 28 of the SRC Act that diminishes the obligation of the respondent to determine the degree of permanent impairment by examining the injury and the resultant permanent impairment by making that determination through the prism of the injury and the permanent impairment resulting from that injury . What might have occurred had the injury not been suffered giving rise to resultant permanent impairment is not to the point. 55 Accordingly, the Tribunal erred in the construction of s 24 of the SRC Act and the role and construction of the Guide. 56 The decision of the Tribunal must be set aside. 57 Section 44(4) of the AAT Act confers a power upon the Court in the exercise of the jurisdiction conferred by s 44(1), to make such order as the Court thinks appropriate by reason of its decision. Mr Parker has engaged in a long process of decision-making, internal review and review by the Tribunal in relation to these questions. The applicant by the Amended Notice of Appeal seeks an order that the respondent is liable to pay compensation to the applicant in respect of the injury suffered by him resulting in permanent impairment, pursuant to s 24 of the Safety Rehabilitation and Compensation Act 1988 (Cth). 59 Since Mr Parker suffered the injury in or about March 2001 and it is now August 2007, I propose to make a further order that the respondent determine the degree of permanent impairment of Mr Parker resulting from the injury, identify the amount of compensation payable to Mr Parker and pay the amount of compensation in discharge of the liability arising under s 24(1) of the SRC Act, within 30 days of these orders. 60 I propose to give liberty to apply on two days notice should circumstances emerge that render it not possible for the respondent to comply with this latter order within 30 days although such circumstances would necessarily, of course, be extraordinary. 61 As to the question of costs, I propose to reserve the determination of costs. It seems to me appropriate to order the respondent to pay the costs of and incidental to the proceeding. However, I am also minded pursuant to the discretion conferred by s 44(4) of the AAT Act to order the respondent to pay the costs incurred by the applicant in seeking to establish the merits of the position before the Tribunal. Such an order may be appropriate although I have not had the benefit of any submissions on the question of costs, whether confined to the proceeding in this Court or otherwise. 62 Accordingly, the Court directs that the applicant file short submissions on costs within seven days and the respondent file submissions within a further seven days. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of the question of whether the administrative appeals tribunal erred in law by finding that the respondent properly determined a degree of permanent impairment of nil in making a determination under s 24(5) of the safety rehabilitation and compensation act 1988 (cth) in respect of an injury suffered by the applicant giving rise to a permanent loss of sight in the right eye consideration of whether reference to a pre-existing condition properly resulted in a determination of no permanent impairment for the purposes of the act consideration of the provisions of a guide to the assessment of the degree of permanent impairment as a subordinate instrument consideration of the question to be addressed under s 24(5). administrative law |
The applicant also operates two other Kuwaiti flagged vessels, the "Al Kuwait" and the "Al Shuwaikh". These three vessels have been engaged in the business of carriage of livestock between ports in Australia and the Middle East for a number of years. The "Al Kuwait" has carried out approximately 181 voyages from Australia to the Middle East since 1981 carrying approximately 100,000 sheep on each voyage. The "Al Shuwaikh" has carried out approximately 69 voyages from Australia to the Middle East since 2002 carrying approximately 78,000 sheep per voyage and the "Al Messilah" has carried out approximately 97 voyages from Australia to the Middle East since 1997 carrying approximately 72,000 sheep per voyage. 2 On 1 October 2008, the "Al Messilah" was in Fremantle Port on its way to the port of Portland in Victoria to load about 72,000 sheep for the purpose of transporting the sheep to the Middle East. On that day the respondent's representative, Mr Sam Lee, issued a notice preventing the vessel from loading livestock. By this application, the applicant challenges the lawfulness of the notice on the grounds that Mr Lee relied upon the applicant's non-compliance with provisions in Marine Orders Pt 43 Cargo & Cargo Handling---Livestock Issue 6 that were invalid because they were inconsistent with the Navigation Act 1912 (Cth) (the Act). The Marine Orders---Pt 43 is a form of delegated legislation and comprise orders made by the Chief Executive Officer of the respondent under a power contained in s 425(1AA) of the Act. 4 Annex IV of MARPOL 73/78 deals with sewage and contains 12 regulations. Regulations 4, 9 and 10 are particularly relevant. Regulation 4 deals with the conducting of surveys to ensure that the structure, systems and fittings of ships comply with the requirements of Annex IV. It provides that the responsibility for ensuring that ships are constructed in accordance with the requirements of the Annex lies with the flag state of the vessel. Regulation 9 provides that each ship shall contain a sewage system comprising either a treatment plant, a disinfecting system or a holding tank. Regulation 10 prescribes the dimensions of a discharge connection in relation to the ship's discharge pipeline. 5 Division 12C of Pt IV of the Act (Div 12C) gives effect to Annex IV of MARPOL 73/78. 6 The legislative scheme of Div 12C distinguishes between Australian vessels and foreign-flagged vessels. Section 267ZG provides that the respondent is empowered to issue a certificate, known as the International Sewage Pollution Prevention Certificate, in respect of an Australian ship which is constructed in accordance with the relevant regulations of Annex IV of MARPOL 73/78. Sections 267ZJ, 267ZK, 267ZL, 267ZM and 267ZN are other provisions of Div 12C which together with s 267ZG comprise a statutory regime to enforce the relevant provisions of Annex IV of MARPOL in respect of Australian ships. Consistent with the provisions of Annex IV, the respondent does not have the same power to enforce compliance with the requirements of Annex IV in respect of foreign-flagged vessels. In respect of foreign-flagged vessels, the International Sewage Pollution Prevention Certificate will be issued by the regulatory authority of the flag state. However, s 267ZQ deals specifically with the position of a foreign-flagged vessel which is in Australian waters which, in the opinion of the respondent, is not constructed in accordance with the provisions of Annex IV. Further, s 267ZQ of the Act does not provide a power to give directions to change the structure of the vessel so that it complies with the provisions of Annex IV. 8 Section 267ZF of the Act also provides that regulations may be made to give effect to regs 4, 9 and 10 of Annex IV of MARPOL 73/78. 9 Further, s 257 of the Act gives the power to make regulations in relation to the loading, stowing or carriage of cargo. 10 Section 425(1AA) of the Act empowers the respondent to make orders. 12 As previously mentioned, the Chief Executive Officer of the respondent has made Marine Orders-Pt 43. The current issue of the Marine Orders-Pt 43 is Issue 6. The orders were made on 2 November 2006 and came into operation on 1 December 2006. However, as an alternative, an operator may demonstrate adequate redundancy in systems and equipment by supplying to the Manager, Ship Inspections, a risk analysis of the systems involved. A revised risk analysis must be provided whenever the arrangements referred to in that analysis are changed. (Footnote omitted. On 13 November 2007, the respondent issued an ACCL in respect of the "Al Messilah". The certificate stated that the vessel fully complied with the Marine Orders except in respect of, relevantly, s 6.6 of Appendix 4 and that the vessel was to comply with s. 6.6 by no later than 26 September 2008. 15 During September 2008, there was correspondence between Mr David Anderson, Principle Marine Surveyor of the respondent, from Canberra, and Mr JK Iyer of the applicant, in relation to the requirement of the respondent that the construction of the vessel be modified to include a holding tank or treatment plant of the nature referred to in s 6.6 of the Marine Orders---Pt 43. 17 Mr Anderson then set out in his email the provisions of s 6.6 of Marine Orders-Pt 43 referred to at [13] above. If any livestock vessel does not comply with MARPOL Annex IV at any time MO43 provides that the ACCL is likely to be considered invalid. 19 As previously stated, on 1 October 2008, Mr Lee issued a notice preventing the loading of livestock onto the "Al Messilah". However, I will proceed on the basis that the notice was issued pursuant to the power set out in O 7.3.1 of the Marine Orders. Because Mr Lee did not give evidence, he did not identify the correspondence to which he referred in his notice. However, the email correspondence to which I referred at [15] above between Mr David Anderson of the respondent in Canberra and a representative of the applicant, relates to the question of livestock effluent drainage and Annex IV of MARPOL. I will, therefore, proceed on the basis that this is the correspondence to which Mr Lee referred in the notice. In any event, it was accepted in argument that the notice was issued because the "Al Messilah" was not constructed in accordance with O 12.2 and s 6.6 of Annexure 4 of the Marine Orders in that it did not have a treatment system or holding tank of the kind specified in s 6.6 of Appendix 4 of the Marine Orders. 23 As already mentioned, the applicant also seeks an order setting aside the decision of Mr Lee to issue the notice on the grounds that Mr Lee relied upon invalid provisions of the Marine Orders--- Pt 43 , and an injunction. 25 The respondent contended that O 12.2 and s 6.6 of Appendix 4 of Marine Orders-Pt 43 were not inconsistent with the Act. The respondent contended that s 425(2) of the Act contemplated that regulations and orders could be made to regulate matters already covered elsewhere in the Act or the regulations. The respondent contended that s 257(1) of the Act provided for the making of regulations in relation to the "loading, stowing or carriage of cargo in ships or the unloading of cargo from ships". 26 The respondent contended that O 12.2 and s 6.6 of Annexure 4 were orders made by reference to the regulation making powers provided for in s 257(1). These orders were, said the respondent, orders which went to the welfare of the livestock and did not "give effect to Annex IV of MARPOL". The respondent contended that the impugned orders "applies a standard which reflects Annex IV requirements, and which is relevant to the loading, stowage and carriage of livestock". This meant that the impugned orders were not inconsistent with the Act. 27 In my view, the distinction sought to be drawn by the respondent is a distinction without a relevant difference. By adopting in the impugned orders a regime applicable to foreign-flagged vessels which incorporates a standard that the vessel must contain structures or systems "complying with Annex IV of MARPOL 73/78, to treat, store and discharge effluent in accordance with that Annex" the impugned orders by their terms amount to the enforcement by the respondent of the requirements of Annex IV of MARPOL 73/78 in respect of foreign-flagged vessels. 28 The fact that the impugned orders enforce the provisions of MARPOL 73/78 in respect of foreign-flagged vessels is also recognised by Mr David Anderson in his email of 26 September 2008 referred to in [16] above. 29 The fact that the respondent may have relied upon a regulatory source other than Div 12C of the Act to make orders which require compliance by foreign-flagged vessels with the provisions of Annex IV is irrelevant to the question in issue. This is because, in requiring that the orders not be inconsistent with "a provision of the Act", s 425(5C) does not distinguish between the regulatory source of the orders made. In other words, no matter what the regulatory source relied upon for making an order under s 425(1AA), the order must not be inconsistent with a provision of the Act. In this case, the impugned orders are inconsistent with the legislative scheme in Div 12C of the Act, to the extent that they enforce compliance with the provisions of Annex IV on foreign-flagged vessels. 30 In my view, therefore, O 12.2 and s 6.6 of Annexure 4 of the Marine Orders-Pt 43 are invalid and are of no force and effect to the extent that they apply to foreign-flagged vessels. 31 The respondent also contended that it was "proper" and "made good sense" for the respondent to adopt Annex IV standards in relation to the storage capacity of, and discharge from, the holding tank because that standard was consistent with and promoted compliance with another statute, namely, the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) (the POTS Act). The object of Div 2 of Pt IIIB of the POTS Act is to give effect to Annex IV of MARPOL 73/78. In general terms, s 26D(3) of Div 2 of the POTS Act makes it an offence to discharge sewage from a ship into the sea. However, in broad terms s 26D(6) provides that it is not an offence if untreated sewage is discharged at least 12 nautical miles from the nearest coastline, or beyond a three mile limit if the sewage is treated using an Annex IV approved system or, if the vessel has a holding tank, it is discharged at a prescribed rate. 32 In my view, this contention does not assist the respondent. Whether the adoption of the Annex IV standard in orders made under the Act was "proper" or "made good sense" or was compatible with the POTS Act, is not to the point. The question is whether the impugned orders are within power and that requires that those orders not be inconsistent with a provision of the Act. As I have already stated, the impugned orders are inconsistent with the legislative scheme of Div 12C of the Act to the extent to which they apply to foreign-flagged vessels. 33 Accordingly, I will grant the substance of the relief claimed by the applicant. I will hear the parties on the terms of any further orders. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | foreign-flagged vessel was refused permission to load livestock because it did not comply with parts of marine orders pt 43 whether o 12.2 and s 6.6 of appendix 4 of the marine orders are inconsistent with div 12c of pt iv of the navigation act 1912 (cth) to the extent they apply to foreign-flagged vessels admiralty |
2 The principal issue was whether Telstra breached the 2005 Enterprise Agreement by failing to pay an employee, William McDonald, a member of the CEPU ("Mr McDonald"), his previous rate of salary after he was redeployed to, and later accepted a redundancy package from, a lower paying position. The answer to that issue turned on the proper construction of cl 17.4 of the 2005 Enterprise Agreement and, in particular whether cl 17.4 of the 2005 Enterprise Agreement permitted the application of cl 15.3 of the TRA to Mr McDonald. 3 On 2 October 2007, I concluded that Telstra had breached the 2005 Enterprise Agreement by failing to pay Mr McDonald his previous rate of salary after he was redeployed to, and later accepted a redundancy package from, a lower paying position: see [2007] FCA 1515 ("the Primary Reasons"). The facts resulting in that conclusion are set out in paras [3] to [38] of the Primary Reasons. I do not propose to repeat them. These reasons for decision should be read with the Primary Reasons. I adopt the same defined terms in these reasons for decision. The Court has jurisdiction to grant declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth). Any further relief is neither necessary nor appropriate. The 2005 Enterprise Agreement was an agreement certified pursuant to s 170LT of the WR Act : see [10] of the Primary Reasons. Section 719(4) of the WR Act prescribes a maximum penalty of $33,000 for breach of a certified agreement. 9 The WR Act applies to the breach of cl 17.4 of the 2005 Enterprise Agreement: see s 719 of the WR Act read with cll 1 and 6 of Sched 7 to WR Act and s 717 of the WR Act . The primary breach is that relating to cl 17.4 of the 2005 Enterprise Agreement. 10 The breach of cl 9.1 of the TRA is entirely reliant upon, and arises out of, substantially the same course of conduct as the primary breach: Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216. Accordingly, any penalty would be determined by reference to the "totality principle": CPSU, The Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228. 11 For those reasons, it is strictly unnecessary for me to conclude whether the WR Act or the IR Act applies to the breach of cl 9.1 of the TRA. However, for the sake of completeness, I have concluded that the WR Act also applies to a breach of cl 9.1 of the TRA: see s 719 of the WR Act read with s 4(1) of the WR Act (definition of "award") and Item 4 of Sched 4 of the Workplace Relations Amendment (Work Choices) Act 2005 and s 717 of the WR Act. (The TRA had the status of an award: see definition of "award" in s 4(1) of the IR Act and, subsequently, s 4(1) of the WR Act prior to its amendment in 2005. • The circumstances in which that conduct took place. • Whether there had been similar previous conduct by the respondent. • Whether the breaches were properly distinct or arose out of the one course of conduct. • Whether or not the breaches were deliberate. • Whether senior management was involved in the breaches. • Whether the party committing the breach had taken corrective action. • Whether the party committing the breach had cooperated with the enforcement authorities. First, the Court has a discretion whether or not to impose a penalty: s 719 of the WR Act and see also Australasian Meat Industry Employees' Union v Australia Meat Holdings (1998) 82 IR 76 at 78 and Victoria University of Technology v Australian Education Union (1999) 91 IR 96 at [33] (which considered the discretion to impose penalty under s 178 of the WR Act prior to substantial amendments to the WR Act in 2005). In other words, there is no principle that a Court must, in all cases of proven breach, impose a penalty: Victoria University of Technology v Australian Education Union (1999) 91 IR 96 at [33]. 14 Secondly, although there were technically two breaches by Telstra (one of the 2005 Enterprise Agreement and one of the TRA), as the analysis of the facts in the Primary Reasons demonstrate, this is a case where the breaches arose out of substantially the same conduct, being conduct that "impose[d] cumulative obligations or obligations that substantially overlap[ed]": cf Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at 223 and Clothing & Allied Trades Union of Australia v J & J Saggio Clothing Manufacturers Pty Ltd (1990) 34 IR 26 at 37. 15 Thirdly, in those circumstances, it is appropriate to determine the penalty by reference to the "totality principle" as described by Finkelstein J in CPSU, The Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230 and Textile Clothing & Footwear Union of Australia v Lotus Cove Pty Ltd [2004] FCA 43 at [44] . So much was conceded by the CEPU and by Telstra. Instead of retrenching Mr McDonald, Telstra accepted his request to redeploy him to a job more than two pay classification levels below his current employment. There is nothing to suggest that Telstra is disposed to contravene certified agreements to which it is a party. In the present case, the position adopted by Telstra was arguable but erroneous. Neither breach was flagrant, wilful or deliberate. Amendments to the WR Act increasing the penalty for breaches of industrial instruments arising out of unlawful industrial conduct indicate a legislative desire to deter and discourage such conduct. These changes in industrial law have led to general deterrence being referred to as the "most significant factor" in determining the applicable penalty: see Finance Sector Union v Commonwealth Bank of Australia (2005) 224 ALR 467 at [60], [72]. Where the unlawful conduct arises out of an arguable but erroneous construction of a relevant term, and the subsequent breach cannot be characterised as demonstrating a flagrant or wilful disregard for the agreement, this legislative purpose is not furthered by imposition of a penalty. In these circumstances, neither general nor specific deterrence is a significant factor weighing in favour of imposing a penalty. Moreover, Mr McDonald has been fully compensated for the loss suffered as a result of the breach. I do not consider that the circumstances in which the conduct took place warrant the Court exercising its discretion to impose a penalty on Telstra. 19 The Court should not be concerned to reimburse an applicant for costs incurred in bringing the application by the imposition of a penalty under s 719 of the WR Act . The legislative policy of the WR Act in relation to costs is found in s 824 of the WR Act , which states that a party should not pay costs except in two prescribed circumstances. In light of this policy, it would be inappropriate to impose a penalty for the purpose of reimbursement: Finance Sector Union v Commonwealth Bank of Australia (2005) 224 ALR 467 at [63]-[64]; Victoria University of Technology v Australian Education Union (1999) 91 IR 96 at [34]. Only when it has been determined that a penalty is appropriate, is it necessary to have resort to s 841 of the WR Act to decide whether the penalty should be paid to the Commonwealth or to a "particular organisation or person": Victoria University of Technology v Australian Education Union (1999) 91 IR 96 at [34] cf CPSU, The Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 232-233; Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union (No 2) (2001) 110 IR 372 at [8]. 20 Finally, the Primary Reasons stated that Telstra had breached cl 17.4 of the 2005 Enterprise Agreement and cl 9.1 of the TRA. The applicant concedes that as a result of these findings, further declaratory relief is of no great significance. In the circumstances, no further relief is necessary or appropriate. | imposition and recovery of penalties where certified agreement breached where breaches arose from disputed and disputable construction of agreement where breaches not flagrant, wilful or deliberate whether penalty should be imposed whether penalty should be paid to applicant organisation industrial law |
He arrived in Australia in August 2005 and promptly applied for a protection visa under the Migration Act 1958 (Cth) (the Act). His application was refused by a delegate of the first respondent on 8 September 2005 and subsequently by the Refugee Review Tribunal on 14 November 2005. The applicant applied to the Federal Magistrates Court for an order to quash the decision of the Tribunal for jurisdictional error, that being the only ground upon which such an application could have been made. Unfortunately he did not attend the hearing of that application on 6 April 2006. Because he did not attend, his application was dismissed pursuant to r 13.03A(c) of the Federal Magistrates Court Rules. The applicant then applied to this Court for leave to appeal from the judgment of the Federal Magistrates Court on 4 July 2006. Leave is required because the judgment is interlocutory. See s 24(1A) of the Federal Court of Australia Act 1976 (Cth) and MLGXAL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 966. In addition, because that application for leave to appeal was not brought within 21 days, the time specified by O 52 r 5(2) of the Federal Court Rules , the applicant also seeks an order that compliance with that rule be dispensed with. I do not propose to explore the reasons why the applicant failed to make that application promptly or why he did not attend before the Federal Magistrates Court. The grant of the application for leave to appeal is, of course, discretionary. One matter of significance is that the Court should be satisfied that there is at least some arguable basis on which the appeal might succeed if leave to appeal is granted. It is to that topic that I turn. As the applicant did not attend the Federal Magistrates Court hearing and his application was dismissed for non-attendance, there are no reasons of the Federal Magistrate dealing with the merits of his application. I propose, nevertheless, to look at the Tribunal decision to see whether there is any prospect of the applicant succeeding on an appeal from that decision, assuming the events in the Federal Magistrates Court may be ignored. That is an assumption very much in the applicant's favour. So too is my preparedness to treat as a neutral factor in the exercise of my discretion his failure to appear at that Court and his delay in making his application to this Court. Before the Tribunal, the applicant made five claims upon which he said he had a well founded fear of persecution for a convention reason. Upon one or more of those claims he therefore asserted that he was a person to whom Australia owed protection obligations under the Refugees Convention, as amended by the Refugees Protocol so as to satisfy the criterion for the grant of a protection visa specified in s 36(2) of the Act. It was upon the satisfaction or otherwise of the existence of that criterion that the Tribunal affirmed the decision not to grant him a protection visa. The Tribunal was not satisfied that the applicant has a well founded fear of persecution for a convention reason if he returns to Pakistan in respect of any of the five grounds upon which he asserted the existence of such a fear. Those grounds were, firstly, that he had converted from Islam to Christianity and that if he were to return to Pakistan he would be persecuted for apostasy. Secondly, he claimed that he and his family had been targeted by Jihadi organisations since at least 1993 and that if he were to return to Pakistan he would be further persecuted by those organisations, the more so because he would be perceived as having changed his religion so as not to have to pay those organisations money. He also claimed to have a well founded fear of persecution if he were to return to Pakistan by reason of having made an unsuccessful application for a protection visa, by reason of having breached Pakistani laws, by jumping ship when the ship on which he was working docked in Australia in August 2005 and because he had become accustomed to a western way of life as a result of having lived abroad and would be so recognised in Pakistan and persecuted because of that appearance. As I have said the Tribunal rejected all of those claims. It did not accept that he had converted to Christianity from about May 2005 as he claimed, and it gave reasons for that decision. As a consequence, it did not accept that he had told his wife, or others, that he had converted to Christianity because that was not, as the Tribunal found, the fact and so there was no basis to conclude that he would be persecuted by reason of his conversion if he were to return to Pakistan and no basis upon which a fatwa would have been issued against him. It regarded his conduct in attending church and apparently taking steps to enhance his knowledge of Christianity whilst he was in Australia as information which the Tribunal could not take into account by reason of s 91R(3) of the Act, because it was not satisfied that he had engaged in that conduct otherwise than for the purpose of strengthening his claim to be a refugee. The Tribunal also rejected the applicant's claim that he would be persecuted for reasons of his real or imputed political opinion or his previous dealings with Jihadi organisations if he were to return to Pakistan. It noted that, on his evidence, in the period of about two years from December 2002 to December 2004, he had worked in Karachi operating a phone shop without any difficulties. As it did not accept that he had converted to Christianity, there was no reason to think that those organisations would be the more interested in him by reason of such a conversion. The Tribunal also rejected the other claims made by the applicant on the information available to it. An unsuccessful protection visa applicant returning to Pakistan would not be vulnerable to persecution by reason of that status. If he were vulnerable to any punishment for having jumped ship to arrive in Australia, that would simply be an enforcement of a law of general application and he would be treated according to Pakistani law equally with any other Pakistani person and would not be singled out for persecution by reason of any convention reason. Finally, the Tribunal did not accept that in the past he had been exposed to persecution by having adopted western ways whilst working on ships in previous years. It found that there was no independent information to support the applicant's claim that he would be vulnerable to persecution for that ground. In my view each of those conclusions was reasonably open to the Tribunal. It is not shown to have misdirected itself in law. It has, in essence, made adverse findings on credibility on the applicant's two principal claims for the reasons which it recorded but principally because of relatively subtle differences in the accounts given by the applicant in statements to the Tribunal when he first made his protection visa application and in his oral evidence, together with his inability to explain in any detail any knowledge of Christianity, even up to the time of the Tribunal hearing. I have considered the material the applicant has submitted comprising, in particular, his affidavit filed on 4 July 2006, his proposed notice of appeal and a subsequent letter dated 17 July 2006. Those matters are re-assertive of certain of the claims to which I have referred. They do not identify, in any respect, errors which might be described as jurisdictional errors on the part of the Tribunal. As I said to the applicant in the course of his submissions, it is the limited role of the Court on an application such as the present to determine whether the decision of the Tribunal was made through jurisdictional error. I have also considered the Tribunal's reasons for decision myself. One piece of information which the Tribunal took into account as indicating to a degree some inconsistency in his evidence was contained in a letter from Sister Pat Sealey, dated 1 November 2005, and provided to the Tribunal after the hearing. The applicant was not given a notice pursuant to s 424A of the Act about that information; that is, was not given particulars of that information and the opportunity to comment upon it. In my judgment it was not obliged to do so because s 424A(3) exempts from its operation information that the applicant gave for the purpose of the application. That letter was provided to the Tribunal by the applicant through his representative under cover of a letter of 3 November 2005. I have not fully considered whether those events, if established, would fall within the scope of s 91R(3). However, I am satisfied, upon consideration of the Tribunal's reasons, that there was no jurisdictional error in the Tribunal not accepting the applicant's claimed fear that those two persons may have told the Pakistani authorities, or people in general, about the applicant's claimed conversion. Consequently, there is no foundation upon which jurisdictional error might be established. The reason why the Tribunal simply did not accept that claimed fear in the case of one of the persons is because, on the applicant's own evidence, he believed that person had gone to England rather than to Pakistan. In the case of the other person, the applicant claimed that that he may have told the authorities of the applicant's interest in Christianity to save himself upon his return to Pakistan. However, the Tribunal's questioning of the applicant indicated that that was purely speculative. Moreover, it was on an assumption which was not made out, namely, that that other person had been deported to Pakistan when in fact, so far as the Tribunal was informed, that other person had returned voluntarily to Pakistan, so that there was no reason why he would have needed to have fear for his own safety upon his return. In all the circumstances, I can see no basis at all upon which there is any prospect of an appeal succeeding, if leave to appeal is granted. In those circumstances, I exercise my discretion to refuse the application. The applicant must pay the first respondent's costs of the application. | application for leave to appeal summary dismissal where applicant failed to appear before federal magistrates court migration |
The Commissioner made the determination because he concluded that the Taxpayer had obtained a tax benefit in connection with a scheme within the meaning of Part IVA of the 1936 Act. The proceeding also raises the question of whether the Commissioner erred in the application of s 226E of the 1936 Act, which provides for the reduction of penalty tax in certain circumstances. The questions in the proceeding arise out of the global merger of the British American Tobacco group of companies ( the BAT Group ) and the Rothmans International group of companies ( the Rothmans Group ), which was completed in September 1999. The BAT Group consisted of British American Tobacco plc ( BAT UK ) and its subsidiaries. BAT UK was a listed public company in the United Kingdom. The Rothmans group consisted of Rothmans International BV ( Rothmans International ) and its subsidiaries. Rothmans International was owned as to 67% by Compagnie Financiere Richemont AG, a public company in Switzerland ( Richemont ) and as to 33% by Rembrandt Group Limited, a public company in South Africa ( Rembrandt ). The BAT Group and the Rothmans Group both had operations throughout the world, including Australia. On 28 September 2000, the Taxpayer lodged its company tax return for the Taxpayer's year of income ended 30 June 2000 ( the 2000 income year ). The return showed taxable income of $22,712,870. Pursuant to s 166A of the 1936 Act, that return was deemed to be a notice of assessment. As a result of a client risk review undertaken by the Australian Taxation Office ( the ATO ), the Commissioner identified certain transactions relating to the merger of the BAT Group and the Rothmans Group as a possible risk to the revenue. The Commissioner issued a position paper to the Taxpayer on 5 May 2005. The Taxpayer provided the Commissioner with a reply to the position paper on 31 October 2005. On 4 August 2006 the Commissioner made a determination that an additional amount of $118,128,983 should be included in the assessable income of the Taxpayer for the 2000 income year. The Commissioner then issued a notice of amended assessment on 9 August 2006. The amended assessment stated that the taxable income of the Taxpayer was $140,841,823. The amended assessment showed an amount payable of $98,326,796.95. That amount included the sum of $42,526,420, representing the tax payable on the understated taxable income and additional tax for understatement of $10,631,605.77, being 25% of the sum of $42,526,420. On 6 July 2007, the Commissioner made a decision disallowing the objection. That decision was an appellable objection decision and, on 3 September 2007, the Taxpayer commenced this proceeding by way of appeal against that decision. The year in dispute is the 2000 income year. The amount of primary tax in dispute is $42,526,423, being 36% of the tax benefit of $118,128,953 that was the subject of the Commissioner's determination under Part IVA of the 1936 Act. In addition, penalties amounting to $10,631,605 and general interest charge amounting to $36,207,722 are in dispute. The Taxpayer has paid $44,682,875.62 of the total amount in dispute. So far as Australia was concerned, the merger involved WD & HO Wills Holdings Limited ( Wills Holdings ) and Rothmans Holdings Limited ( Rothmans Holdings ) and their respective subsidiaries. Wills Holdings was a listed public company in Australia. 67.3% of the issued shares of Wills Holdings was held by British American Tobacco Australia Limited ( BAT Australia ), a subsidiary of BAT UK. The other 32.7% was held by the public. The Taxpayer was a wholly owned subsidiary of Wills Holdings. Rothmans Holdings was also a listed public company in Australia. 50% of its shares were held by Rothmans International and the other 50% were held by the public. Rothmans of Pall Mall (Australia) Limited ( Rothmans ) was a wholly owned subsidiary of Rothmans Holdings. Rothmans Asia Pacific Limited ( Rothmans Asia ) was also a wholly owned subsidiary of Rothmans Holdings. PT Rothmans of Pall Mall Indonesia ( Rothmans Indonesia ) was also a wholly owned subsidiary of Rothmans Holdings. 95% of the issued shares in Rothmans Indonesia were held by Rothmans Asia. In the period prior to the announcement of the merger, Rothmans Indonesia had incurred losses. At the time of the announcement of the merger Rothmans Asia had accumulated capital losses of $63.3 million. Early in the negotiations that led to the merger, it was agreed that the larger of the BAT Group business or the Rothmans Group business in each jurisdiction would take the lead in the merger. In Australia, the Rothmans Holdings group had a larger market share and a larger market capitalisation than the Wills Holdings Group. Accordingly, the Rothmans Holdings group was to take over the Wills Holdings group. In Indonesia, however, PT BAT Indonesia Tbk ( BAT Indonesia ), which was 70% owned by BAT UK, had a larger market share than Rothmans Indonesia. Accordingly, BAT Indonesia was to acquire Rothmans Indonesia from its Australian owners, Rothmans Holdings and Rothmans Asia. At an early stage, the Australian Competition and Consumer Commission ( the Commission ) expressed the view that the merger would be likely to have the effect of substantially lessening competition in the cigarette market in Australia and requested the parties to confirm that the merger would not go ahead. Consequently, representatives of Rothmans Holdings engaged in discussions with the Commission concerning the proposed merger. The Commission, through its chairman, Professor Fels, intimated that, without brand divestments by the merged group, the merged entity would become a dominant force in the Australian market after the merger. Professor Fels intimated that, unless there was divestment of some of the brands of the proposed Australian merged group, the Commission would seek to restrain the merger. Professor Fels also intimated that divestment of brands must be on terms that the buyer of the divested brands could be up and running as soon as the brands were transferred to it. Both Wills Holdings and Rothmans Holding wished to satisfy the Commission's requirements because they understood that the Commission could obtain an injunction from the Federal Court preventing completion of the merger. Accordingly, steps were taken to endeavour to find a buyer for some of the brands of the proposed Australian merged group, which could be divested in order to satisfy the Commission's requirements. From an early stage, the group controlled by Imperial Tobacco Group plc ( Imperial ) was considered as an obvious choice. On 30 April 1999, after some negotiation, an instrument ( the Term Sheet ) was signed on behalf of BAT UK and Imperial. The Term Sheet provided for the sale and purchase of a number of Australian and New Zealand cigarette brands, tobacco brands and tobacco paper brands, together with the related intellectual property rights and know how related to those brands. Some of the brands were Wills brands and some were Rothmans brands. The sellers named in the Term Sheet were the Taxpayer, British American Tobacco (New Zealand) Limited ( BAT NZ ) and Rothmans Holdings. The buyer named in the Term Sheet was Imperial. The purchase price was to be the sum of $A325 million and the sale was to include assets necessary for the functioning of the sales force for the brands to be sold. Completion of the proposed sale to Imperial was to be subject to shareholder approvals and to completion of the merger of Wills Holdings and Rothmans Holdings. The Term Sheet expressly recognised that the parties would work together to achieve as efficient a structure for the transaction as may be possible and that that might affect who would be the vendors and who would be the purchasers of the relevant brands. During April and May 1999, negotiations took place concerning the implementation of the merger in Australia. In particular, negotiations took place as to the price that would be paid to the minority shareholders of Wills Holdings. The negotiations resulted in an accord in principle, which was recorded in a letter of 13 May 1999 from BAT UK to Wills Holdings. The directors of Wills Holdings were satisfied that they had secured a significant cash premium for the minority shareholders. On 19 May 1999, a memorandum of understanding in relation to the implementation of the merger in Australia was signed on behalf of BAT UK, Rothmans Holdings (Australia) (BV), Wills Holdings and Rothmans Holdings ( the Memorandum of Understanding ). The Memorandum of Understanding recited, inter alia, that the Commission had foreshadowed that, as a condition of its approval of the merger, the merged group must dispose of certain assets. Clause 3.1 provided that Rothmans Holdings would, immediately upon entry into the Memorandum of Understanding, procure that Rothmans would negotiate in good faith with Imperial to agree option arrangements as follows: Rothmans would irrevocably offer to sell to Imperial the assets identified in the Term Sheet. Imperial would irrevocably offer to purchase from Rothmans the assets identified in the Term Sheet. The Memorandum of Understanding also dealt with other details relating to the merger that are not presently relevant. On 2 June 1999, BAT UK, BAT Australia and Rothmans Holdings (the Merger Parties) executed an enforceable undertaking to the Commission ( the Commission Undertaking ). On the same day, the Commission Undertakings were accepted by Professor Fels on behalf of the Commission. Rothmans Holdings and Wills Holdings immediately announced that they welcomed the Commission's clearance of the proposed merger on the basis of the proposed sale of brands. By the Commission Undertaking, each of the Merger Parties agreed to do all things in its power or control to cause or procure the disposal of the business of manufacturing, marketing, selling and distributing cigarettes and other tobacco products under the brand names listed in a schedule to the Commission Undertaking. The brand names listed in that schedule were the brand names stated in the Term Sheet. Each of the Merger Parties also agreed to cause or procure entry into a series of contractual arrangements with Imperial as described in another schedule to the Commission Undertaking. Each of the Merger Parties undertook to give effect to those contractual arrangements in accordance with their terms. On 16 July 1999, Wills Holdings, Rothmans Holdings and BAT Australia entered into a Merger Implementation Agreement . The Merger Implementation agreement provided detailed mechanisms and arrangements to give effect to the proposed merger of the Australian groups. On 20 July 1999, Wills Holdings and Rothmans Holdings announced the conditional sale of brands to Imperial. On the same day, Rothmans Holdings executed a deed whereby it covenanted with Imperial that it would comply with the terms of the Commission Undertaking and would comply with the terms of the contractual arrangements described in the Commission Undertaking. In addition, on the same day, Rothmans and Imperial and the Taxpayer entered into an instrument entitled Offers for Sale and to Acquire Australian brands ( the Offer Instrument ). By the Offer Instrument, Rothmans irrevocably offered to sell to a subsidiary of Imperial, nominated by it, certain Australian intellectual property assets and Imperial irrevocably offered to procure the acquisition, by one of its subsidiaries, from Rothmans of those Australian intellectual property assets. The Australian intellectual property assets included nine Australian brands owned at that time by the Taxpayer ( the 9 Wills Brands ) as well as Australian brands owned by Rothmans. The sale and acquisition was to be on the terms of an agreement in the form annexed to the Offer Instrument. Clause 3.5 of the Offer Instrument provided that, if either offer was accepted, Rothmans and the subsidiary nominated by Imperial would be deemed to have entered into a binding and enforceable agreement for the sale and purchase of the Australian intellectual property assets on the terms of the agreement annexed to the Offer Instrument ( the Australian Brands Sale Agreement ). The date of such agreement was to be the date of acceptance of the relevant offer. Clause 3.1 of the Offer Instrument provided that neither offer would be capable of acceptance unless the conditions precedent specified in the Offer Instrument had been satisfied or the conditions had been waived and unless the Implementation Date , as defined in a proposed scheme of arrangement between Wills Holdings and certain of its members, had occurred. On 16 July 1999, the Supreme Court of New South Wales ordered that a meeting of members of Wills Holdings be convened for the purpose of considering a scheme of arrangement under which Wills Holdings would buy back all shares in Wills Holdings held by BAT Australia and Rothmans would acquire all of the shares in Wills Holdings held by other shareholders for the consideration stated in the scheme. At the meeting so convened, which was held on 18 August 1999, the shareholders of Wills Holdings voted in favour of a resolution to approve that scheme of arrangement. On the same day, the shareholders of Rothmans Holdings also voted in favour of a scheme of arrangement between Rothmans Holdings and its shareholders. On 2 September 1999, the merger of Rothmans Holdings and Wills Holdings was completed in accordance with the schemes of arrangement. On 3 September 1999 several instruments were entered into and completed to give effect to the merger of the Wills Group and the Rothmans Group. In particular, the Taxpayer, as assignor, and Rothmans, as assignee, entered into a deed of assignment, for a consideration of $181,700,000, of the 9 Wills Brands. Thereupon, following exercise of the options under the Offer Instrument, Rothmans as seller, on the one hand, and Pinelawn, an Irish corporation, Imperial New Zealand Limited and Van Nelle Tabak Nederland BV, as buyers, on the other hand, entered into the Australian Brands Sale Agreement. The three buyers are subsidiaries of Imperial. Each of those entities purchased different brands from Rothmans. The brands sold included the 9 Wills Brands. In due course the Australian Brands Sale Agreement was completed and the 9 Wills Brands and the relevant Rothmans brands were transferred to one or other of the three buyers. The consideration received by Rothmans in respect of the sale of the 9 Wills Brands to the three buyers was the same as that received by the Taxpayer from Rothmans, namely $181,700,000. No objection was taken by the Commissioner to any of the affidavits and there was no cross examination of any of the deponents. Mr Martin Broughton became chairman of BAT UK in 1998 when that company was first listed on the London Stock Exchange. Mr Broughton was also the chairman of the management board to which the strategic management of BAT UK was delegated. During the second half of 1998, representatives of BAT UK participated in negotiations with RJ Reynolds of the United States, in relation to the possible purchase of that company's tobacco business. At the same time, representatives of Rothmans International were also talking to RJ Reynolds about the possibility of purchasing its tobacco business. Mr Broughton described RJ Reynolds as, in effect, running an auction for its business between Rothmans International and BAT UK. In November 1998, Mr Broughton met with Mr Johann Rupert, the chief executive officer of Richemont. Mr Broughton considered that a merger with Rothmans was an attractive option and in due course the merger proposal was announced on 11 January 1999. In 1998 and 1999, Mr Gary Krelle was the chief executive officer of Rothmans Holdings. In that capacity, Mr Krelle was a member of the executive committee of Rothmans International. At a meeting in South Africa in November 1998, Mr Krelle participated in a discussion about a possible bid by Rothmans International for the non-United States business of RJ Reynolds. In early January 1999, Mr Krelle was informed that the Rothmans International bid for RJ Reynolds was unsuccessful but that the Rothmans Group would be merging with BAT Group. In 1998, Mr Nigel Gourlay was appointed head of business development of BAT UK. In his role as head of business development he reported to Mr Broughton on global and regional projects and to Mr Ulrich Herter, the managing director of BAT UK, on national projects. Mr Gourlay was responsible for new markets around the world where the BAT Group had no presence or had only a limited presence. Mr Gourlay was lead negotiator for BAT UK in the discussions with Rothmans International. His counterpart was Elois Mishotte of Rothmans. The negotiations began in late 1998 and progressed quickly until the announcement of the merger on 11 January 1999. Once the public announcement of the merger was made, Mr Gourlay's role was to ensure the global completion of the merger. Specifically, he had the role of ensuring that all of the requisite regional mergers were effected in order to implement the merger world wide. That included the merger of any public companies. Australia was the most complex of the world wide jurisdictions. Mr Gourlay was a member of the merger integration steering group led by Ulrich Herter. The steering group consisted of senior employees of the BAT Group and the Rothmans Group. The steering group was important in the first few weeks after the merger was announced in setting out the rules of engagement between the Rothmans Group and the BAT Group. It also set out the communication process and many of the different task forces and teams that were necessary to progress the local mergers as quickly and efficiently as possible. The steering group did not formally report to the Board of BAT UK. However, members of the steering group, including Mr Gourlay, spoke to Mr Broughton as and when required. Mr Gourlay described the principles laid down by the steering group as follows: Where public companies were involved in a particular jurisdiction, minority shareholders had to be considered. Australia was difficult because the requirements of the Australian Securities and Investments Commission, as well as the Australian Competition and Consumer Commission, had to be satisfied. Mr Gourlay understood that Australia was the only jurisdiction where the regulatory authorities could potentially obtain an injunction to prevent the global merger occurring. Ideally, Mr Gourlay wanted the Commission to agree that the merger could proceed on the basis that competition issues would be dealt with in the future, on the basis of undertakings. Mr Gourlay understood that the Canadian authorities were willing to allow the merger of the Canadian entities to proceed on that basis, but that the Commission was not prepared to allow the merger of the Australian entities to proceed on that basis. He understood that the Commission required a brand disposal deal to be signed with a robust and credible competitor before the merger could proceed. He understood that merely putting forward a buyer who was not already in the tobacco industry would not have satisfied the Commission. In 1998, Mr Kenneth Hardman became head of taxation of BAT UK and is still employed as head of tax for the merged British American Tobacco group of companies. In that role, he has ultimate responsibility for all taxation matters for the group world wide. During the last quarter of 1998, Mr Hardman was involved in discussions with Richemont relating to the proposed merger of the BAT Group with the Rothmans Group. In relation to tax issues on the merger, Mr Hardman reported to Messrs Broughton and Herter and Keith Dunt. Mr Hardman understood that the Commission was likely to require the merged entity to dispose of assets to a third party as a condition of the Commission's not seeking an injunction to prevent the implementation of the global merger. While Mr Hardman was not involved in the selection of the brands to be sold, he was informed about the progress of negotiation and the evaluation exercise conducted in relation to those brands. The method by which the brands were to be divested by the merged group was determined after the corporate structure of the merged Australian groups had been agreed. Mr John Kingsley, who has since died, was the chief finance officer of Rothmans Holdings. Mr David Leach was chief finance officer of Wills Australia and Mr Barry Cohen was tax manager of Wills Australia. Mr Mark Dunkley was the group taxation manager. Messrs Kingsley, Dunkley, Leach and Cohen kept Mr Hardman appraised of progress with the method proposed to effect the required divestment of brands. In a memorandum of 20 May 1999, Mr Kingsley outlined to Mr Hardman the method he proposed to effect the divestment of brands. The memorandum recorded the substance of a proposal that had been explained to Mr Hardman by Mr Kingsley orally, prior to the signing of the Memorandum of Understanding. Mr Kingsley proposed that, once Wills Holdings became a wholly owned subsidiary of Rothmans Holdings, the 9 Wills Brands would be transferred at market value to Rothmans. Mr Kingsley explained that, since the Taxpayer would then be a wholly owned subsidiary of Rothmans, the Taxpayer could exercise an election to rollover any capital gains liability from the Taxpayer to Rothmans. He explained that, while the divestment of brands by Rothmans to Imperial at market value would give rise to a capital gain by Rothmans, losses were available to Rothmans, including carried forward capital losses and current year losses, to set off against that capital gain. Mr Hardman agreed to Mr Kingsley's proposal for the following reasons: The requirement for divestiture was imposed upon the merged group by the Commission. The merged group had available capital losses to offset any capital gain arising on the forced sale of brands. Australian taxation law provided a specific election to enable companies within the same corporate group to enjoy rollover relief upon transfers within that corporate group. If a capital gain arose in the merged corporate group, available capital losses could be used to shelter that capital gain. There was no commercial sense for the merged group to effect the required divestiture in a way that did not utilise the capital losses available to the merged group. Accordingly, he did not consider it necessary to consult Mr Broughton or Mr Herter about the issue. In a memorandum to Mr Kingsley of 20 May 1999, Mr Dunkley expressed concern that agreements might be entered into for the sale of the brands prior to the merger taking place. Mr Dunkley said that it appeared to him that there may be instances of the BAT Group and Imperial entering into negotiations and preliminary agreements that could give rise to a question as to whether a brand disposal had taken place at a date prior to the merger occurring. While Mr Dunkley did not believe that their arguments had been jeopardised to date, he thought it was important that Mr Hardman be advised of the steps that needed to be undertaken in order to be in a position to utilise the tax losses that would exist in Rothmans Asia. Mr Dunkley prepared a memorandum for Mr Kingsley to send to Mr Hardman. In that memorandum, which Mr Kingsley sent to Mr Hardman on 20 May 1999, Mr Kingsley first described the current position. He said that Rothmans Asia had carried forward capital losses of $63.3 million that arose from the sale of an investment in the Philippines. As a result of the sale of Rothmans Indonesia, a capital loss of in excess of $100 million would also arise in Rothmans Asia. In total, therefore, the Rothmans Holdings group had in excess of $163 million of capital losses, which could be utilised and set off against capital gains arising in the Rothmans Holdings group. Mr Kingsley then outlined a strategy for utilising the capital losses as follows: Mr Kingsley identified a critical issue. He said that the need to ensure that there was no contractually binding agreement for the disposal of the 9 Wills Brands prior to the Taxpayer and Rothmans becoming part of the same group was of critical importance to the strategy for utilising the losses. He said that, if a disposal of the 9 Wills Brands occurred prior to the Wills Group being wholly owned by the Rothmans Groups, the rollover would be ineffective, a capital gain arising from the disposal of the 9 Wills Brands would be generated in the Taxpayer and it would not be possible to transfer the capital losses in the Rothmans Group to the Taxpayer. Mr Kingsley therefore urged Mr Hardman to monitor the creation of contracts and documentation in the United Kingdom that relate to the disposal of the 9 Wills Brand to Imperial. He said that failure to do so could significantly jeopardise the ability to maximise the utilisation of the capital losses that existed in the Rothmans Group. Ms Rubbo indicated that she would prefer if the ATO could make an informal approach to her by email rather than by a formal letter. Accordingly, the ATO sent an email to Ms Rubbo confirming a request for information in relation to named members of the Merged Group, including Rothmans. The ATO requested schedules detailing calculation of capital gains or losses. On 6 July 2001, Mr Dunkley responded to the email and enclosed documents relating to the companies named in the ATO's email. Mr Dunkley referred to the fact of the merger that had been completed in September 1999, which gave rise to the Merged Group. Mr Dunkley also pointed out a number of name changes undergone by members of the Merged Group. He also said, in relation to the request for information in relation to capital gains and losses, that schedules had been included in the income tax working papers where appropriate but that there were no significant gains or losses arising to the Merged Group during the relevant period, with the exception of the 2000 income year return for Rothmans. Additional work papers were included with the documents in support of the capital gains tax calculation for Rothmans for that year. On 16 July 2001, Mr Dunkley forwarded further documents to the ATO. On 6 March 2002, the ATO wrote again, requesting further details relating to specific transactions involved in the merger between Rothmans Holdings and Wills Holdings and the subsequent disposal of brands to Imperial. Specifically, the letter requested information and documentation as follows: a chronological record of all material transactions undertaken leading up and through to the completion of the merger; all contracts and other associated agreements; minutes of all board meetings; a copy of documentations supplied to shareholders; details of capital gains tax assets sold. Mr Dunkley said to the ATO that, while the information provided explained the merger, it did not fully satisfy all of the information requested in the letter of 6 March 2002. On 30 May 2002, arrangements were made between Mr Dunkley and the ATO for a visit to the offices of the Merged Group by officers of the ATO on 18 and 19 June 2002. On 31 May 2002, an email was sent by the ATO to Mr Dunkley confirming a request by the ATO that contracts and board minutes be available for inspection during the proposed visit. On 5 September 2002, the ATO wrote to Mr Dunkley with reference to the client risk review of the Merged Group that had been conducted by the ATO. The letter said that the client risk review had been completed and attached details of material tax risks identified by the ATO. The letter said that, based on the information provided in the process of review, the ATO was requesting further documentation and information in respect of relevant transactions. An annexure to the letter specifically asked for details of the purpose, commercial or otherwise, for the transfer of the 9 Wills Brands by the Taxpayer to Rothmans prior to their disposal to Imperial. The ATO specifically asked for provision of "the reason why this additional step was undertaken". The ATO's letter referred to s 177D of the 1936 Act. Mr Dunkley replied on 23 September 2002. An annexure to his letter dealt specifically with the transfer of the 9 Wills Brands from the Taxpayer to Rothmans prior to the disposal to Imperial. Mr Dunkley said that the reasons for the transfer of the 9 Wills Brands by the Taxpayer to Rothmans were as follows: Mr Dunkley's response ended by saying that the disposal of brands to Imperial was an important feature of the merger, and had been implemented to comply with the requirements of the Commission. He said that that was why the ultimate disposal of brands to Imperial was conditional on the merger being approved by shareholders. He emphasised that the process involving the disposal of brands to Imperial was driven by a need to comply with the Commission's requirements and the packaging was something that was a consistent part of the strategy to ensure that the requirements of the Commission could be complied with in the most simple and effective way. On 13 November 2002, the ATO informed Mr Dunkley that it was considered appropriate to escalate the review of the Merged Group to a large business audit, which would focus on, but not necessarily be restricted to, the material risks identified in the ATO's letter of 5 September 2002. It is common ground that, by the letter of 13 November 2002, the Commissioner informed the Taxpayer, for the first time, that a tax audit relating to the Taxpayer was to be carried out. The significance of that will become apparent. I shall deal with each separately. Under s 126-45(1), which is in subdivision 126-B, there may be a rollover if a CGT event ( the trigger event ) happens involving a company ( the originating company ) and another company ( the recipient company ) where, relevantly, the originating company and recipient company are members of the same wholly owned group at the time of the trigger event. Under s 126-55, there is a rollover if, relevantly: the trigger event would have resulted in the originating company making a capital gain, and the originating company and recipient company both choose to obtain the rollover. Part IVA of the 1936 Act, which consists of ss 177 to 177F, deals with schemes to reduce income tax. Scheme is defined in s 177A(1) as meaning: Under s 177F(1), where a tax benefit has been obtained, the Commissioner may, in the case of a tax benefit that is referable to an amount not being included in the assessable income of a taxpayer, determine that the whole or part of that amount is to be included in the assessable income of the taxpayer. Under s 177F(2), where the Commissioner determines that an amount is to be included in the assessable income of a taxpayer, that amount is to be deemed to be included in that assessable income by virtue of such provision of the 1936 Act as the Commissioner determines. Under s 177D, Part IVA relevantly applies to any scheme where a taxpayer has obtained a tax benefit in connection with the scheme and, having regard to the matters referred to in s 177D(b), it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for the purpose of enabling the relevant taxpayer to obtain a tax benefit in connection with the scheme . However, under s 177C(2A), a reference to the obtaining by a taxpayer of a tax benefit in connection with a scheme is, in some circumstances, to be read as not including a reference to the assessable income of a taxpayer not including an amount that would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer, if the scheme had not been entered into or carried out. For the purposes of s 177C(2A), the non-inclusion of an amount in the assessable income of a taxpayer is taken to be attributable to the making of an election where, if the election had not been made, the amount would have been included in that assessable income. The language of the provision is unfortunate. Having referred to the making of a choice under subdivision 126-B, the provision then refers to the making of the "...election". There may be historical reasons explaining that disconformity. The proceeding has been conducted on the basis that the reference to election in s 177C(2A)(a)(ii) is s reference to the same thing as the choice referred to earlier, in s 177C(2A)(a)(i). Clearly enough, the reference to the election in s 177C(2A)(a)(ii) must be understood as a reference to the choice referred to in s 177C(2A)(a)(i). Under s 226(2)(b), penalty percentage means 25% in the present case because it is common ground that it is reasonably arguable that Part IVA does not apply in this case. However, under s 226E, if a taxpayer is liable to pay additional tax under a scheme section and, before the Commissioner had informed the taxpayer that a tax audit relating to the taxpayer in respect of the relevant income year was to be carried out, the Taxpayer voluntarily told the Commissioner in writing about the matter because of which the wrongful behaviour provision applies, the amount of the additional tax is to be reduced by 80%. Under s 222A, s 226 is a scheme section and s 226(1)(c)(ii) is a wrongful behaviour provision. However, while the agreements by which the global merger was implemented give rise to no factual dispute, there are issues as to the conclusions that should be drawn concerning: The first issue raised in relation to penalty tax is whether, before receipt of the ATO's letter of 13 November 2002, the Taxpayer had told the Commissioner, by reason of the exchanges described above, about the matter because of which s 226 applied to the Taxpayer. The second issue is whether, if that prerequisite was satisfied, the exchanges described above constituted the Taxpayer telling the Commissioner voluntarily . It is convenient to deal with each assessability issue separately. The Taxpayer says that the only other step that might be part of a scheme for the purposes of s 177C(1)(a) is the step involving the disposal of the 9 Wills Brands from the Taxpayer to Rothmans. The Taxpayer says that the other steps identified by the Commissioner are not part of a scheme in connection with which the tax benefit in question could have been obtained, because they did not result in that tax benefit. That is to say, the Taxpayer contends that the relevant scheme must be limited to the steps necessary to effect the rollover under subdivision 126-B on the disposal of the 9 Wills Brands to Rothmans. The significance, on the Taxpayer's contention, is that s 177C(2A)(a) would then operate to remove the asserted tax benefit from the operation of Part IVA. The definition of the scheme is important, since any tax benefit identified must be related to the scheme, as must any conclusion of dominant purpose and the ultimate determination by the Commissioner ( Commissioner of Taxation v Hart (2004) 217 CLR 216 at [5]). The definition in s 177A is wide, but it must be related to the tax benefit obtained ( Hart at [9]). On the other hand, scheme is defined in s 177A(1) in terms that may not always permit the precise identification of what are said to be all of the integers of a particular scheme. The definition encompasses not only a series of steps that together can be said to constitute a scheme or a plan but also the taking of but one step. The very breadth of the definition is consistent with the objective nature of the enquiries that are to be made under Part IVA ( Hart at [43]). The bare fact that a taxpayer pays less tax, if one form of transaction rather than another is made, or simply to show that a taxpayer has obtained a tax benefit does not demonstrate that Part IVA applies. Thus, it is necessary to read Part IVA in a way that will not bring ordinary transactions to tax. Of course, the significance of such a proposition depends upon what is meant by ordinary ( Hart at [53]). The question is whether that which the Commissioner has identified as the scheme falls within the definition in s 177A. That is to say, it is necessary to determine whether all of the steps leading to and the entering into and the implementation of the disposal of the 9 Wills Brands by the Taxpayer to Rothmans can be understood as together constituting a scheme. The question is whether those steps constituted a scheme, plan or course of action ( Hart at [55]). The essence of the scheme identified by the Commissioner is the disposal of the 9 Wills Brands by the Taxpayer to Rothmans and their subsequent disposal by Rothmans to the Imperial Group, coupled with the exercise of the rollover choice by the Taxpayer and Rothmans, and the utilisation by Rothmans of losses in the Rothmans Group. That is to be contrasted with the counterfactual hypothesis, of a disposal of the 9 Wills Brands by the Taxpayer directly to the Imperial Group with the consequence that the Taxpayer's capital gain would be the income of the Taxpayer. The negotiations between BAT UK and Imperial culminated in the execution of the Term Sheet on 30 April 1999. The arrangements covered by the Term Sheet included the disposal of the 9 Wills Brands. Although the arrangement was conditional upon, inter alia , the completion of the merger and took account of the possibility of changes in the identity of the relevant vendors and purchasers, there was no legal or commercial reason why the 9 Wills Brands could not have been disposed of by the Taxpayer directly to Imperial's subsidiaries rather than being disposed of to Rothmans and then disposed of by Rothmans to Imperial's subsidiaries, as happened. The Taxpayer did not enter into any agreement with Rothmans with respect to the disposal of the 9 Wills Brands until 3 September 1999, after the completion of the merger had taken place. That is so even though, as early as 30 April 1999, the date of the Term Sheet, plans for the acquisition of the 9 Wills Brands by Imperial were in place. It was not until 3 September 1999 that the Taxpayer disposed of the 9 Wills Brands to Rothmans for the consideration of $181,700,000. That was the day after completion of the merger pursuant to the schemes of arrangement. That sequence had the effect of avoiding possible adverse capital gains tax consequences for the Taxpayer. The parties wanted to ensure that there would be a disposal to Imperial or its nominees. Accordingly, on 20 July 1999, Rothmans and the Taxpayer, on the one hand, and Imperial, on the other, had entered into the Offer Instrument whereby irrevocable offers to sell and to buy the 9 Wills Brands were granted. The adoption of that mechanism, in lieu of an actual sale and purchase, had the effect that capital losses would be available to set off against gains rolled over to Rothmans. The arrangement was conditional upon, inter alia , completion of the merger pursuant to the schemes of arrangement. Once again, it was not until 3 September 1999 that the members of the Imperial Group accepted the offer of Rothmans under the Offer Instrument. Assignment deeds were then executed to give effect to the Australian Brands Sale Agreement that had come into existence by reason of the acceptance of the offer. As I have said, the consideration received by Rothmans in respect of the assignment of the 9 Wills Brands to the members of the Imperial Group was the same as that received by the Taxpayer from Rothmans, namely $181,700,000. Rothmans made a capital gain on the disposal of five of the 9 Will Brands, aggregating $138,328,953. Rothmans made a capital loss on the disposal of three of the 9 Wills Brands, aggregating $20,200,000 and made no capital gain or capital loss on the disposal of one of the 9 Wills Brands. Thus, the net capital gain of Rothmans was $118,128,953. In their respective income tax returns for the 2000 income year, the Taxpayer and Rothmans chose rollover pursuant to subdivision 126-B in relation to the CGT events that occurred by reason of the disposal by the Taxpayer to Rothmans of the 9 Wills Brands. Rothmans Holdings, Rothmans Asia and Rothmans were all members of the Rothmans Holdings group and, accordingly, it was open for Rothmans Holdings and Rothmans Asia to transfer net capital losses to Rothmans. Rothmans Holdings and Rothmans entered into an agreement for the transfer by Rothmans Holdings to Rothmans of the net capital loss of $341,043 in respect of the 2000 income year and Rothmans Asia and Rothmans entered into an agreement for the transfer of Rothmans Asia to Rothmans of a net capital loss of $161,977,127 in respect of the 2000 income year. Accordingly, in calculating net capital gains, and thus its assessable income, for the 2000 income year, Rothmans was able to utilise the capital losses transferred to it from the other members of the Rothmans Holdings group. Rothmans applied the net capital losses transferred to it by Rothmans Holdings and Rothmans Asia in working out the amount of its net capital gains and the amount of its assessable income for the 2000 income year. Rothmans had a net capital loss of $361,073 that was carried forward from an earlier income year into the 2000 income year. Rothmans applied that loss in working out its net capital gain and thus its assessable income for the 2000 income year. The essence of the scheme consisted of the arrangement whereby the 9 Wills Brands were disposed of by the Taxpayer to Rothmans and then by Rothmans to the Imperial Group, after there had been a rollover choice to enable the Taxpayer to avoid capital gains tax. The capital losses were then transferred to enable Rothmans to avoid capital gains tax. I consider that the steps identified by the Commissioner, which are described above, constitute a scheme for the purposes of Part IVA. The sale by Rothmans Holdings and Rothmans Asia of their respective shares in Rothmans Indonesia to BAT Indonesia also generated further capital losses. Those capital losses were never capable of transfer to the Taxpayer. They were only capable of transfer to companies that, prior to the merger, were members of the Rothmans Holdings group, including Rothmans. Had the scheme not been entered into or carried out as described but the same ultimate result, disposition of the 9 Wills Brands to the Imperial Group, were to be achieved or effected, the Taxpayer would have derived the capital gain on the disposal of five of the 9 Wills brands, would have made a capital loss on the disposal of three of them and would not have made a capital gain or loss on the disposal of one of them. Thus, the Taxpayer would have derived a net capital gain of $118,128,953 on the disposal of the 9 Wills Brands to the Imperial Group. There is no reason to doubt that, if the scheme had not been implemented or carried out, the 9 Wills Brands would nevertheless have been disposed of by the Taxpayer direct to the Imperial Group subsidiaries in order to satisfy what was perceived to be a necessary requisite for the completion of the merger of Wills Holdings and Rothmans Holdings. The Taxpayer obtained a tax benefit within s 177C(1)(a) of the 1936 Act in the 2000 income year. The tax benefit was the non-inclusion of an amount of $118,128,953 as a capital gain in determining the Taxpayer's assessable income pursuant to s 102-5 of the 1997 Act. The Taxpayer obtained that tax benefit because, had the scheme identified above not been entered into or carried out, that sum of $118,128,953 would have been included in its assessable income in the 2000 income year as a net capital gain pursuant to s 102-5 of the 1997 Act. I consider that the Taxpayer obtained that tax benefit in connection with the scheme identified by the Commissioner and described above. The Taxpayer contends that, therefore, s 177C(2A)(a) applies to the scheme such that the non-inclusion of the sum of $118,128,953 net capital gain as its assessable income is not a tax benefit of which Part IVA applies. Section 177C(2A)(a) operates, relevantly, only where the non-inclusion of an amount of assessable income is attributable to the making of a choice under subdivision 126-B and the scheme consists solely of the making of that choice (or election). The Taxpayer contends that the purpose of the provision is not to exclude from the exception provided for in s 177C(2A)(a) a capital gain not included in a taxpayer's income by reason of the capital gain being rolled over to another taxpayer in the same group. It says that the mischief to which the provision was directed was something completely different, being the multiplication of capital losses so that they exceed in magnitude the underlying economic loss. The Taxpayer contends, in effect, that the word scheme where it appears in different parts of s 177C(2A)(a) is to be given different meanings. It says that there is no such thing as a CGT rollover divorced from a CGT event and that, therefore, s 177C(2A)(a) can have no application if scheme is given the meaning defined in s 177C(1)(a). As I have indicated above, subdivision 126-B speaks in terms of a trigger event involving an originating company and a recipient company. In the present context, that would cover the disposal (trigger event) by the Taxpayer (the originating company) to Rothmans (the recipient company). The language of s 177C(2A) encompasses both a scheme consisting of each of the originating company and the recipient company not making a choice under subdivision 126-B and a scheme consisting of each of the originating company and the recipient company making a choice under subdivision 126-B. Without more, either would satisfy the requirements of s 177C(2A)(a). A scheme could consist of the making of the choice under s 126-55 by the originating company (the Taxpayer in this case) and the recipient company (Rothmans in this case). The tax benefit would be attributable to the making of the choice by the originating company (the Taxpayer) and the recipient company (Rothmans). The steps that will bear upon the decision to make the choice or not to make the choice by both the originating company and the recipient company might commence before, at the same time as, or subsequent to, the happening of the relevant CGT event (the disposal of the 9 Wills Brands in this case). Where the steps commence subsequent to the relevant CGT event, the relevant CGT event may merely be context in relation to the making of the choice by the originating company and the recipient company, rather than being part of the scheme. In the present case, the planning for and implementation of the scheme identified by the Commissioner and described above, in relation to the making of the choice by the Taxpayer and Rothmans commenced many months before the actual disposal by the Taxpayer of the 9 Wills Brands to Rothmans on 3 September 1999 and continued for some time after that disposal. Thus, the scheme consisted of much more than the mere making of the rollover choice or election. Section 177C(2A)(a) was not satisfied in the present case. The Taxpayer says that the fact that that purpose was effected in a way that utilised capital losses that were properly available to the merged group does not transform that purpose into one of obtaining a tax benefit. The Taxpayer points out that it was only because of the proposed merger of the BAT Group and the Rothmans Group that the Commission intimated that it would intervene. It was to avoid the Commission's intervention that it was necessary to dispose of the 9 Wills Brands to parties outside the merged group. In fact, substantial capital gains were also realised on the disposal by Rothmans to the Imperial Group, of brands that had always been within the Rothmans Holdings group ( the Rothmans Brands ). For example, there was a $45 million gain attributable to the sale of the Peter Stuyvesant brand by Rothmans to Imperial subsidiaries. Further, the regional organisation resulted in the crystallisation of capital losses on the part of Rothmans Asia and Rothmans Holdings in amounts almost equal to the capital gain attributable to the disposal of the 9 Wills Brands. The Taxpayer contends that, absent the scheme, which includes the disposal of the brands to Imperial by Rothmans, the 9 Wills Brands would not have been disposed of to Imperial subsidiaries and the parties to the merger would have been in breach of the undertaking given to the Commission. Thus, the Taxpayer says, the scheme was an ordinary transaction entered into or carried out for the dominant purpose of successfully completing the merger without intervention from the Commission and therefore does not satisfy Part IVA. However, that analysis ignores the essential concept of the scheme identified by the Commissioner. As I have said, the essential element is to be found in the disposal of the 9 Wills Brands by the Taxpayer to Rothmans and the subsequent disposal by Rothmans to the Imperial Group of the 9 Wills brands, together with the Rothmans Brands. The desired objective of the disposition of all of the relevant brands, both the 9 Wills brands and the Rothmans Brands, to the Imperial subsidiaries could have been achieved by a transfer direct from the Taxpayer to the Imperial subsidiaries of the 9 Wills Brands and a transfer direct from Rothmans to the Imperial subsidiaries of the Rothmans Brands. The requirements of the Commission would have been satisfied and the intended object of the merger would have been achieved. There was no commercial or legal reason why the disposition to the Imperial subsidiaries of both the 9 Wills Brands and the Rothmans Brands should have been effected from a single vendor, transferor or disposer rather than a disposition from separate vendors, transferors or disposers. Precisely the same commercial and legal object could have been achieved without the transfer, sale or disposal by the Taxpayer to Rothmans followed by transfer, sale or disposal by Rothmans to the Imperial subsidiaries. Section 177D(b) points to eight factors to be taken into account in determining whether it would be concluded that the person, or one of the persons, who entered into or carried out the scheme, or any part of the scheme, did so for the purpose of enabling the relevant taxpayer to obtain a tax benefit in connection with the scheme. The Taxpayer contends that those factors would lead to the conclusion that the achievement of the merger was the dominant purpose of all persons who entered into or carried out the scheme and that the desire to complete the merger drove both the need to comply with the Commission Undertaking, by divesting of brands to Imperial, and the need to undertake the regional organisation that resulted in the sale of Rothmans Indonesia. The Taxpayer says that the commerciality of the transaction is highlighted when tax is taken into account. Faced with the ability to choose to rollover, it would have been commercially imprudent for the Taxpayer to have chosen to ignore the availability of a rollover and instead elect to pay tax. That contention, of course, begs the question. The question is why it was necessary to create a situation where a choice was possible. The first factor contemplated by s 177D(b) is the manner in which the scheme was entered into or carried out. This factor examines the way in which and the method or procedure by which the scheme was established, entered into and carried out (see Commissioner of Taxation v Spotless Services Limited [1996] HCA 34 ; (1996) 186 CLR 404 at 420). The factor invites consideration of surrounding circumstances. The Taxpayer says that the lack of control that the Taxpayer and other relevant entities had over the disposition of the Australian brands is illustrated by the fact that Imperial could have selected predominantly Rothmans brands. In such a case, there would have been no suggestion of a tax benefit. However, as I have said, once Imperial had chosen the 9 Wills Brands, there is no reason why the Taxpayer could not have transferred or disposed of those brands direct to Imperial or its subsidiaries. The second factor is the form and substance of the scheme. The Taxpayer asserts that the form and substance of the scheme as identified do not diverge. Rather, both are squarely aimed at achieving the merger through the re-organisation of the two groups and the disposal of Australian brands to Imperial. Again, however, the Taxpayer's contentions ignore the basic proposition that the merger and the disposition could have been achieved in a different fashion and there was no commercial imperative that required the disposal of the 9 Wills Brands to Imperial subsidiaries to be effected through Rothmans. The third factor is the time at which the scheme was entered into and the length of the period during which the scheme was carried out. The Taxpayer contends that the timing of the scheme was dictated entirely by the requirements of the global and Australian merger, particularly the timing of regulatory, shareholder and court approvals. It says that the timing and duration point towards the purpose of achieving the merger. That must be so in so far as the object of disposition to Imperial was to facilitate the merger. However, the timing of the disposition by the Taxpayer to Rothmans was critical to achieving the tax benefit. The fourth factor is the result in relation to the operation of the 1936 Act that, but for Part IVA, would be achieved by the scheme. The result achieved by the scheme was to enable the Taxpayer to dispose of the 9 Wills Brands without incurring capital gains tax, by making the rollover choice under subdivision 126-B, after the merger. But for the operation of Part IVA, that result would have been achieved. That points to a conclusion that the scheme was entered into and carried out for the purpose of enabling the Taxpayer to obtain that tax benefit. The fifth factor is any change in the financial position of the relevant taxpayer that has resulted from the scheme. Apart from tax consequences, there was no change in the financial position of the Taxpayer except in so far as it received $181,700,000 from Rothmans upon the disposition of the 9 Wills Brands to Rothmans. That was the value of the 9 Wills Brands. However, the Taxpayer avoided liability for capital gains tax because of the rollover choice, something it could not have done without the scheme. The sixth factor is any change in the financial position of any person who has any connection with the relevant taxpayer, being a change that has resulted from the scheme. Rothmans acquired the 9 Wills Brands for a consideration equal to their value and then disposed of the 9 Australian Wills brands for a consideration equal to their value. There was no change except to the extent that it was able to participate in the use of the tax losses of the Rothmans Holdings group. The seventh factor is any other consequence for the relevant taxpayer or for any person who has any connection with the relevant taxpayer, of the scheme having been entered into or carried out. The consequence for the Taxpayer and the Rothmans Holdings group, as just indicated, was that tax losses were utilised that would not have been utilised by the Taxpayer if the Taxpayer had transferred or disposed of the 9 Nine Wills Brands direct to the Imperial subsidiaries rather than to Rothmans. The eighth and final factor is the nature of any connection between the relevant taxpayer and any person who has any connection with the relevant taxpayer. At the time of the disposition by the Taxpayer to Rothmans, they were both members of the merged group. Prior to that, they were competitors. The relationship enabled the object of the scheme to be achieved, namely the utilisation of tax losses in connection with the disposition by the Taxpayer of the 9 Wills Brands. I consider that, overall, the eight factors required to be considered point strongly to the conclusion that the Taxpayer and Rothmans, both of whom entered into and carried out the scheme, together with other parties, did so for the purpose of enabling the Taxpayer to obtain the tax benefit resulting from the rollover choice. That had the consequence that the Taxpayer was not required to bring into account as assessable income the capital gain of $118,128,953 derived on the disposition of the 9 Wills Brands that would have been derived, without the benefit of set off against tax losses, had they been disposed of direct to the Imperial subsidiaries rather than to Rothmans. I shall deal with each separately. He also attaches significance to the evidence given by Mr Hardman as to his reasons for agreeing with the proposal advanced by Mr Kingsley. Specifically, the Commissioner says that the subject matter of the memoranda of 20 May 1999 and Mr Hardman's reasons constitute the very matter because of which the provisions of s 226 of the 1936 Act apply. The Commissioner contends that at no time did the Taxpayer tell the Commissioner in writing about that matter. The Taxpayer did not tell the Commissioner in writing that a significant reason for transferring the 9 Wills Brands to Rothmans before they were transferred to the members of the Imperial Group was to enable the merged group to avail itself of the losses available in the Rothmans Holdings group, which would not have been available had there been a transfer direct to the members of the Imperial Group. That is at variance from the assertions made by the Taxpayer in the annexure to Mr Dunkley's letter of 23 September 2002, purporting to advance reasons for the transfer by the Taxpayer to Rothmans. That is a critical step in the scheme identified by the Commissioner, which was not the subject of any written disclosure to the Commissioner prior to the commencement of the tax audit. Accordingly, I would be disposed to accept the Commissioner's contentions that the Taxpayer did not tell the Commissioner, within the meaning of s 226E, about the matter because of which s 226 applies to impose the penalty. It would follow that s 226E does not apply to reduce the penalty. Did the Taxpayer Tell the Commissioner Voluntarily? The Commissioner contends, however, that, even if the communications from the Taxpayer to the Commissioner did entail telling the Commissioner about the relevant matter within the meaning of s 226E, the Taxpayer did not tell the Commissioner voluntarily within the meaning of s 226E. That is to say, the Taxpayer did not volunteer the information. Rather, it was provided on behalf of the Taxpayer only after the Commissioner requested that it be provided. The Taxpayer contends, on the other hand, that s 226E contemplates only that the Commissioner be told about the relevant matter without resort to legal compulsion. In the present case, the Commissioner did not resort to ss 263 and 264 of the 1936 Act to compel the Taxpayer to provide the relevant information. Accordingly, it is correct to say that the information was not provided under any legal compulsion. I consider that at least three levels can be identified in this context. The first is legal compulsion. Certainly, the Taxpayer provided the information voluntarily, in the sense that it was not compelled to do so. However, the word voluntarily has at least two senses. In one sense, action might be said to be undertaken voluntarily if it is undertaken of one's own free will or accord, without compulsion, constraint or undue influence by others. However, in another sense, conduct may not be said to be undertaken voluntarily unless it is undertaken spontaneously. Thus, voluntary conduct might be action performed or done of one's own free will, impulse or choice, not constrained, prompted or suggested by another. In that sense, one might ordinarily speak of volunteering information in the sense of communicating information on one's own initiative without prompting. The Commissioner contends for that second meaning of the word voluntarily. That is to say, the Commissioner says that s 226E requires that the Taxpayer tell the Commissioner about the relevant matter, on its own initiative, without being prompted or asked. Section 226E, together with s 226D, was inserted into Part VII of the 1936 Act on the enactment of the Taxation Laws Amendment (Self Assessment) Act 1992 (Cth) ( the Self Assessment Amendment ). The purpose of ss 226E and 226D, in giving a reduction in the penalty otherwise attracted, was to encourage the making of voluntary disclosure by taxpayers. The encouragement of voluntary disclosure is in contrast to the rewarding of a taxpayer who, hoping to avoid detection, defers making disclosure until such time as it becomes obvious that activity of the Commissioner is about to uncover relevant facts. A taxpayer who makes disclosure without being prompted by direct action from the Commissioner receives a substantially greater reduction in penalty than does a taxpayer who defers making disclosure or refrains making disclosure until after being notified of an audit. Section 226E is not intended to extend to every taxpayer who does something other than under compulsion. It applies only to a taxpayer who does something of his, her or its own initiative, without prompting or apprehended pressure from the Commissioner. That is consistent with the object of the regime introduced by the Self Assessment Amendment. I do not consider that s 226E has been attracted in the present case. The Taxpayer should pay the Commissioner's costs of the proceeding. I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | capital gains tax whether the structure of sale of assets was a scheme within the meaning of s 177a(1) of the income tax assessment act 1936 (cth) whether additional amount included by commissioner in amended assessment is an amount of assessable income that would have been included, or might reasonably be expected to have been included in the applicant's assessable income if scheme had not been entered into or carried out whether scheme was attributable solely to the making of a choice as per s 177c(2a)(a) of the income tax assessment act 1936 (cth) whether it would be concluded that a person who entered into the scheme did so for the purpose of enabling the applicant to obtain a tax benefit in connection with the scheme penalties whether applicant told the commissioner in writing about a matter because of which s 226 of the income tax assessment act 1936 (cth) applies to impose a penalty whether the applicant told the commissioner voluntarily within the meaning of s 226e of the income tax assessment act 1936 (cth) taxation taxation |
The company has admitted that its packaging and promotional materials were misleading or deceptive in that they misrepresented the composition of the juices. Declaratory orders, an injunction, a corrective advertising order and an order for establishment of a compliance program within the company have been agreed to. For the reasons that follow, I am of the opinion that the proposed orders are within power and appropriate and, subject to some minor variations, will make the orders sought. It manufactures and supplies fruit juice to retailers throughout Australia. 3 Commencing from 1 July 2007 Nudie supplied to retailers for sale to consumers a new product range under the brand name "Rosie" comprising two fruit juice products called "Rosie Ruby" and "Rosie Blue". The company has the right to use the registered trade marks Rosie Ruby and Rosie Blue. The products were supplied between July 2007 and 30 January 2008 to retailers throughout Australia through national supermarket chains and independently owned shops. They were promoted by advertising campaigns in Sydney, Melbourne and Brisbane using signboards on buses and trams, street posters and postcard flyers. A wrap-around label with the name "Rosie Ruby" in large and prominent font on the front and rear of the label. 2. A description of the product on the front and rear of the label as "cranberry cloudy juice". 3. Adjacent to the description a prominent picture of a cranberry on a white background. 4. No pictorial representation of any other type of fruit. 5. The visible contents of the bottle being substantially the same colour as the fruit pictured on the label. 5 The Rosie Blue product came in a transparent plastic screw top bottle of the same dimensions as the Rosie Ruby product. A wrap-around label with the name "Rosie Blue" in large and prominent font on the front and rear of the label. 2. A description of the product on the label as "cranberry blueberry juice". 3. Adjacent to the description and below the name was a prominent picture of a cranberry and a blueberry on a white background. 4. No pictorial representation of any other fruit on the label. 5. Beneath the picture and at the bottom and rear of the label were the words "no preservatives, additives, added sugar or guilt". These products were supplied to retailers for sale to consumers between 1 July 2007 and 30 January 2008. 6 The promotion of the two fruit juices involved the use of bus and tram signboards, street posters and postcards as already mentioned. The Rosie Ruby and Rosie Blue signboards used on buses and trams described Rosie Ruby as "cranberry cloudy juice" and Rosie Blue as "cranberry blueberry juice". And no guilt. " These signboards were used between 20 August 2007 and 16 September 2007. And no guilt. And no guilt. " The postcard promotional flyers were used between 16 January 2008 and 30 January 2008 and again described the two products as "cranberry cloudy juice" and "cranberry blueberry juice" respectively. With no added sugar or preservatives, you can enjoy the refreshing taste of real cranberries whenever (or however) you like and feel great about it". This was accompanied by a pictorial representation of the packaging and labelling of Rosie Ruby and Rosie Blue. On the reverse side of the postcards was a pictorial representation of a single cranberry and blueberry accompanied by the words "Chilled cranberry juice with no added sugar. And no guilt. Rosie Blue consisted solely of cranberry juice and blueberry juice. 9 Nudie now admits that in respect of those members of the public that purchase fruit juice, the representations were false, misleading and deceptive. As appears from its specific admissions, both Rosie Ruby and Rosie Blue comprise largely apple juice with significantly lesser proportions of cranberry juice and blueberry juice respectively. These comprise declarations setting out the admitted contraventions of ss 52 , 53 and 55 of the Trade Practices Act 1974 (Cth). An injunction restraining Nudie from repetition of such conduct for a period of three years, a corrective advertisement and the establishment by Nudie of an education, training and trade practices compliance program. They also filed an agreed statement of facts upon which the preceding factual background is based. They referred to the well established proposition that in such cases the Court will not impede settlements between parties legally represented and able to understand and evaluate the desirability of agreeing to a settlement. The Court will not ordinarily refuse to give effect to terms of settlement by refusing to make orders or accept undertakings where they are within the Court's power to make and are otherwise appropriate. The Court will generally not substitute its own view of the orders or undertakings which it would have made provided that those which are suggested fall within the range of an appropriate disposition in the case: Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18 ; (1999) 161 ALR 79 at [20] . 12 I am satisfied that the Court has power to make the orders which are sought. I am also satisfied that the orders are appropriate. The declarations that are proposed are more numerous than would appear necessary and could have been collapsed into one or two declarations. That, however, is a matter of drafting rather than a matter of substance. The proposed injunction is expressed with sufficient precision to make it enforceable. 13 Having regard to the misleading promotion, which has been admitted, the corrective advertisement is appropriate. The compliance program is related to the contraventions which have occurred and is appropriate in the circumstances. 14 Subject to some slight redrafting, which the parties have accepted, of the terms of the orders to express them with greater clarity, I am prepared to make the orders sought. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French J. | misleading or deceptive conduct sale of fruit juices labels and promotional materials representations as to content representations that drinks comprise cranberry juice and cranberry juice with blueberries drinks largely comprised of apple juice contraventions admitted declarations, injunctive relief and other orders by consent trade practices |
The proceeding is an appeal from a judgment of the Federal Magistrates Court of Australia, which dismissed an application for judicial review of the Tribunal's decision and ordered that the appellant pay the first respondent's costs of that proceeding. The judgment of the learned federal magistrate was delivered, and the orders made, on 11 October 2007. See SBZD v Minister for Immigration & Anor [2007] FMCA 1624. The Tribunal's decision, dated 9 May 2007, was to affirm a decision of a delegate of the Minister for Immigration and Multicultural Affairs (now the Minister for Immigration and Citizenship, the first respondent) (in both cases, "the Minister") to refuse to grant to the appellant a protection visa. 2 The appellant is a citizen of the United Kingdom, who arrived in Australia on 29 October 1982. With the benefit of an appropriate visa, he resided lawfully in Australia. During the course of his residence in Australia, he was convicted and sentenced on charges of sexual offences in relation to his adopted daughter, and was imprisoned. As a result of his conviction and sentence, the appellant had his visa cancelled on character grounds, and was the subject of a deportation order, pursuant to s 200 of the Migration Act 1958 (Cth) ("the Migration Act "). On 16 September 2005, the appellant applied for a protection visa. The Minister's delegate's decision to refuse to grant the visa was made on 30 January 2006. The appellant applied to the Tribunal to review that decision. On 1 June 2006, the Tribunal affirmed the decision of the Minister's delegate. The appellant sought review of that decision of the Tribunal in the Federal Magistrates Court. On 22 September 2006, by consent, the Federal Magistrates Court set aside the decision and remitted the matter to the Tribunal, to be determined according to law. The decision of the Tribunal the subject of this proceeding followed that remittal. 3 By s 36 of the Migration Act , there is a class of visas to be known as protection visas. A criterion for a protection visa is that the applicant for the visa be a non-citizen in Australia to whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol. The terms "Refugees Convention" and "Refugees Protocol" are defined in s 5(1) of the Migration Act to mean respectively the Convention relating to the Status of Refugees done at Geneva on 28 July 1951, and the Protocol relating to the Status of Refugees done at New York on 31 January 1967. It is convenient to refer to these two instruments, taken together, as the "Convention". For present purposes, it is sufficient to note that, pursuant to the Convention, Australia has protection obligations to a person who is a refugee, as defined in Art 1 of the Convention. His fear of persecution is based on the existence in the United Kingdom of vigilante groups, who target paedophiles, or suspected paedophiles, for assault and even death. It accepted that his name and photograph had been communicated publicly in the past by the British media, which had portrayed him as a child sex offender or paedophile. The Tribunal therefore accepted that the appellant has some public profile as a child sex offender or paedophile in the United Kingdom. The Tribunal accepted that if the appellant returned to the United Kingdom, there was a real chance that his name and photograph would again be publicised by British media, and that he would be portrayed in such publicity as a child sex offender or paedophile. 6 The Tribunal accepted that if the appellant returned to the United Kingdom in the reasonably foreseeable future, there was a real chance of serious harm to him from vigilante groups by reason of his identification as a known child sex offender or paedophile. The Tribunal accepted that the appellant was a member of a particular social group for the purposes of the Convention. The Tribunal was prepared to accept that, if the appellant returned to the United Kingdom immediately or in the reasonably foreseeable future, there was a real chance that he would face serious harm from various individuals and groups because of his membership of a particular social group, however that group was described. 7 The Tribunal then turned to consider whether the United Kingdom authorities would be able to provide the appellant with effective state protection from the harm that he feared. The joint judgment in S152/2003 refers to the obligation of the state to take "reasonable measures" to protect the lives and safety of its citizens, including "an appropriate criminal law, and the provision of a reasonably effective and impartial police force and justice system", or a "reasonably effective police force and a reasonably impartial system of justice", indicating that the appropriate level of protection is to be determined by "international standards", such as those considered by the European Court of Human Rights in Osman v United Kingdom (1998) 29EHRR 245. Thus, an unwillingness to seek protection will be justified for the purposes of Article 1A(2) where the state fails to meet the level of protection which citizens are entitled to expect according to "international standards". 8 The Tribunal found that the United Kingdom authorities do not take vigilante attacks against child sex offenders or paedophiles lightly and "aggressively pursue any vigilantes or other citizens who attack child sex offenders or paedophiles. " The Tribunal also referred to the fact that a program known as Multi-Agency Public Protection Arrangements ("MAPPA") may provide some additional protection from possible vigilante attacks. The Tribunal accepts that the applicant's safety cannot be guaranteed on a 24-hour basis by the United Kingdom authorities, however based on the findings in MIMA v Respondent S152/2003 (discussed above), such inability to guarantee 24-protection is not a denial of adequate protection. 9 The Tribunal expressed its lack of satisfaction that an adequate level of state protection would not be available to the appellant if he returned to the United Kingdom, or that such protection would be denied to the appellant in any way. Therefore, the Tribunal finds that if he returned to the United Kingdom now or in the reasonably foreseeable future the applicant would be able to obtain effective state protection from the harm that he fears from non-state actors. The Tribunal also find [sic] that the applicant would not be denied such protection for reasons of his membership of a particular social group...Therefore the applicant's fears of harm from individuals and vigilante groups because he is an identified child sex offender or paedophile are not well founded. 10 The Tribunal then dealt with the appellant's expressed fear of retribution by the brothers of his victim, who live in England and are aware of his crimes. It accepted that the brothers may report the appellant's possible or actual return to the media, but was not satisfied that this would constitute the type of serious harm that would amount to persecution for the purposes of the Convention. It found that there was no evidence that the brothers had threatened the appellant with any physical harm or other type of harm apart from revealing his name to the media, or that they had taken any steps to harm him in the past. It was therefore not satisfied that there was a real chance that he would suffer any form of serious harm that would amount to persecution from the brothers. In any event, the Tribunal found that he would be able to obtain adequate state protection in accordance with international standards from any harm that he might suffer, and that he would not be denied such protection for any reason, including his membership of a particular social group. The Tribunal then discussed and rejected a submission that the MAPPA system itself amounted to persecution. It also rejected a submission that the appellant would be denied the opportunity to obtain employment, because he would have to disclose his conviction, but found that this was the result of the application of laws appropriate and adapted to achieving a legitimate object of the United Kingdom, being the protection of the general public from child sex offenders or paedophiles whilst providing some protection for child sex offenders or paedophiles, using proportionate means. 11 The Tribunal found that there was no real chance that the appellant would be persecuted for any Convention reason if he returned to the United Kingdom immediately or in the reasonably foreseeable future. It therefore found that he did not have a well-founded fear of persecution for a Convention reason. He was not, therefore, a person to whom Australia has protection obligations under the Convention. The only one relevant to this appeal was described as the Tribunal's failure to take account of evidence that the British authorities failed to protect members of the appellant's social group. At [35] of his reasons for judgment, the federal magistrate expressed the view that there was no evidence from which the Tribunal could reasonably conclude that the persecution feared by the appellant had an "official quality" within the United Kingdom. At [36]-[46], his Honour held that the Tribunal had to consider the level of protection available to child sex offenders in the United Kingdom and, in particular, whether vigilantes are beyond the control of the British authorities, so that the British Government would be unable to protect the appellant from the possibility of persecution to an unacceptable degree. His Honour recognised that some persons with the same attributes as the appellant had been subjected to serious harm in the United Kingdom, solely because of those attributes, so that the state had failed to protect such persons. At [37], he posed the question "Does the possibility of this harm alone render the applicant a refugee? This guarantee not being realistically achievable, short of detaining the applicant in the United Kingdom. In performing this assessment the RRT looked at the number of attacks concerned and the response the British authorities had made to them. The RRT found that the British police did respond to complaints of attack by sex offenders living in the community. It also found that the British criminal justice system had prosecuted and convicted the perpetrators of such violence. The RRT further found that, through the MAPPA system, the British Authorities would make a proper assessment of the level of threat to the applicant and provide him with a level of protection commensurate to that threat, which though not absolute was likely to be adequate in the circumstances. On the basis of this assessment, the RRT did not believe that the current situation in the United Kingdom was such that an adequate level of state protection would not be available to the applicant, if he was returned to the United Kingdom. I can find no discernable error in how the RRT conducted this assessment and the matters it took into account in reaching it. They are matters for evidence, which are in the sole domain of the RRT. Pursuant to the scheme in O 80 of the Federal Court Rules , the appellant was referred to counsel for legal assistance. Amended grounds of appeal were filed, and the appeal proceeded on one of those grounds of appeal, with the consent of counsel for the Minister. 16 That ground is that the Tribunal failed to apply the correct legal test in ascertaining whether the appellant satisfied the requirement that his unwillingness to avail himself of the protection of the United Kingdom was the result of a well-founded fear of being persecuted. The argument put on behalf of the appellant rested heavily on the proposition that what the majority said in S152/2003 does not constitute a definitive statement of the appropriate test in circumstances such as those faced by the appellant, and needs to be read in the context of the case with which the High Court was dealing. Rather, it was suggested that the correct test was stated by McHugh J in that case. To deal with this submission, it is necessary to analyse S152/2003 . 17 That case involved applications by a couple of Ukrainian nationals for protection visas, on the basis that the husband, who was a Jehovah's witness, had a well-founded fear of persecution in Ukraine for the reason of his religion. Before the Tribunal, the case had been that the Government of Ukraine, directly and through the media it controlled, encouraged persecution of Jehovah's witnesses. The Tribunal rejected that proposition. It was also said that the police condoned violence towards Jehovah's witnesses. The Tribunal did not accept that. The Tribunal made specific findings that it was not satisfied that the Ukrainian authorities were unable or unwilling to protect citizens from violence based on antagonism of the kind involved. An application for judicial review in this Court was rejected. On appeal to the Full Court of this Court, an issue emerged that had not been raised at first instance. The Full Court held that the Tribunal was entitled to find that there was no evidence that the Ukrainian authorities encouraged persecution of Jehovah's witnesses, but that the Tribunal had failed to consider whether Ukraine had the ability, in a practical sense, to provide protection. On this ground, the Full Court allowed the appeal and set aside the Tribunal's decision. The High Court allowed an appeal from the judgment of the Full Court. The Tribunal's conclusion that the violence was random and uncoordinated was not merely an assertion. It was a finding based on the evidence, and it was directly relevant to the case the first respondent was seeking to make, which was that the violence was orchestrated and State-sponsored. The first respondent did not set out to demonstrate that his country was out of control. On the contrary, he was claiming that the government was in control, and was using its power and influence to harm people like him. The new case, raised for the first time in the Full Court, has to be related to the terms of Art 1A(2). What kind of inability to protect a person such as the first respondent from harm of the kind he has suffered would justify a conclusion that he is a victim of persecution and that it is owing to a well-founded fear of persecution that, being outside his country, he is unwilling to avail himself of his country's protection? No country can guarantee that its citizens will at all times, and in all circumstances, be safe from violence. Day by day, Australian courts deal with criminal cases involving violent attacks on person or property. Some of them may occur for reasons of racial or religious intolerance. The religious activities in which the first respondent engaged between May and December 1998 evidently aroused the anger of some other people. Their response was unlawful. The Ukrainian State was obliged to take reasonable measures to protect the lives and safety of its citizens, and those measures would include an appropriate criminal law, and the provision of a reasonably effective and impartial police force and justice system. None of the country information before the Tribunal justified a conclusion that there was a failure on the part of Ukraine to conform to its obligations in that respect. 19 At [27], their Honours referred to the absence of any "cause to conclude that there was any failure of State protection in the sense of a failure to meet the standards of protection required by international standards". It is not necessary in this case to consider what those standards might require or how they would be ascertained. There was no evidence before the Tribunal to support a conclusion that Ukraine did not provide its citizens with the level of State protection required by such standards. The question of Ukraine's ability to protect the first respondent, in the context of the requirements of Art 1A(2), was not overlooked by the Tribunal. Because of the way in which the first respondent put his claim, it was not a matter that received, or required, lengthy discussion in the Tribunal's reasons. If the Full Court contemplated that the Tribunal, in assessing the justification for unwillingness to seek protection, should have considered, not merely whether the Ukrainian Government provided a reasonably effective police force and a reasonably impartial system of justice, but also whether it could guarantee the first respondent's safety to the extent that he need have no fear of further harm, then it was in error. A person living inside or outside his or her country of nationality may have a well-founded fear of harm. The fact that the authorities, including the police, and the courts, may not be able to provide an assurance of safety, so as to remove any reasonable basis for fear, does not justify unwillingness to seek their protection. For example, an Australian court that issues an apprehended violence order is rarely, if ever, in a position to guarantee its effectiveness. A person who obtains such an order may yet have a well-founded fear that the order will be disobeyed. Paradoxically, fear of certain kinds of harm from other citizens can only be removed completely in a highly repressive society, and then it is likely to be replaced by fear of harm from the State. 20 In a separate judgment, McHugh J discussed at length the requirements of a well-founded fear of persecution. In societies divided by strongly held ethnic or religious views, it commonly happens that members of one group have a real chance of suffering harm --- often violent harm --- because of the pervasive but random acts of members of another group. Such harm occurs although the State makes every effort to prevent it. In such cases, it would be a misuse of language to say that the fear of persecution is not well-founded because the State has "a system of domestic protection and machinery for the detection, prosecution and punishment of actings contrary to the purposes which the Convention requires to have protected". 21 The quotation is from Horvath v Secretary of State for the Home Department [2001] 1 AC 489 at 510. 22 At [79], his Honour pointed out that an asylum seeker would have to show more than that persons whose circumstances were similar were being persecuted. The asylum seeker would have to show that there is "a real chance that he or she will be one of the victims of that persecution. " This might be done either by showing that the particular person has a greater chance of harm than other persons, or to show that a very high percentage of such persons are persecuted. Nothing in the Convention supports such a conclusion. 23 The remaining member of the High Court in S152/2003 , Kirby J, discussed the issues but allowed the appeal without expressing a concluded view on the differences between the majority judgment and that of McHugh J. See the judgment of Kirby J at [111]-[112]. 24 This examination of S152/2003 demonstrates that it is impossible to uphold the contention, put on behalf of the appellant in the present case, that the majority judgment in that case cannot be taken as an expression of the authoritative test to apply when the issue is whether the country of nationality of an applicant for a protection visa alleges that that country lacks the ability effectively to protect him or her from the harmful actions of non-state antagonists. By the time the case reached the High Court, it was a case about the adequacy of state protection. It had become such a case because the Full Court had held that the Tribunal had failed to deal with the ability of the Ukrainian Government to prevent future harm. The majority of the High Court allowed the appeal on the basis that the Tribunal had no evidence before it that would have justified a finding that the necessary state machinery of Ukraine fell below the required standard for protection of its citizens. The majority expressed this norm by reference to international standards, and made it clear that there is no requirement that a state provide absolute protection for its citizens. In the light of what the majority said, the view of McHugh J cannot be regarded as authoritative. In Applicant A99 of 2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 773 (2004) 83 ALD 529 at [35] - [42] , Mansfield J analysed S152/2003 . It is clear that his Honour thought that the view expressed by the majority was authoritative. I respectfully share his Honour's view. Even if what the majority said could be characterised technically as obiter, it would be necessary to characterise the view of McHugh J in the same way. It would be a bold step for a judge of this Court, or a federal magistrate, and especially a Tribunal member, to ignore what the majority said in favour of adopting the view of McHugh J. 25 There can be no doubt that the Tribunal in the present case applied the test expressed by the majority in S152/2003 . It specifically found that the appropriate level of protection was to be determined by international standards, and that the level of protection in the United Kingdom meets international standards. There was evidence before the Tribunal to justify this finding. Once it was reached, the Tribunal was bound to decide, as it did, that the appellant's fear of persecution was not well-founded. Even if in fact the appellant might come to harm at the hands of vigilantes in the United Kingdom, his unwillingness to avail himself of the protection of that country because the protection would not be absolute would not be sufficient to bring him within Art 1A(2) of the Convention. 26 The appellant has therefore failed to make good the only ground on which this appeal was conducted. No reason appears, and none was suggested, why the ordinary principle that costs follow the event should not be applied. Accordingly, the appellant will be ordered to pay the costs of the first respondent of the appeal. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | visa protection visa particular social group child sex offender or paedophile, or person perceived to be a child sex offender or paedophile fear of persecution based on risk of serious harm inflicted by vigilante groups whether tribunal applied wrong test in determining that fear not well-founded level of protection satisfying international standards whether higher level of protection or absolute protection, required migration |
In those tax years it had accumulated tax losses to which the income from the Raftland Trust was applied, with the result that neither it nor the Raftland Trust had income subject to taxation. The business of the principal company, Heran Projects Pty Ltd , ('Heran Projects') was the building of houses. It was controlled by Brian Heran who was also a director as was Martin Heran until May 1996. Those two brothers held ordinary shares in the company and each of the three brothers and two other associated companies held special shares. Northbank Homes Pty Ltd ('Northbank Homes') and Southbank Homes Pty Ltd ('Southbank Homes') were subcontractors to Heran Projects and were controlled, respectively, by Martin Heran and Stephen Heran. The trustee of the Brian Heran Discretionary Trust , which was settled in 1990, was Maggside Pty Ltd ('Maggside') . The potential beneficiaries of that Trust included any trust in which Brian Heran and his brothers had an interest and any company in which they held shares or of which they were office-holders. The directors and shareholders of Maggside were Brian and Stephen Heran. 3 In May 1995 management reports were prepared for each of Heran Projects, Northbank Homes and Southbank Homes. The report concerning Heran Projects contained the notation that its 'tax profit' for the year ended 30 June 1995 was projected at approximately $2.7m. Northbank Homes' profit was anticipated to be $284 207.00. 4 Following upon the receipt of this information, Brian Heran contacted his solicitor, Mr Tobin, concerning the possible 'acquisition' of a trust which had some losses from previous tax years, and which might be utilised so as to absorb the forecast profits. Mr Heran asked Mr Tobin to speak with Mr Adcock of Harts Accountants ('Harts') to this end. Information was subsequently provided of the E&M Unit Trust, including a copy of its Trust Deed, financial and other records. It had substantial tax losses from previous tax years, in the order of $4m. Between 16 and 19 June 1995 a 'price' of $250 000 was nominated by Mr Adcock to be paid with respect to the Trust, following some negotiations. At about this time consultations with senior counsel were undertaken concerning tax arrangements and the transactions which followed. 5 On 22 June 1995 Mr Tobin wrote to Harts, suggesting that the E&M Unit Trust be paid $250 000 and that the Trust dispose of the distribution which would be made to it in a way that did not 'fall foul of the income injection test' , a reference to the Treasurer's press release of 9 May 1995 which carried the heading 'Trafficking in Trust Losses' . Examples given by Mr Tobin were distribution to its unit holders or part payment of one or more of its debts. Reference was made to the need to amend provisions of the E&M Unit Trust Deed relating to notification of the retirement of the Trustee. The Trustee of the Trust was also to appoint the nominee of the Heran's interests to act as accountants and to deliver its books of account to them. It owed some monies to Heran Projects. On 22 June 1995 Mr Tobin wrote to Mr Heran concerning the dealings which were proposed between Heran Projects and Maggside. That same day Heran Projects entered into an agreement with Maggside by which Maggside, as trustee of the Brian Heran Discretionary Trust, was to be paid the sum of $2 915 000 for the right to sell investment properties owned by Maggside and to retain any proceeds of sale of them. It would appear that another company connected with the Herans, Kedsfield Pty Ltd , was a joint venturer with Heran Projects in this and contributed some $650 000 to the venture, but this assumes no importance in these proceedings. The dealings between the two companies involved a payment by Heran Projects to Maggside and a payment by Maggside to Heran projects in the same sum, by way of repayment of its loan and a further loan to Heran Projects. The results for Heran Projects, as disclosed in its financial statements and taxation returns were joint venture costs of some $2.3m and a net loss for the 1995 tax year. 7 From this point, it may be inferred, it was planned to distribute monies to two trusts, culminating in a resolution to distribute to a trust which had tax losses accumulated from previous years. Mr Brian Heran said that without the availability of the trust losses of the E&M Unit Trust he would not have caused these two entities to enter into the sales rights agreement. Had the E&M Unit Trust not been available, Maggside would have distributed its income, or entitlement thereto, to one or more corporate beneficiaries. The agreement between Heran Projects and Maggside was rescinded, prospectively, by a document dated 27 June 1996 for the sum of $10.00. At that date one property had been sold for about $190 000. It was settled on 8 July 1986. Its Trust Deed provided for a trust fund to be held by the trustee, which was to include the initial sums paid on settlement together with any further additions accepted by the Trustee. The Trustee was E&M Investments Pty Ltd, the directors and shareholders of which were Mrs Elizabeth Cox Kerr Thomasz (formerly ECK Carey) and her husband Mr Mark Thomasz. The nature of the business of the Trust was the acquisition and sale of real property. It was controlled by Mr Thomasz. 9 Pursuant to the Trust Deed, units represented a share in the Trust Fund and their initial value was $1.00 each. Ten units were issued equally as between Mrs Thomasz, as trustee of the ECK Family Trust, and Thomasz Enterprises Pty Ltd. Other documents disclose that the latter company's interest was as trustee of the Thomasz Family Trust. A settlement sum of $10.00 was recorded in the Deed. 10 The powers of the Trustee under the E&M Unit Trust Deed, include a power of delegation of all of the trustee's powers and discretions, the grant of a Power of Attorney (cl 27) and a power to amend the trust Deed (cl 35(a)). If it is not then the sole Trustee, the continuing Trustee or Trustees shall make such appointment. Clause 22 deals with the net income which is to be paid, applied or set aside for the benefit of the unitholders in proportion to the number of units they had. 12 By July 1991 Mr and Mrs Thomasz were facing bankruptcy and, inferentially, their company E&M Investments and the Trust were in financial difficulty. They took steps with respect to the position of trustee of both the E&M Unit Trust and the Thomasz Family Trust. Documents dated 10 July 1991 show that Thomasz Enterprises Pty Ltd resolved to cease as Trustee of the latter trust and that Mr Glen Carey, the son of Mrs Thomasz, was thereafter to act in that capacity. Four documents of the same date were prepared and signed with respect to the E&M Unit Trust. This letter serves as notification of the decision to resign. Ltd. from its capacity as trustee of the E & M Unit Trust, it was decided pursuant to the trust deed and as part of the resignation that Glen Carey act in the role of trustee for the trust. You are to be indemnified against any actions of the old trustee. You will be required to sign an appropriate form. 15 Mr Carey, by letter, agreed to act as Trustee of the E&M Unit Trust. It does not appear that he was ever required to sign anything other than a document entitled 'Retirement of Trustee and Appointment of New Trustee' . In it, E&M Investments was described as 'the retiring Trustees' and Mr Carey 'the new Trustee' . 17 On 30 August 1991 the estates of Mr and Mrs Thomasz were sequestrated. In about February 1992 the mortgagee, Farrow Mortgage Services Pty Ltd, sold the real property of the E&M Unit Trust. The proceeds of sale were not sufficient to discharge the debt owed to it and liquidators were appointed to E&M Investments Pty Ltd. On 24 June 1993 that company was deregistered. 18 The financial statements and income tax return of the E&M Unit Trust for the year ended 30 June 1991 were prepared by an accountant, Mr Harris, in 1994, when Mr and Mrs Thomasz were discharged from bankruptcy. The balance sheet of the Trust for the years 1989 and 1990 show subscribed units at $10.00, as do the accounts for 1991 when that sum was set off against accumulated losses and a net deficiency shown. After 1991 the draft accounts of the Trust do not contain a reference to the settlement sum, nor to any other trust property. There is however no evidence of any payment being made of the $10.00 out of the Trust Fund. 19 Apart from the $10.00 for subscribed units, set off against accumulated losses of $4 017 291.09, the total of current assets was expressed in the negative. A loan to Mr Thomasz, in about the same sum as stock-on-hand, which I take to refer to the investment properties, $1.6m, appears to have been written off. Other assets listed were a 'beneficiary loan' to the Thomasz Family Trust of $12 000 and a small amount of petty cash. Fixed assets comprised plant and equipment of $740.00 and investments were shown as shares in Robs Findon (SA) Pty Ltd at $20.00. These shares were subsequently sold, in 1993, for the sum of $300.00. Mr Thomasz apparently took this money for his own use. Liabilities including those to beneficiary loan accounts which stood at $3 966 478.01. 20 The draft balance sheets for the following years 1992, 1993 and 1994 are consistent with the 1991 accounts, save that the reference to a loan from Farrow Mortgage Corporation is not shown and there is added an entry 'Loan --- Mark Thomasz --- debt unpaid' in the same amount. 21 In the period from July 1991 Mr Thomasz retained the financial records of the Trust. The few dealings undertaken in the period through to June 1995 on behalf of the Trust were undertaken by Mr Thomasz and involved some trading in shares and options. He says Mr Carey delegated this role to him. No details are available of the share and option dealings save for some references to them on cheque butts. They involved modest sums. Two trading accounts were utilised on a few occasions between 16 August 1994 and 19 September 1995 and between 23 November 1994 and 11 April 1995. Mr Carey was not aware of the cheques drawn in 1995. 22 Mr Harris also prepared and signed a form which was lodged with the Australian Taxation Office on 27 September 1994 (ATO form TX160) stating that it was considered unnecessary for the E&M Unit Trust to continue to lodge tax returns as the 'Trust has been non-trading for the 1992, 1993 and 1994 year' . The income tax return for 1994 was not lodged until 20 June 1997. 24 On or before 30 June 1995 two companies --- Raftland Pty Ltd and Navygate Pty Ltd --- were acquired. All three brothers were directors of the companies and Brian and Stephen Heran were shareholders. Two trusts were settled: the Raftland Trust, of which Raftland Pty Ltd was trustee, and the Heran Developments Trust, the trustee of which was Heran Developments Pty Ltd ('Heran Developments') . The latter trust assumes more relevance in the 1996 tax year. In each of the trusts the E&M Unit Trust was included as a Tertiary Beneficiary. 25 Clause 3(b) of the Raftland Trust provides that the Trustee may determine whether to pay, apply or set aside the income of the Trust Fund for one or more of the Primary, Secondary and Tertiary Beneficiaries or to accumulate the same, at the end of each year. The proviso to that clause is that if the Trustee has not done so by 30 June then the Trustee holds the income in trust for the Tertiary Beneficiaries and if they are not then in existence, for the Primary Beneficiaries, or if there are no such Beneficiaries, the Secondary Beneficiaries. The Primary Beneficiaries of the Raftland Trust were the three brothers. Any determination could be made in writing by the Trustee or passed by resolution of the Trustee and a determination to pay, apply or set aside any amount for any Beneficiary could be made by placing that amount to the credit of the beneficiary in the books of the Trust Fund, or by drawing a cheque to their credit or by paying them cash (cl 3(c)(iii)). A Beneficiary in whose favour the Trustee paid, applied or set aside income is regarded as having an immediate and indefeasible vested interest in that income, it being intended that they be taken as presently entitled to it: cl 3(f). 26 It appears that Mr Thomasz was contacted by Mr Adcock about the E&M Unit Trust and that the accountant for Mr and Mrs Thomasz, Mr Harris, became involved at some point. They attended the meetings in Brisbane on 3 July at Mr Adcock's office. Mrs Thomasz and Mr Carey had little knowledge or understanding of what was occurring. Mr Carey acted in accordance with Mr Thomasz's requests. 27 There was some discussion entered into between Mr Tobin and Mr Adcock, on about 27 June 1995, concerning the price to be paid for the Trust. Mr Tobin expressed concern that only a sum equivalent to the debts owed to each of Mr and Mrs Thomasz Trust ($118 000) could be paid without affecting the losses carried forward. This was however later resolved and the payment of the sum of $250 000 was at some point agreed to. 28 On 30 June 1995 Mr Carey executed certain documents affecting the E&M Unit Trust. A Deed, said to be made by him in his own right and as a Trustee for the E&M Unit Trust, the Thomasz Family Trust and the ECK Family Trust, was executed by Mr Carey and witnessed by Mr Thomasz. In it he acknowledged acceptance of appointment as a beneficiary of the Raftland Trust and he agreed not to disclaim his interest as beneficiary or any distribution from the Raftland Trust. He acknowledged that he was also the trustee of the Thomasz Family Trust and the ECK Family Trust and that they were the sole unitholders in the E&M Unit Trust. As Trustee of the latter he amended its Trust Deed by deleting from cl 34(a) the words: 'upon giving at least one (1) month's notice in writing to all Unit Holders' . As Trustee for each of the unit holders of The E. & M. Unit Trust the Trustee hereby removes himself, Glen Carey as Trustee of The E. & M. Unit Trust and appoints Raftland Pty Ltd ACN 069 996 943 as Trustee of The E. & M. Unit Trust effective on and from the 2nd of July, 1995. Both documents had been prepared by Mr Tobin, who advised Mr Adcock on Friday 30 th June that, so long as those documents were executed that day and the books of account of the E&M Unit Trust were delivered the following Monday, the sum of $250 000 would then be paid. 30 On 30 June 1995 Maggside resolved to distribute the trust income of the Brian Heran Discretionary Trust for that year to the Raftland Trust. The accounts of the firstmentioned Trust record such a distribution and the internal accounts of the Raftland Trust show the receipt of $2 892 762 which figure is crossed out by hand and the figure $2 849 467 with the notation 'BHDT' added. It is not necessary to analyse the reference to receipt of the larger figure here and elsewhere. The latter is the relevant figure. 31 On the same day two resolutions were passed by the directors of Raftland: that the Raftland Trust distribute the sum of $250 000 to Mr Carey, in his capacity as Trustee of the E&M Unit Trust; and that the Raftland Trust distribute the balance of its income for 1995 to Mr Carey in that same capacity. 32 The monies for the bank cheque in the sum of $250 000, payable to Mr Carey and given to him at a meeting on 3 July 1995, were provided by Heran Projects, Northbank Homes and Southbank Homes. By a written direction, Mr Carey requested that payment be made to Harts Acountants. That firm deducted the sum of $30 000 and the balance was paid to Mr Carey, who in turn paid it to Mr Thomasz. Mr Thomasz said that the Heran interests were not a party to the arrangement for the payment to Harts. It was his decision to have the balance funds paid to the Mark Thomasz Family Trust. The Thomasz Family Trust income tax return for the 1996 year shows the sum of $220 000 as having been received by way of 'business income' . 33 The balance sheet of Raftland as Trustee shows the figure of $2 849 467, inserted by hand, against 'other debtors' in 'current assets' ; a non-current liability being 'Loan other entities' of $250 000 and a current liability of $2 642 762 ( 'other creditors' ). A notation against a journal entry shows the sum of $250 000 as 'drawings to G Carey' . The tax return of the Raftland Trust of 1995 discloses the distribution of net income of $2 849 467 to the E&M Unit Trust. 34 The accounts of the E&M Unit Trust for the 1995 year show the shareholders fund and current assets at $2 892 762 with a loan due from 'other entities' of $250 000 and the balance of the assets owed by 'other debtors' . Its tax return discloses a distribution to it from the Raftland Trust of $2 849 467 which was set off against balance losses brought forward from previous years so that the net income was nil. Balance losses of $1 165 271 were carried forward. 35 Raftland has not in fact paid the balance sum of $2 642 762 to the E&M Unit Trust and it is not intended to do so. I do not understand Raftland to suggest that it ever held that intention. Mr Tobin conceded as much and in any event its intention not to do so may readily be inferred. He agreed that there was no particular business purpose to the steps devised and although he sought to resile from this statement on one aspect it is clearly the case. He went on to say that the purpose was to make use of the E&M Unit Trust's losses and that it was made a beneficiary as a mechanism for distributing funds from the 'Heran entities' in a tax effective way. The E&M Unit Trust has not called for or got in those monies and has recorded no intended distribution to its unitholders. Mr Thomasz said that apart from the purchase price of $250 000 he had no expectation of receiving any further benefits from the transactions. He considered that control had been relinquished by the E&M Unit Trust. In answer to a question put by the Commissioner, he agreed that he understood the transaction to involve entities with which he or his wife were associated being owed a purchase price and from that point would have no further dealings with the trust. 36 Further steps were taken by Raftland in July 1995. On 3 July 1995 its directors met. The Chairman reported that, apart from the amount of $250 000 to be distributed to the Trustee of the E&M Unit Trust for immediate payment to creditors and/or beneficiaries, the company did not expect to require the funds to which it was entitled under resolutions of Maggside made on 30 June 1995. He proposed that the available funds of the company be used to subscribe for non-voting shares in Navygate Pty Ltd. On 7 July 1995, at an Extraordinary General Meeting, the members of Navygate resolved to increase its share capital by 3 million shares of $1.00 each and to alter the Memorandum and Articles of Association accordingly. The directors of Raftland then resolved to apply in writing for 3 999 998 shares in Navygate. 39 The previous day Senior Counsel, who had been advising Mr Tobin and the Heran interests, had provided a written advice in which it was said that, as the E&M Unit Trust would not be calling upon the balance funds to which it was entitled from the Raftland Trust, the funds were to be reinvested in the group for the benefit of the group. This was in the context of Raftland subscribing for shares in Navygate. 40 On 7 July Navygate resolved to issue the shares. The Navygate shareholding is recorded in the accounts of Raftland as trustee of the E&M Unit Trust. The share register of Navygate did not record this further issue of shares. This was said to be due to error. Heran Developments distributed all of its trust income for the 1996 year to the Raftland Trust, as did Maggside, as trustee of the Brian Heran Discretionary Trust and Northbank Homes. The Raftland Trust then resolved to distribute its income for that year to the E&M Unit Trust. The 1996 income tax return of the Raftland Trust shows a distribution of its income of $779 705 and the return of the E&M Unit Trust discloses income in that amount, which it offset against prior year tax losses. Its net income was again nil. Again, payment by Raftland was not in fact made to the E&M Unit Trust and it is not intended to do so. The latter Trust has not proposed any distribution. 42 In the 1997 year, Northbank distributed the first $386 035 of its trust income to the Raftland Trust and that Trust's return states that that income has been distributed by it. The E&M Unit Trust's return discloses the sum as income, which was again offset against prior year tax losses and a nil net income obtained. On 19 July 2002 a notice of amended assessment was raised by the respondent ('the Commissioner') for the 1995 year on a taxable income of $2 849 467. The total tax assessed was $2 973 766.28, of which $1 594 622.26 was said to be for 'understatement penalty and interest' . It was further explained that $689 571.01 of that sum was by way of penalty and $905 051.25 for interest. An objection was lodged on 13 September 2002 and a notice of disallowance given on 29 October 2002. 44 The amended assessment issued to Raftland for the 1996 year, on a taxable income of $779 705, was for $837 610.43 of which $25 820.10 was said to be for 'additional tax for late return' and $433 633.41 for 'understatement penalty and interest' . Of this latter amount $189 078.76 was for penalty and $244 544.65 for interest. For the 1997 year, an amended assessment on income of $386 035 of $393 693.59 was raised with an additional tax for late return of $10 819.45 and penalty of $93 999.58 and $100 875.50 for interest. 45 Other amended assessments were raised against Stephen Heran, Maggside Pty Ltd, Brian Heran, Heran Developments and Northbank Homes. Shortly prior to the date for their hearing the Commissioner advised that he no longer resisted these appeals and did not rely upon the provisions of Part IVA so far as concerns this appeal. Proceedings numbered Q125, Q126, Q127 and Q157 of 2002 were dismissed by consent with only the issue of costs remaining outstanding. It commences with s 95. Pursuant to s 96 a trustee is not liable to pay income tax upon the income of the trust estate, except as is provided in the ITAA. The assessable income of a resident beneficiary of a trust estate, not under a legal disability, includes a share of the trust income to which they are presently entitled: s 97(1). (1) For the purposes of this Act, where a beneficiary of a trust estate is presently entitled to any income of the trust estate, the beneficiary shall be taken to continue to be presently entitled to that income notwithstanding that the income is paid to, or applied for the benefit of, the beneficiary. Relevantly, s 99A(4) provides that, where there is no part of the net income of a resident trust estate that is included in the assessable income of a beneficiary pursuant to s 97 , the trustee is to be assessed and liable to pay tax on the net income of the trust estate at the rate declared by the Parliament for the purposes of the section. 48 Section 100A has the title 'Present entitlement arising from reimbursement agreement'. In Prestige Motors the Full Court discussed the background to the introduction of s 100A in 1979 and set out, at length, the Treasurer's statement of 11 June 1978 and the Explanatory Memorandum accompanying the Bill. I shall refer to those materials in a summary way. 55 The Treasurer's statement announced the Government's intention to legislate to overturn schemes which had the 'broad purpose of allowing income derived by trusts to be passed on to beneficiaries in a tax free form' . A feature of several of the schemes was said to be the grant of a wide power in the trustee to distribute to 'specially introduced beneficiaries' who do not pay any or much tax on the amount distributed, because of circumstances pertaining to them. The essential element in the transactions identified was that, while the income is freed from tax in the hands of the beneficiary, the terms of the underlying arrangement ensured that the beneficiary does not enjoy the full use or benefit of the income. The arrangements directed a broadly equivalent capital sum to persons who were intended as the real beneficiaries, and at the same time provided a promoter's fee to the participating exempt body which was a nominal beneficiary. The legislation proposed was to treat any distribution of income pursuant to such an arrangement as not having been made. A contract, arrangement or understanding, to which the legislation would be directed, was one where a particular beneficiary had conferred upon it a 'present entitlement' to income of a trust, and under which the beneficiary or an associated party is to provide funds or benefits to another. 56 The Explanatory Memorandum gave as an example of a 'specially introduced beneficiary' to whom income was distributed by a trustee, a beneficiary which would not pay tax because of some peculiar tax status, such as having deductible losses which could absorb its share of the trust income. The arrangements were said to invariably require the introduced beneficiary to retain only a minor portion of the trust income and ensure that the person intended to take the benefit enjoyed it in a tax-free form. An example of the settlement of a capital sum in another trust estate for the benefit of that person was given. The proposed s 100A was said to look to the existence of an agreement, arrangement or understanding entered into, other than in the course of ordinary family or commercial dealing, and as a result of which a present entitlement to a share of trust income was conferred upon a beneficiary in return for the payment of money or the provision of valuable benefits to some other person, company or trust. In such circumstances, the section would require the income dealt with under the 'reimbursement agreement' to be treated as having been accumulated by the trustee as income to which no beneficiary is presently entitled. 57 Subsections 100A (3A) and (3B) were inserted in 1981 (the Income Tax Laws Amendment Act 1981 , No 108 of 1981, s 17). The Explanatory Memorandum to that Bill said that the proposed amendments to the ITAA were to counter variations of earlier arrangements which exploited the exclusion of income of a trust estate, to which a beneficiary becomes entitled, from the operation of the 1979 amendments (s 100A). The variants exploit that exclusion under arrangements whereby income of the head trust is distributed either directly, or through interposed trust estates, to a beneficiary, in the capacity of a trustee of another trust estate in circumstances where the beneficiary-trustee does not need to redistribute the income to avoid any liability to tax, e.g., because of deductions created under the scheme. The Commissioner submits that there was no trustee of the E&M Unit Trust at that time, the attempt to appoint Mr Carey in 1991 having been ineffective; there was no property remaining in the Trust at 1995; and any property which had been in existence in 1991 had not vested in the new Trustee, assuming one to have been appointed. 59 The Commissioner's second approach to the purported distributions to the E&M Unit Trust is to characterise them as a 'sham' . It is submitted that the real transaction between the parties was the transfer of the control of the E&M Unit Trust and the benefit of its accumulated losses for the sum of $250 000. There was never any intention that that Trust, or its unitholders, benefit from the distribution of the balance income. The nomination of the E&M Unit Trust as a beneficiary of Raftland was only to effect these purposes and was therefore also a sham. 60 If the purported distributions to the E&M Unit Trust were not effective, for any of the above reasons, the consequences are in dispute. The Commissioner contends that, whilst the Raftland Trust Deed would make the Heran brothers beneficiaries by default, as Primary Beneficiaries where a Tertiary Beneficiary did not exist, s 100A (1) and (2) nevertheless apply to deem them to be not presently entitled. Raftland is therefore liable to pay in accordance with s 99A. 61 Subsections 100A (1) and (2) also assumed relevance in the event that it is found that the E&M Unit Trust continued in existence to the relevant time and there were distributions of trust income to it. Whether the Primary Beneficiaries or the E&M Unit Trust are found to be presently entitled to that income, Raftland argues that subs 100A (1) and (2) do not apply to deny that position and render it liable to taxation on the income. It submits that no 'reimbursement agreement' has been identified by the Commissioner and no person or entity shown to have been given the benefits provided to the E&M Unit Trust, as the section requires. 62 Alternatively it is submitted, at least with respect to the E&M Unit Trust, that subs 100A (3A) or (3B) apply so that subs 100A (1) and (2) are not applicable. 63 In the event that Raftland is not successful on its appeal, it challenges its liability for penalties for understating its tax and interest. Additionally the Commissioner relies upon the failure of Mr Carey to execute the deed, contemplated by cl 34(d), as affecting the validity of his appointment. As a result, that company continued as Trustee until it ceased to exist upon deregistration in June 1993. At that point the Trust was without a trustee. To this latter contention Raftland points to the provisions of the Corporations Law (as set out in s 82 of the Corporations Act 1989 (Cth). A company's property vests in the Australian Securities and Investment Commission on deregistration (see s 601AD(2)) and it may continue as a trustee when property vests (s 601 AE(1)). 65 A trust exists when the holder of a legal or equitable interest in property is bound by an obligation to hold that interest for the benefit of others or for some object permitted by law: RP Meagher & WMC Gummow, Jacobs' Law of Trusts in Australia 6 th edn, Butterworths, Australia, 1997 at [101] ( 'Jacobs' ). It is the essence of a trust that it is recognised by and enforceable in equity: Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation [1993] HCA 69 ; (1993) 178 CLR 145 at 175. The trust here originally established, with E&M Investments Pty Ltd, was an express trust according to the terms of the Trust Deed, which contained provisions for the retirement of a trustee and the appointment of a new trustee. It was settled in South Australia and is expressed to be subject to the laws of that State. Section 70 of the Trustee Act 1936 (SA) however provides that trustees may be appointed and trust estates transferred other than in accordance with the Act. 66 It is a clearly established principle of equity that it will not allow a trust to fail for want of a trustee: WF Fratcher, Scott on Trusts, 4 th edn, vol II, Little, Brown and Company, Canada, 1987 at SS101 (' Scott on Trusts') ; Jacobs [1502]. In accordance with that principle the Court will appoint a trustee where there is none. The Commissioner's point is that this was not undertaken. The submission overlooks the relevance of the principle to the intention which might be imputed to the settlor of a Trust. The rationale for the principle is that in most cases a want of trustee is contrary to the settlor's intention: Scott on Trusts SS 101.1. An exception may be the rare case where the settlor intended the trust to continue only as long as the settlor's designated trustee continues in that capacity. In the present case the definition of 'trustee' and the recital to the Trust Deed show that the trust was intended to enure with additional or substituted trustees. It may therefore be inferred that the E&M Unit Trust was not intended to fail for want of a trustee and that intention might guide the interpretation of the terms of a Trust Deed and the consequences which might follow a failure to follow them strictly when a new trustee is sought to be appointed. It is necessary first to consider the terms of cl 34 and what it required. 67 The Commissioner's argument is that the terms of cl 34 should be construed strictly. They contemplate the giving of one month's notice prior to the current Trustee retiring. Such an approach would prevent the Trustee announcing its retirement at the same time as notice was given. It does not seem to me that that was likely to have been intended by the settlor. In my view cl 34(a) simply postpones the time at which the retirement of the current Trustee takes effect. Its terms have the consequence that a retirement which has been announced will not take effect until a period of one month has passed and until another Trustee is appointed. The purpose of a provision such as this is to give the unitholders time to consider whether there are any matters arising from the retiring Trustee's administration of the Trust which need be addressed before the retirement takes effect. It could not be intended to operate in such a way as to prevent the Trustee retiring and nullifying the appointment of a new Trustee. To do so would have serious implications not only for the Trust but also the liability of those persons. 68 In my view, the notice given by E&M Investments to the unitholders on 10 July, in conjunction with the appointment of Mr Carey, was effective to retire E&M Investments one month from that date and to replace it with Mr Carey as Trustee. Mr Carey's appointment was made by Mr and Mrs Thomasz, one infers, as directors of the trustee company. Nothing further was necessary to effect his appointment in terms of cl 34(a) save for his acceptance, which was communicated. 69 The Commissioner submitted that Mr Carey's appointment as Trustee was not effective because he did not execute a Deed undertaking the obligations of the retiring trustee, as cl 34(d) requires. Raftland submits that that should be read as a condition which takes effect subsequent to the appointment of a new trustee. That submission is correct, in my view. The provision itself assumes appointment has already occurred when it refers to ' A new trustee so appointed' being required to execute a Deed. Appointment cannot be said to be dependent upon fulfilment of the requirement. Rather the obligation on the part of the new Trustee, created by cl 34(d), remains outstanding. In the meantime Mr Carey, having accepted the appointment, would be taken to have done so according to the terms of the Trust Deed. 70 In my view E&M Investment's resignation took effect one month after 10 July and Mr Carey became trustee of the E&M Unit Trust. At that time there was trust property in the trust estate to which his obligations as Trustee were attached. The Commissioner's submissions at this point focussed upon the fact that no steps were taken to vest the legal title in the Trust's principal asset, its real property, in Mr Carey and that that property was sold in February 1992. Even so Mr Carey would have had an interest in their redemption for a time, but the continuance of the Trust does not depend upon his ability to deal with these assets. There was other property in the Trust as at July 1991- the shares, the plant and equipment, the loans and the settlement monies. As to the latter the Commissioner argued that they ceased to exist in the accounts of the Trust. It is true that they were set off against accumulated losses for accounting purposes, but the evidence does not suggest that the monies were ever paid out to the unitholders. 71 I did not understand the Commissioner to contend that these assets could not vest in Mr Carey as the new trustee. Such a submission would be incorrect. Section 14(3) of the Trustee Act 1936 (SA) provides that every new trustee has the same powers and obligations as if they were originally appointed. Clause 3 of the E&M Unit Trust Deed has the effect of vesting the Trust estate and income in the Trustee. Whilst further steps are necessary to vest the legal title in land (see s 16(1) of the Act), this is sufficient to vest chattels and other assets. 72 The Commissioner further argued that after the shares were sold and the loans written off there was no trust property to permit continuance of the Trust. The submission overlooks the fact that Mr Thomasz took the monies from the sale of the shares and that a debt thereby arose to the Trust. The submission takes no account of the settlement monies remaining in existence nor of the trustee's continuing obligations. In Scott on Trusts , vol 1A at SS74.2, it is pointed out that, although a trust cannot be created unless there is trust property, it is not altogether extinguished merely because the trustee no longer holds any property in trust. It may not be a full and complete trust, but the fiduciary relations continue, although they cease to be related to any specific property. It may also be observed that the books of account and records of the Trust must be retained by the Trustee, and inspection of them be allowed. A beneficiary's right in this regard is said to be proprietary in character: Re Simersall; Blackwell v Bray (1992) 35 FCR 584. 73 Given my finding that the trust continued in existence as at 30 June 1995 it is not necessary for me to deal with Raftland's further contention. It was submitted that the dealings by Mr Carey with Raftland, to bring about the distributions to the E&M Unit Trust and the payment of $250 000, constituted him as a trustee. There would appear to be merit in the contention that equity would treat Mr Carey as having assumed that role with its attendant obligations. 74 A further contention was raised by Raftland namely that the Trust's tax loses, carried forward from prior tax years, could be characterised as trust property. It is not however necessary to determine that question. Moreover the matter is not without complexity and it would not be appropriate to express a concluded view upon it in the absence of substantial argument. It is submitted that the resolutions to distribute are a 'sham' and should be disregarded, as should the appointment of the E&M Unit Trust as a Tertiary Beneficiary, since it was and made only to facilitate the false distributions. 76 The term 'sham' has been used in the context of commercial transactions and the ITAA. It has come to be applied where persons have entered into an 'ostensible transaction as a disguise to conceal their true transaction' : Re State Public Services Federation; Ex Parte Attorney-General (WA) [1993] HCA 30 ; (1993) 178 CLR 249 at 290, Toohey J. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive. In Sharrment (at 455) his Honour gave the example of a purported disposal of property and the creation of a debt. In his Honour's view it might be a sham if the donor and donee do not intend to give effect to the transaction, it being agreed between them that there will be no change in the legal and beneficial ownership of the property. His Honour referred to Lord Diplock's judgment in Snook v London & West Ryding Investments Ltd (1967) 1 QB 786 at 802 where it was explained that a sham arose where acts are done, or documents are created, which are intended to give the appearance of creating the parties' legal rights and obligations, different from the actual legal rights and obligations. His Lordship considered it to be clear, in legal principle, that to be a sham the parties must have 'a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating' . It is otherwise where the parties intend that the documents in question should take effect, and operate according to their tenor 'and that they should respectively have the rights and be bound by the obligations thereby created ': Lau v Federal Commissioner of Taxation (1984) 54 ALR 167 at 173, Connolly J. 78 The Commissioner listed a number of factors which, it was submitted, show that there was no intention to create a right on the part of the E&M Unit Trust to receive the alleged distributions. It is not necessary to set them out. A number of them are concerned with Raftland taking control of the E&M Unit Trust. Whilst this may be a factor indicative of intention, it is not conclusive as to the parties common intention. In Sharrment Lockhart J considered that one person's control of the situation did not itself permit a conclusion about whether a loan was regarded by the parties as recoverable (at 457). It was necessary to look at the legal effect of what had been undertaken. 79 The importance of this consideration was confirmed in Equuscorp Pty Ltd v Glengallen Investments Pty Ltd [2004] HCA 55 ; (2004) 218 CLR 471 where the High Court rejected an argument that unless real money was lent, the transaction was a sham. In their Honour's view this relied upon an economic rather than a legal effect of the transaction (at [48]). A 'sham' refers to steps which take the form of a legally effective transaction, but which the parties do not intend should have the apparent, or any, legal consequences. The proposition that no real money was lent, and no real capital therefore brought to the venture, depended upon an unstated premise that the obligations said to be owed could not, or would not, be met (at [49]). 80 Raftland places considerable reliance upon the legal efficacy of the resolution. It submits that its failure to pay the balance income does not deny the efficacy of that resolution. The Commissioner does not contend that non-payment is conclusive, but submits that it can be seen that there was never any intention that the E&M Unit Trust benefit. Raftland's reliance upon the existence of the resolution may not be sufficient. The cases do not hold that an act of that kind must be taken at face value if there is other evidence which tends to contradict it. Whether the parties had an intention to the contrary of the apparent distributions is simply to be determined by reference to the evidence and by inferences which may be drawn, given that there is no direct evidence of the intention of Mr and Mrs Thomasz. Questions of onus of proof may therefore assume some importance. 81 Issues relating to the true characterisation of a transaction do not fall to be determined separately from the overall case to be made out by the taxpayer, as Hill J pointed out in Richard Walter Pty Ltd v Commissioner of Taxation (1996) 67 FCR 243 at 259 ( 'Richard Walter' ). The ultimate onus of proving the assessment is excessive lies upon the taxpayer. The Commissioner does not have the burden of proving that transactions are a sham, although he may come under a factual obligation to identify the real transaction for which it is contended that the ostensible transaction is a disguise: Richard Walter at 259, citing Coppleson v FCT . In the present case the Commissioner has done so. The Commissioner submits that the parties were engaged in the transfer of control of the E&M Unit Trust with its carried forward losses, for the sum of $250 000. 82 Raftland's case is that the assessment on income of $2 849 467 is excessive and should not have been paid because it has distributed that income. It is therefore necessary for it to prove that distributions were made. It does so by relying upon the two written resolutions and the payment of the sum of $250 000 which is said to be in accordance with one of them. 83 It may readily be inferred that Raftland and the other entities controlled by Mr Brian Heran which had an interest in the transaction were not concerned about the creation of a relationship of trustee and beneficiary between Raftland and the E&M Unit Trust. They had no reason to benefit that Trust or its unitholders. The only reason why the Raftland Trust was created with the E&M Unit Trust as a beneficiary was to enable income to be channelled to a Trust which had accumulated losses. Mr Brian Heran was frank in his evidence that, had the E&M Unit Trust not been available, he would not have had Heran Projects and Maggside enter into the initial transaction. The resolutions must be seen in this light. 84 Raftland at no time had an intention to make the payment of the further $2.6m to the E&M Unit Trust. It did pay a substantial sum, but not apparently by way of a distribution of trust income. Whilst not critical to an analysis of Raftland's view of the transaction, it is a fact that the money it paid was not income of the Raftland Trust. It was provided by other entities having either a present or future interest in the use of the E&M Unit Trust. The payment was to be a one-off payment with nothing further to take place between the parties. 85 The payment of the $250 000 does not provide support for Raftland's case that Raftland was paying under a distribution and that Mr Carey was receiving a distribution of Raftland Trust income in his capacity as trustee of the E&M Unit Trust. Clearly the sum paid was understood to be the price for control of the Trust, access to the accumulated losses and the co-operation of Mr Carey and Mr and Mrs Thomasz. That was the true character of that transaction. It was a transfer of interests for valuable consideration. 86 So far as concerns the second resolution to distribute, Raftland had no intention of ever paying it and Mr and Mr Thomasz had no expectation that the E&M Unit Trust would even receive those monies or any further benefits. Mr Thomasz knew that that income was to be applied against the Trust's losses. He knew that whilst a debt was to be recorded as owed to the E&M Unit Trust, in its books of account, he and his wife would be having no further dealings with the Trust. Those controlling Raftland and the E&M Unit Trust well understood that the only transaction which was to take place between them was that relating to the control of the Trust. There is no direct evidence that Mr and Mrs Thomasz promised never to seek any further monies. I infer however that they had no intention of doing so, consistent with their understanding of the transaction. 87 Raftland relies upon the Navygate transaction in part to show that it considered the second resolution to have created an obligation to pay the monies to the E&M Unit Trust and that it was possible that the unitholders might require the trustee of the E&M Unit Trust to seek the monies. It was said that this risk was seen as a 'commercial' one, which I infer here means that it was not a risk of any significance and little more than a mere possibility. I would not place any reliance upon the transaction as being one undertaken out of an abundance of caution, even if it could be seen as effective for that purpose, which seems doubtful. I do not accept that those controlling Raftland and those advising them considered that there was any real risk. The share purchase transaction may just as readily be seen as an attempt to bolster a conclusion that the resolution to distribute was viewed by the parties as one to which legal effect might be given. For it to be so in fact the parties concerned must have intended that the deed should take effect and operate according to its tenor; that a fund should be set up subjected to the trusts of the deed; and that Associated Provident Funds should as trustee be bound to carry out those trusts. On the other hand, if the scheme, including the deed, was intended to be a mere facade behind which activities might be carried on which were not to be really directed to the stated purposes but to other ends, then the words of the deed should be disregarded. It was urged for the appellant Associated Provident Funds that it is a real company and that the deed was really executed by it; and that, it was said, is the end of the question. But it is not. A disguise is a real thing: it may be an elaborate and carefully prepared thing; but it is nevertheless a disguise. The difficult and debatable philosophic questions of the meaning and relationship of reality, substance and form are for the purposes of our law generally resolved by asking did the parties who entered into the ostensible transaction mean it to be in truth their transaction, or did they mean it to be, and in fact use it as, merely a disguise, a facade, a sham, a false front --- all these words have been metaphorically used --- concealing their real transaction ...'. Raftland is required to prove that there were distributions of trust income and there is evidence which strongly suggests that this was not the parties' common intention. Rather Raftland was to pay and the E&M Unit Trust was to receive a sum for control of the Trust and access to its losses. No further dealings were intended to take place. The onus then shifts to Raftland to show that these inferences, concerning the parties' intentions, are not correct. It might have done so by direct evidence from the parties or to what had taken place between them, if that had been helpful. Having not done so it has not established that there were distributions of income. 90 A conclusion that a transaction is a sham means that it may be ignored and regard had to the real transaction. In the present case I conclude that there were no distributions of income to the E&M Unit Trust. The appointment of the E&M Unit Trust as a Tertiary Beneficiary was made only as part of the facade and should also be disregarded. 91 Raftland then submits that it is not to be taxed upon its income, pursuant to s 99A, because the Primary Beneficiaries are entitled under the default provisions of cl 3(b) of the Raftland Deed. It is not suggested that the existence of the Trust should be ignored for all purposes. That provision requires the Trustee to exercise its discretion to either pay to, apply, or set aside the income of the Trust for one or more of the classes of beneficiaries, or to accumulate it. The clause requires, where the Trustee's discretion is not exercised by the end of the tax year, that Raftland holds the income in trust for the Primary Beneficiaries, the three Heran brothers. The case relied upon by the Commissioner in support of the submission that cl 3(b) did not take effect, did not contain a limitation upon the time in which an effective exercise of discretion was to be made (see BRK (Bris) Pty Ltd v Federal Commissioner of Taxation (2001) ATC 4,111 at 4,121). The clause contemplates the situation where there has been no distribution and, impliedly, no effective distribution. That is the case for the 1995 year. It follows that Raftland holds the income on trust for the Primary Beneficiaries. Their interest and the application of s 100A to that interest must then be considered. The extrinsic materials do not bear out such a limitation. A similar submission was rejected in Prestige Motors (at 218-219) as too narrow an approach to the section, one which, it was held, does not follow simply from the fact that the section is an anti-avoidance provision. On the other hand the Full Court also rejected a submission that the application of s 100A was to be determined by reference to the section, read in light of the extrinsic materials. Their Honours held (at 215) that whilst those materials may be an aid to interpretation, they cannot be regarded as determinative of it: Re Bolton; Ex Parte Beane [1987] HCA 12 ; (1987) 162 CLR 514 at 518. The words of a Minister must not be substituted for the text of the law. The starting point must be the text of the law, having regard to its 'ordinary meaning and grammatical sense' : Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) [1981] HCA 26 ; (1981) 147 CLR 297 at 321. In summary, s 100A(1) operates when the present entitlement of a beneficiary, to a share of the income of a trust estate, arose out of a reimbursement agreement or by reason of any act, transaction or circumstance that occurred in connexion with, or as a result of, a reimbursement agreement. Having said that, I do not think it could be suggested that there are not real difficulties in applying s 100A and in understanding concepts central to it, such as a reimbursement agreement. 93 The case law holds that a beneficiary is taken to be presently entitled to income from a trust estate if their interest in it is both vested in interest and in possession and they have a present legal right to demand and receive payment of the income: Harmer v Federal Commissioner of Taxation [1991] HCA 51 ; (1991) 173 CLR 264 at 271. Section 95A(2) however deems a beneficiary to be presently entitled to income of a trust estate in which they have a vested and indefeasible interest, but to which they are not presently entitled. Hill J in Trustees of the Estate Mortgage Fighting Fund Trust v Commissioner of Taxation [2000] FCA 981 at [55] commented that the purpose of the introduction of s 95A(2) is unclear. It had however been considered in Commissioner of Taxation v Harmer (1990) 24 FCR 237; in Dwight v Commissioner of Taxation (1992) 37 FCR 178 and by another Full Court in Walsh Bay Developments Pty Ltd v Commissioner of Taxation (1995) 130 ALR 415. Those cases make clear that an interest in income will be vested when the holder has an immediate fixed right of present or future enjoyment, one which is not subject to a contingency and which is not defeasible, which is to say, capable of being brought to an end. 94 I do not understand either of the parties to contend that the Primary Beneficiaries are not presently entitled to the income from the Raftland Trust, within the meaning of the section. 95 The subsection then requires that there be a reimbursement agreement. The word 'agreement' in s 100A has the widest meaning. Only transactions being within the ordinary course of commercial or family dealings, as referred to in s 100A(13), are excluded from its operation: Prestige Motors at 216. It includes any agreement, arrangement or understanding. It does not have to be legally enforceable. To qualify as a reimbursement agreement it is not necessary that the beneficiary be a party to it: Idlecroft v Federal Commissioner of Taxation [2005] FCAFC 141 ; [2005] ATC 4647 at [4656]; FCAFC 141 at [41] ( 'Idlecroft' ). It is however necessary that a reimbursement agreement provide for the payment of money, transfer of property or the provision of services or other benefits to a person other than the beneficiary. It is in particular the requirement of a reimbursement agreement that Raftland submits is not satisfied in the present case. It submits that no person or entity has been identified by the Commissioner as benefiting from a reimbursement agreement. 96 It is true that the Commissioner has not identified one or more reimbursement agreements. He has sought to rely upon the series of transactions commencing with the purchase of rights by Heran Projects from Maggside, Maggside's distribution as trustee of the Brian Heran Discretionary Trust to Raftland and its purported distribution to the E&M Unit Trust. I infer that Raftland contends for a narrower approach to the meaning of reimbursement agreement, requiring a close, if not direct, connexion between a singular understanding or arrangement between two persons and the benefit provided. Some support for a narrower meaning to be given to the words 'that provides for' in subs (7) can be found in Idlecroft (at [44]) at least in contradistinction to the connexion required between the reimbursement agreement and the beneficiary's present entitlement. The Court was not there addressing the question raised by Raftland's submissions. In Prestige Motors however regard was had to the series of steps as constituting the arrangement or understanding to which a number of companies or persons were parties (at 216). The Court placed emphasis upon the width of the meaning intended to be given to subs (13). It appears to have accepted the Commissioner's submission (at 214) that one should not view a reimbursement agreement as if it was a discrete transaction or transactions divorced from the context of the overall arrangement. The approach taken in Prestige Motors is, with respect, the only way in which the section can have a meaningful operation, given the context of the complex transactions to which it will often be addressed and the purpose which it seeks to achieve. 97 A benefit in this case was gained by the Brian Heran Discretionary Trust and by Heran Projects. The benefit accrued so long as Raftland did not make the payment of trust income to the E&M Unit Trust. In turn Maggside did not have to pay Raftland and it did not have to call upon the monies it had loaned Heran Projects. At the same time they enjoyed tax benefits. 98 Mr Tobin suggested that the sale of Maggside's rights might have some business purpose, although it was not apparent to me. He otherwise affectively conceded that the transactions were not in the ordinary course of commercial dealings, as clearly they are not. The purpose referred to in subs (8), to reduce liability to taxation, requires investigation of the purpose of the parties to the agreement. It is not required to be a purpose of the agreement itself: Prestige Motors at 217. Here a number of persons and entities had such a purpose. I did not understand this to be seriously in issue. 99 The requirement of connexion between the beneficiary's present entitlement and a reimbursement agreement assumes particular importance given the width of the operation of s 100A(1). This is shown in several ways. The provision is a deeming provision and such provisions normally operate to extend the reach of language used in relation to a requirement. There is an additional extension incorporated by the use of the expression "arose out of", which reaches beyond the narrower notions of being "provided for" or "regulated by" an agreement and, as Spender J points out, provides for a broad "but for" test of causation. That is to say, if one of the consequences of the act, transaction or circumstance were to result in any way from the designated criteria then it would be within the language of the section. Furthermore, it is not only the agreement that must be considered but also any circumstance or act that occurred "in connection with" or "as a result of" the reimbursement agreement. The broad extensive language in the subsection coupled with the requirement to interpret the subsection according to its ordinary and natural meaning, having regard to its purpose, mandates an application of the provision unlimited by implied constraints having no foundation in the context. A similar argument was raised and rejected in Idlecroft . It was held (at [45]) that the requisite connexion is present in such a case. The connecting circumstance is that the entitlements of the default beneficiaries came about because the appointment of income was invalid. That appointment was made pursuant to the reimbursement agreement. But for the existence of the agreement, the appointments would not have been made. The same analysis applies in the present case. 101 In my view s 100A(1) applies to the present case so that the Primary Beneficiaries are not to be taken as presently entitled to the income. Raftland is liable to be assessed on the income pursuant to s 99A. 102 It follows from my findings concerning the nature of the payment of the $250 000, that the Primary Beneficiaries would be entitled to all of the trust income from the Brian Heran Discretionary Trust. Subs 100A(2) therefore has no application. 103 Subsection 100A(3A) does not apply to the Primary Beneficiaries, although it would have applied to the E&M Unit Trust had there been a distribution to it. In that event there would have been an interposed trustee. The Primary Beneficiaries, to whom subs (1) does apply, are not however trustees and do not qualify as trustee beneficiaries for the purpose of subs 100A(3A). Neither that subsection nor subs (3B) has any application to the situation of the Primary Beneficiaries and Raftland in the years 1996 and 1997. 104 The same conclusions apply to the assessable income of the Raftland Trust Estate in each of these years. The further purported distributions from Raftland, albeit as a conduit of other entities, are characterised by the initial transaction. There were not in reality further distributions and the parties did not intend them to take effect as such. The Primary Beneficiaries are deemed not to be presently entitled to the income and Raftland's income is to be assessed under s 99A. Raftland's submissions on this issue did not have regard to a finding that there were no distributions in truth by it to the E&M Unit Trust. In the context of a sham transaction, a conclusion of recklessness is clearly open. No case for remitter of part of the penalties is made out. 106 The balance of the submissions had regard to the requirement of interest pursuant to s 170AA, where an assessment is amended. That requirement does not however form part of the assessment (subs 170AA(13)) with which these proceedings are concerned. Whether the requirement should stand could only be determined in other proceedings, by way of judicial review, and no such proceedings have been brought. The Commissioner is entitled to the costs of this proceeding but there is an issue as to whether he is entitled to all of these costs. He did not proceed with a case based upon Part IVA , although the parties had largely undertaken their preparation for it and he was unsuccessful on the trust issues. These issues occupied a considerable part of the hearing and submissions. The Commissioner submitted that the evidence about trust property continued to unfold during the hearing. The resolution of that issue did not however depend upon a critical piece of evidence adduced late. And the Commissioner maintained reliance upon the allegation that the E&M Unit Trust did not continue in existence. Such a conclusion was never going to be readily arrived at and here the parties' intention and the terms of the Trust Deed did not prevent it. In these circumstances it seems appropriate that the Commissioner be denied a portion of his costs. I would assess those to which he is entitled at seventy (70) per cent. The applicant will be ordered to pay seventy (70) per cent of the respondent's costs of the proceedings. I certify that the preceding one hundred and eight (108) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. | assessable income trusts distribution of trust income to tertiary beneficiary trust with accumulated losses whether distribution ineffective whether tertiary beneficiary trust ceased to exist if trust continued in existence whether distribution a sham effect of onus of proof whether distributions proved whether real transaction otherwise if no effective distribution whether primary beneficiaries presently entitled to income whether present entitlement arose out of a reimbursement agreement whether sections 100a (1), (2) (3a) and (3b) of the income tax assessment act 1936 (cth) apply retirement of trustee and appointment of new trustee whether terms of trust deed complied with whether property held in trust to enable its continuance failure of distribution to tertiary beneficiary distribution by default taxpayer's onus of proof burden of proof when sham alleged income tax trusts evidence |
The Tribunal had affirmed a decision of a delegate of the then Minister for Immigration and Multicultural Affairs ('the delegate') to refuse to grant a protection visa to the appellant under the Act. On 10 April 2006 the appellant lodged an application for a Protection (Class XA) Visa with the then Department of Immigration and Multicultural Affairs (now the Department of Immigration and Citizenship). On 15 May 2006 the delegate refused the application for a protection visa and notified the appellant of the decision and his review rights. On 19 June 2006 the appellant applied to the Tribunal for a review of the delegate's decision. This fear was the result, he said, of being detained and mistreated by police who also made threats of life imprisonment if he did not desist his practice of Falun Gong. It was because of these events that he came to Australia. 5 On 28 June 2006, the Tribunal sent the appellant a letter by post, stating that the Tribunal had considered the material before it in relation to the appellant's application, but was unable to make a decision in favour of the appellant on this information alone. The appellant, pursuant to s 425 of the Act, was invited to attend a Tribunal hearing on 23 August 2006, to give evidence and to present arguments in support of his claims. He was also invited to send any new documents or written arguments which he wanted the Tribunal to consider and to complete the "Witnesses" part of the 'Response to Hearing Invitation' form if he wanted the Tribunal to get oral evidence from another person. He was requested to return the completed form, with any new documents or written arguments, by 14 July 2006. 6 The appellant did not reply to the letter of 28 June 2006 and did not attend the hearing on 23 August 2006. 7 After the close of business on 24 August 2006, the appellant faxed a letter to the Tribunal indicating that he had been unable to attend the scheduled Tribunal hearing because of illness and that he had been sick for over a week. The appellant indicated that he wished to have another hearing. A medical certificate which was dated 23 August 2006 from Pacific Medical Centre Blacktown was provided, indicating that the appellant was 'unable to attend work/school' from 23 August 2006 to 24 August 2006 inclusive. There was no list of doctors on the letterhead and the signature was illegible. 8 On 25 August 2006 the Tribunal wrote to the Pacific Medical Centre in Blacktown, from where the medical certificate was issued, asking for details regarding the issue of the medical certificate and for details about the patient. Its contents reveal that the Tribunal was concerned to satisfy itself that the medical certificate was genuine. The Tribunal receives a number of medical certificates and, unfortunately, not all prove to be genuine. Court you please provide further details in response to the Member's concerns listed below, or at least the name of the doctor and a time when it may be convenient for the Member to speak to him or her directly by telephone? The medical certificate has indicated two days. Is this the patient's usual medical practitioner? If the patient was able to travel to Blacktown to see the doctor, is there any reason why he could not have travelled a much shorter distance to the city in order to keep an appointment with the Tribunal? The Tribunal requested that the receptionist provide the name of the doctor who issued the medical certificate, a suitable time to contact and that the receptionist fax written comments to the Tribunal. The receptionist indicated that she would send written information but did not do so. 10 On 29 August 2006 the Tribunal wrote to the appellant informing him that it had decided not to offer him a further hearing and advising him that it had also decided to exercise its powers under s 426A of the Act namely to make a decision on his case without taking further action to allow or enable him to appear before it. The letter noted in a highlighted box: "If you do not attend the hearing, and the Tribunal does not postpone the hearing, it can make a decision on your case without further notice. The letter about the hearing requested that you reply, stating your intention of attending or not attending, by 14 July 2006. The letter also invited you to send any new arguments or any new documents you wanted the Tribunal to consider. You did not reply by the given date; nor make any contact with the Tribunal whatever in the subsequent five weeks to the time of the hearing. In this fax, you note that you have been ill for over a week and "hope to another hearing". The Member refers again to the instructions in the letter containing the offer of hearing: "If you think you may not be able to attend the hearing, you must contact the Tribunal immediately. " If you were ill for over a week prior to 24 August 2006, you had ample opportunity to contact the Tribunal and postpone the hearing. However, the Member notes that you did not go to the doctor until the actual day of the hearing: 23 August 2004. The Member notes that the doctor stated that you were ill only for two days --- the day of the hearing and the following one. The diagnosis --- "viral illness" --- could cover a range of disorders including a common cold. The Member notes that it would have been a much shorter and less arduous trip to go from Ashfield to the city and attend the hearing. He did not send further material. The applicant was put on notice in writing that the Tribunal could make a decision on his case with no further notice if it did not reply. He did not do so. He did not contact the Tribunal to say that he would attend a hearing and provide oral evidence. He was notified in late June 2006 about a hearing that would take place in over seven weeks time. He had ample opportunity to contact the Tribunal if he intended to come to a hearing. However, he did not do so. It would have been less arduous for the applicant, if he were not feeling well, to travel from Ashfield to the city and attend the hearing. If the applicant had been demonstrably not well at the hearing, the Tribunal would have adjourned to another day. However, the applicant travelled to Blacktown where a doctor noted that he was unwell on that particular day and the next. The applicant, on the other hand, said in his fax to the Tribunal that he had been ill for over a week as of 24 August 2006 --- that is, since before 17 August. This would have given him ample time to let the Tribunal know he was unable to attend a hearing, as he was requested to do in the original offer hearing letter. Recent legislation has obliged the Tribunal to complete a case within 90 days of receiving it, unless there is a cogent reason why this cannot be achieved. If the Tribunal were to offer the applicant another hearing, it would not be possible to schedule this until well into October - some two months after it was originally set down. This would extend the decision-making process well beyond the prescribed 90 days. Given the way he has failed to respond to invitations in the past, there is no reason to believe that he would come to a later-scheduled hearing. He has not indicated that he has any new document or arguments he wants the Tribunal to consider. If they are taken ill, they contact the Tribunal immediately, and are able to supply satisfactory medical certificates setting out exactly why they are [sic] could not attend at the scheduled time. If they have other problems, they ring the contact person listed on the Tribunal correspondence. He has had ample opportunity to make known his intentions to come to a hearing and has failed to do so. In this case, the Tribunal stands by its advice to the applicant in its letter of 28 June 2006: that it is unable to make a decision in his favour on the basis of the material before it. The Tribunal at the time of writing has only the same material before it. This material lacks detail. There is no evidence before the Tribunal to indicate that the applicant has any knowledge of the practice of Falun Gong, nor its history or philosophy. He notes that it is deemed to be a "cult" and seems to indicate that the Government viewed it unfavourably after 1999, but this is common knowledge and does not indicate any specialized knowledge available to a practitioner. There is no evidence before the Tribunal that the applicant has undertaken any Falun Gong practice or associated activities in Australia, which one would expect from a practitioner who was genuinely seeking a non-repressive place in which to practice. However, it is to be remembered that the decision was made without the benefit of further material and submissions, which may have been presented by the appellant at a hearing. 14 The applicant was notified of the decision of the Tribunal on 5 October 2006 but did not file his application for judicial review of that decision as well as for an extension of time pursuant to s 477 of the Act until 8 November 2006 which was several days outside the 28 day period provided for in s 477(1) of the Act . The RRT failed to attain, or failed to exercise, jurisdiction, by reason that the RRT erred in law in finding that it could not reschedule a hearing of the RRT beyond the period set out in s 414A unless it had "cogent reasons". The RRT failed to attain, or failed to exercise, jurisdiction, by reasons that the RRT erred in law in taking into account irrelevant considerations in finding that the RRT would not reschedule a hearing of the RRT. If they are taken ill, they contact the Tribunal immediately...... Tribunal correspondence. In respect to the first proposed ground, her Honour concluded that fairly read, the Tribunal, when it stated that it could not reschedule a hearing beyond the 90 day period, set out under s 414A(1) of the Act , unless there were "cogent reasons" was not really seeking to introduce a discretionary criterion to this statutory provision where none is expressly stated. Rather, as her Honour implicitly found, this discretion arose pursuant to s 426A of the Act which confers upon the Tribunal a discretion, where the applicant does not appear before the Tribunal at the scheduled hearing, whether or not to enable the applicant to appear before it at a rescheduled hearing. It was not suggested by the appellant before her Honour that such a discretion was not thereby open. 18 Her Honour found that it was perfectly proper for the Tribunal to take into account that its own timetable would not allow it to reschedule the hearing until a date beyond the 90 day period, as well as taking into account the failure of the appellant to respond to the Tribunal's letters of 28 June or 29 August 2006. 19 As to the second proposed ground, the Federal Magistrate concluded that the matters taken into account by the Tribunal were, in effect, relevant and open and that no error was disclosed. 20 Whilst the medical certificate was mentioned in the Federal Magistrate's reasons at [15], [18]-[20], her Honour did not, it seems, consider the effect of the certificate and its relevance to the appellant's request for a rescheduled hearing. 21 The Federal Magistrate concluded that the Tribunal had complied with its statutory obligations, both in the conduct of its review and in the making of its decision, which was not affected by jurisdictional error. 22 Having found that the proposed grounds had no reasonable prospect of success her Honour determined that it was not in the interest of justice that time be extended to the appellant to file his application. The Federal Magistrate accordingly dismissed the application for an extension of time. 25 The first respondent contends that the appellant has failed to establish that the discretionary decision below is plainly wrong and, in turn, that the test for leave enunciated in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 has not been met. 26 The first respondent accepts, in effect, that where the relevant delay is short and there is no prejudice to the first respondent, an extension would normally be granted but, because it would be futile to do so, there being no merit in the proposed appeal, leave ought be refused. This is to reiterate the opinion of the Federal Magistrate that the application lacked utility because substantively there were no reasonable prospects of success. 27 It is said by the first respondent that the grounds in the notice of appeal reproduce what was ground two before her Honour, and that no plain error is manifest in her Honour's reasoning or conclusions. 28 The first respondent also submits that, having regard to the construction placed upon s 426A by Greenwood J in NBBL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 1045 , where the matters set out under s 426A(1)(a) and (b) are satisfied, the Tribunal's discretion whether to make a decision without a further hearing is constrained only by the requirement that it not act capriciously and that in this case the Tribunal did not so act. Firstly, the Tribunal may make a decision on the review without taking any further action to allow or enable an applicant to appear before it [s 426(1)]. Secondly it may reschedule an applicant's appearance before it, or delay its decision on the review in order to enable the applicant's appearance before it as rescheduled [s 426(2)]. 30 In this case the Tribunal exercised its discretion under s 426(1) and made its decision without taking any further action to allow or enable the appellant to appear before it. 31 There are related questions as to whether the discretion miscarried because the Tribunal misdirected itself: NBGZ v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 119 at [52] - [56] per Allsop J, or failed to consider relevant material: NBBL v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCA 1045 at [21] and [24], the result of which was that the appellant was denied procedural fairness. 32 The Tribunal is not required, where there is compliance with ss 425 and 425A of the Act , to make further enquiries, if the applicant fails to attend the review hearing: Minister for Immigration and Multicultural and Indigenous Affairs v SZFHC [2006] FCAFC 73 [38]-[39]. Nor is it required to give reasons for its exercise of discretion under s 426A: SZHSQ at [60]. Further, this is not one of those cases where there was requisite compliance by the Tribunal with ss 425 and 425A but the appellant did not, in fact, receive the letter of invitation to attend the Tribunal hearing. See VNAA v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 134 at [16] ; NADK of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 184 at [16] ; NASF v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 162 at [16] . Nor is it a case where the appellant's non-appearance was the result of the negligence of a migration agent: Minister for Immigration and Multicultural Affairs v SZFDE [2006] FCAFC 142 ; (2006) 154 FCR 365 at [127] per French J, cited with approval by the High Court in SZFDE at [53]. 33 In SZIGQ v Minister for Immigration & Citizenship [2007] FCA 328 , Downes J at [5] reiterated that the authorities are clear that the reason for non-attendance at a hearing does not matter. If there is compliance with ss 425 and 425A , the Tribunal may proceed under s 426A to consider and decide the matter without conducting any further enquiries. I do not take his Honour to be saying that where the Tribunal is in fact appraised of the reason for non-attendance at a scheduled hearing by an applicant for review that due consideration should not be given to this. 34 Nonetheless, where, as in this case, the discretion is unconfined, the Tribunal may have regard to a range of factors in the exercise of its discretion. That range too is unconfined except in so far as the subject matter, scope and purpose of the statute by implication limit those factors to which the decision-maker may legitimately have regard: SZHSQ at [49]. See also Minister for Aboriginal Affairs v Peko-Wallsend [1986] HCA 40 ; (1996) 162 CLR 24 at 40. 35 I do not accept the submission of the first respondent that the only constraint upon the exercise of the discretion is that it not be exercised capriciously. NBBL as I mentioned was said to be authority for this proposition. A proper reading of Greenwood J's reasons however shows that his Honour referred to a capricious decision as but one example of a circumstance which might give rise to procedural unfairness [24]. At [21] of his Honour's reasons, a wider foundation is apparent. 36 In this case the Tribunal elected to make enquiries and to give reasons for the exercise of its discretion. It did not make its decision on the day scheduled for the hearing but delayed its decision, it seems in effect, to consider whether, under s 426A(2) of the Act , it would reschedule the hearing in order to enable the appellant's appearance before it. In my opinion it is relevant then to consider whether, arguably, it took irrelevant matters into account and/or failed to take relevant matters into account in exercising its discretion. He was also put on notice that the Tribunal could make a decision on his case with no further notice if he did not reply and he did not do so. He did not contact the Tribunal to say that he would attend a hearing and provide oral evidence. He did not indicate that he had any new documents or arguments he wanted the Tribunal to consider. He was notified in late June 2006 about a hearing that would take place in over seven weeks time. He had ample opportunity to contact the Tribunal if he intended to come to the hearing. However he did not do so. It would have been less arduous for the applicant, if he were not feeling well, to travel from Ashfield to the city and attend the hearing. If the applicant had been demonstrably not well at the hearing, the Tribunal would have adjourned to another day. A doctor noted that he was unwell on the day of the hearing and the next. The applicant on the other hand had said in his fax to the Tribunal that he had been ill for over a week as of 24 August 2006 --- that is, since before 17 August. This would have given him ample time to let the Tribunal know he was unable to attend a hearing, as he was requested to do in the original offer of hearing letter. If they are taken ill, they contact the Tribunal immediately, and are able to supply satisfactory medical certificates setting out exactly why they could not attend at the scheduled time. If they have other problems they ring the contact person listed on the Tribunal correspondence. He had had ample opportunity to make known his intentions to come to a hearing and had failed to do so. 40 There is no obligation whatsoever upon an applicant for review to respond to such a letter of invitation. It is no more than an invitation to appear to give evidence and present arguments. Section 425(1) is clear in its terms. The invitation to the applicant is "to give evidence and present arguments relating to the issues arising in relation to the decision under review". It contemplates that such evidence, oral or documentary or both, which of course might well go beyond the content of the written application for the protection visa, will be given, and any arguments will be presented, at the hearing. I consider it irrelevant to the exercise of discretion that the applicant did not reply to this letter prior to the scheduled date of the hearing. Furthermore, the Tribunal's reasons state that the applicant was put on notice that the Tribunal could make a decision on his case with no further notice if he did not reply. This was erroneous both as to the content of the notice and indeed the terms of the statutory discretion under s 426A. The notice of 28 June 2006 in fact informed the applicant that if he did " not attend the hearing and the Tribunal does not postpone the hearing , it can make a decision on your case without further notice ". This broadly reflects the language of s 426A. 42 Accordingly, in my opinion, it was arguable that it was an irrelevant consideration to the exercise of discretion that the applicant did not either respond to the Tribunal's correspondence or to advise it that he intended coming to the hearing. There might however be several explanations for such conduct. The applicant may not have had his own local doctor and attended the doctor in Blacktown on the recommendation of a friend or relative. He may even have been taken by a vehicle driven by someone else such as that friend or relative to see that particular doctor. That is but one possible explanation. Reliance was also placed, it seems, by the Tribunal upon the apparent conflict between what the applicant said to the Tribunal as to the length of time he had been ill namely, "for over a week" as contained in his fax and the dates 23 and 24 August 2006 noted on the medical certificate from the Pacific Medical Centre, Blacktown. However there is at least one possible explanation which on its face is capable of reconciling this apparent conflict. In his fax the applicant said that he had been "sick" for over a week. The medical certificate on the other hand contains a pre-typed opinion "is unable to attend work/school". The box which is alongside this has been ticked. It is prefatory to the dates "from 23/8/06 to 24/8/06 inclusive". It may well be that whilst the applicant was sick for several days prior to 23 August 2006 that it did not incapacitate him from attending work, assuming he were employed. Another explanation is that the doctor may not have been prepared to grant him a certificate for any prior dates because he did not see him before 23 August 2006. 44 The fact is, however, that on its face, this is a medical certificate by a doctor, to the effect that the appellant was unable to attend the Tribunal (although it refers to "work/school") due to a viral illness. The certificate is dated 23 August 2006 and is signed although the signature is not legible. It is plain that the Tribunal considered that the medical certificate might not be genuine. In its letter of 25 August 2006 to the Pacific Medical Centre a Tribunal officer stated that the Tribunal "receives a number of medical certificates and unfortunately not all prove to be genuine". It sought clarification from the medical centre but ultimately the medical centre staff declined to provide any information. That is understandable enough given the relationship of confidentiality existing between a doctor and patient. In any event this refusal to provide the information requested can hardly be sheeted home to the applicant. 45 It should be noted that the Tribunal did not actually make a finding that the medical certificate was not genuine. However, it is not, in my opinion, arguably, relevant to the exercise of discretion for the Tribunal to have concluded that, had the applicant attended at the Tribunal hearing on 23 August 2006 instead of going to the medical practice, then if it were persuaded that he was demonstrably not well at the hearing then it would have adjourned to another day. Whilst that may be so, the fact remains that the medical certificate was provided to the Tribunal albeit on the day after the date scheduled for the hearing to the effect that the applicant was unable to attend the previous day. Moreover, in my opinion, arguably, the Tribunal afforded undue weight to the fact that the appellant had been ill since before 17 August 2006 and which led it to conclude that he would have had ample time to let the Tribunal know that he was unable to attend the hearing. It may be that whilst he was ill prior to 23 August 2006 that he was not so unwell such as to cause him to conclude that he would not be able to attend the hearing on 23 August 2006. However on 23 August the position may well have altered significantly. It is to be remembered also that the applicant does not speak English and may not have been in a position to communicate by telephone to the Tribunal or registry staff on 23 August 2006 that he was too unwell to attend. He has not indicated that he has any new document or arguments he wants the Tribunal to consider. I have already indicated that the appellant was under no obligation to do either of those things, even though he was requested to do so in the letter of 28 June 2006. Section 425 contemplates that these matters would be produced to the Tribunal, if at all, at the scheduled hearing. 49 Accepting the Tribunal's obligation to review the decision under s 414 and record its decision under s 430 within 90 days from the day on which the Secretary gave the Registrar the documents required by subsection 418(2) to be given by the Secretary to the Registrar, I would be most surprised, if the Tribunal had been persuaded to exercise its discretion to enable the applicant to appear before it, if a suitable date was in the 90 day period could not have been found. Indeed, a Tribunal officer wrote to the appellant by letter dated 29 August 2006 advising him that his request for another hearing had on reflection not been granted. In the penultimate paragraph, the letter advised the appellant that if he had any questions he should call the Tribunal officer on the number set out in the letter. It did not suggest that if he did so and provided new information, that the Tribunal could and might recall its decision and consider that new information. However in its reasons the Tribunal said that if the appellant had done so, then the decision would have been recalled and the new information considered as was normal Tribunal practice. I infer from that that it considered itself in a position to consider new information before the expiry of the 90 day period. 50 In my opinion, this matter in those circumstances was arguably irrelevant to the exercise of the Tribunal's discretion. However, for my part, I would afford, in this case, such considerations little if any weight. According to the Tribunal's reasons, people who believe that they have genuine claims for a protection visa are anxious to come to a hearing and if they are taken ill, contact the Tribunal immediately and are able to supply satisfactory medical certificates setting out exactly why they could not attend at the schedule time or if they have other problems, they ring the contact person listed on the Tribunal correspondence. Putting it another way, the Tribunal seems to have concluded that because, in its opinion, the medical certificate was unsatisfactory, the appellant could not have believed that he had a genuine claim for a protection visa and was not anxious to come to a hearing. In any event, on its face, the medical certificate is, in my opinion, satisfactory. It states exactly why the applicant could not attend, in effect, the Tribunal hearing on 23 August 2006 because he had a viral illness. It was not for the Tribunal to speculate as to the seriousness or otherwise of that diagnosis which it clearly did when, for example, in the letter to which I have already referred from the Tribunal to the appellant dated 29 August 2006 the Tribunal officer said that the "diagnosis --- 'viral illness' --- could cover a range of disorders including a common cold". 52 In my opinion, arguably, this matter was not relevant to the exercise of the Tribunal's discretion, or, arguably, if relevant, should have been accorded little or no weight. I have already dealt with that matter. It follows that in my opinion, arguably, this was an irrelevant consideration to the exercise of the discretion. It seems to have accepted that the appellant did travel to Blacktown and that a doctor did note on the certificate that he was unwell on that particular day and the next. In fact that is not what the doctor certified. He certified that due to viral illness he would be unable to attend, in effect, the Tribunal hearing, on the 23 or 24 August 2006. However the use made by the Tribunal of the certificate was to highlight what it clearly considered to be a discrepancy as to the length of the period of illness. The Tribunal should have, in my opinion, accepted that the evidence before it, namely the medical certificate, was to the effect that he was not able to attend the scheduled hearing by reason that he was unfit to do so. In so doing, in my opinion, it acted unreasonably. The Tribunal, in its reasons, stated that, had the appellant appeared before it, and had it concluded that the appellant was demonstrably not well, then it would have adjourned the hearing. That of course, had it occurred, would have been reasonable. However, the medical certificate was to the same effect. 55 The appellant, relying upon the medical certificate, had sought an adjournment in order that he might at a later date take up the critically important invitation to appear before the Tribunal. A refusal of an application for an adjournment for this reason may amount to procedural unfairness: Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11 ; (2002) 209 CLR 597 at [40] per Gaudron and Gummow JJ; Applicant NAHF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 140 ; (2003) 128 FCR 359 at [31] - [39] ; Applicant S296 of 2003 v Minister for Immigration and Multicultural Affairs [2006] FCA 1166 at [5] . Such, arguably, was the case here. 56 In this case, the Tribunal had before it a medical certificate which was on its face genuine and sufficient to establish a good reason for the appellant's non-attendance before it on the day scheduled for the hearing. 57 The Federal Magistrate, as I indicated above, did not in her reasons consider the effect of the medical certificate. In my respectful opinion, this was arguably a relevant consideration and it was an error to ignore it. Likewise, again arguably, the Federal Magistrate erred in concluding that the Tribunal had not fallen into error when directing itself otherwise, as to the exercise of its discretion. 58 It follows, in my opinion, that the decision of the Federal Magistrate is attended with sufficient doubt such as to warrant its consideration by this Court. I am also satisfied, assuming the decision below to be wrong, that a substantial injustice would result if leave were refused: Décor Corporation Pty Ltd . 59 In so concluding, I am satisfied that the decision of the Federal Magistrate to not extend time did not amount to a proper exercise of discretion: House v King [1936] HCA 40 ; (1936) 55 CLR 499 at 504-505. In arriving at her conclusion, her Honour was of the view that the proposed appeal had no reasonable prospects of success and that for that reason it was not in the interests of justice that time be extended [46]. I have indicated that in my opinion the appellant's grounds are arguable. By that I mean, for present purposes, that they have reasonable prospects of success. For that reason it would be in the interests of the administration of justice that time be extended pursuant to s 477(2) of the Act . 60 I would accordingly grant leave to appeal and would allow the appeal. There should be an order extending time for making the application for review to 8 November 2006 being the date when the appellant filed his application for review. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | migration act 1958 (cth) refugee review tribunal appellant failed to attend tribunal hearing exercise of discretion by tribunal under s 426a(1) whether tribunal misdirected itself whether irrelevant consideration taken into account effect of medical certificate supporting application for adjournment whether denial of procedural fairness. immigration |
The context was the leasehold estate of a city building in Sydney and medical practices conducted in different rooms located in that building. The causes of action pleaded in chief were based principally upon and otherwise related to a comprehensive agreement in writing styled Business Sale & Purchase Agreement ('the Agreement') bearing date 14 December 2000, to which the parties to the proceedings were solely privy, concerning the sale to the first respondent Foundation company, then named Foundation Medical Centres (NSW) Pty Limited, of the medical centre business conducted by the applicant, Idoshore. The business involved the provision of facilities and services to medical practitioners for the conduct of their respective professional practices in consultation rooms located within that city building. The second respondent company, then named Foundation Healthcare Limited (at the time of the Agreement a public company), was a party to that Agreement as guarantor of the first respondent's obligations under that Agreement. The cross-claim involved an issue also purportedly arising under the Agreement for monetary claims made by Foundation against Idoshore. A number of matters pleaded by the amended statement of claim, inclusive of certain of the alleged representations collateral to the formation of the Agreement and of certain alleged implied terms, were not ultimately pursued. 3 The circumstances of the case are complex, as is evident from the pleadings as subsequently amended, and also from the comprehensive written submissions provided by counsel to the Court. A defence to the amended statement of claim and an amended cross-claim were filed by the respondents on 27 April 2006. An amended defence to that amended statement of claim and the amended cross-claim were subsequently filed on 12 March 2007 by the respondents, being the first day of what was in excess of a four day final hearing conducted upon the basis of the tender of the affidavit evidence in the first instance, followed by oral evidence. Issues principally raised by the time of filing of the amended defence and amended cross-claim, additionally to joinder of issue upon the material averments of the amended statement of claim, were first, that the representations and the collateral warranties pleaded were not promissory in nature nor otherwise went to the root of the contract, secondly were not representations as to future matters within section 51A of the Trade Practices Act , and thirdly involved representations which the Foundation respondents had reasonable grounds for making. The amended cross-claim of the Foundation respondents sought remedies by way of damages from Idoshore for breach of certain warranties and/or conditions. The change to the present names of both respondent companies, whereby there was substituted the prefix IPN in the place of Foundation, apparently took effect after the commencement of the proceedings, but consistently with the extensive written submissions of the parties, the convenient course is for me to refer generally to the respondent companies, whether alone or together, as 'Foundation', except to the extent where otherwise necessary to the context. 4 Comprehensive written submissions were provided by both parties. The consequences flowing from what I have therefore recorded was that the material presented to the Court for resolution is of considerable complexity, and not precisely or conveniently partitioned in presentation. In addition to his legal qualifications, Mr O'Shanassy holds a Masters of Business Administration, having majored in what he described as 'new business ventures'. It appears that he had engaged in commercial business affairs prior to the transactions the subject of the proceedings. He exercised personally on behalf of Idoshore the management of the subject Oxford Square Medical Centre ('OSMC') during times material to its operation as a modern medical centre in the usable space comprising the ground and first floor(s) or level(s) within the building complex located at Nos 10-14 Oxford Square Darlinghurst, Sydney. 6 That location was described in the evidence as 'premium' for a medical centre, by reason of its high pedestrian traffic and its close proximity to the Central Business District of Sydney. It was said to traditionally attract a demand for 'walk in' patient treatment. The lessor of that building complex appears to have been a member of the Meehan group of companies, being related corporately, whether directly or indirectly, to the Foundation group of companies (inclusive of the respondents), whereof Mr Graham Meehan had been at all material times chief executive officer. 7 It was in or about the years 1994-1995 that Mr O'Shanassy caused to be acquired by Idoshore, pursuant apparently to an assignment of the head leasehold estate, the occupation of certain level(s) in that building complex. There was by then in operation a medical centre conducted by about four or five general medical practitioners assisted by two or three employed support staff, that medical centre by then being already named the 'Oxford Square Medical Centre' and being located on at least the ground floor level. Medical services had been provided at the premises since about 1975 or 1976. That acquisition took place pursuant to arrangements made by Idoshore with the liquidator of the then corporate operator of that medical centre. Included within the scope of the acquisition were fixtures and fittings, and also patient medical records. At the time of that acquisition, part of the ground floor was sublet to an unrelated operator of an x-ray clinic, and part of the first floor was sublet to a beautician. As I have foreshadowed, Idoshore caused to be operated in due course on the ground and first of those levels the activities of a composite medical centre, under the continuing designation of 'Oxford Square Medical Centre', until the sale in December 2000 of what may be described imprecisely as the medical centre assets of that going concern to the first Foundation respondent as a corporate member of the Foundation Healthcare group of companies, being a transaction which provided the context to the disputes the subject of the present proceedings. No issue arises as to the standing of Idoshore to bring the present proceedings. 8 From the time of the commencement in 1995 of Idoshore's business operations appertaining to the OSMC, the occupancy of rooms with associated facilities, inclusive of support staff, was provided for medical practitioners for the time being engaged professionally at the OSMC, in return for payment of service fees equivalent to about 50 per centum of each such resident doctor's gross billings. I use the description 'resident doctor' in the particular sense just described, none of the practitioners for the time occupying any part of the OSMC in any residential sense. The occupancy/facility arrangement made with each of those medical practitioners was described by Mr O'Shanassy as 'simply a longstanding arrangement' whereby each doctor 'used Oxford Square['s] medical facilities' at the material times for financial reward to Idoshore. I would infer that the set-up originally was that no medical practitioner had exclusive rights at all times to occupation of a particular room within the OSMC. Mr O'Shanassy explained in his comprehensive affidavit evidence that '[t]he ability of Oxford Square medical to retain its medical practitioners was... dependent on (in the main) its ability to provide them with quality facilities in a good location'. Mr O'Shanassy claimed to have adopted at the OSMC the objective that the size of a medical clinic accommodating discrete practices of various medical practitioners, crucially affected profitability of the clinic operator, in circumstances where each practice was thus conducted 'within one roof', with the attendant savings in costs and other pecuniary advantages. It may be inferred that, at least generally speaking, the patients of the OSMC practitioners were 'bulk billed' in respect of his or her treatment, so that the ultimate pecuniary source of each OSMC medical practitioner's gross earnings was confined essentially to the Commonwealth Medicare funding of the patients of the practices conducted at the OSMC. 9 Following upon completion in or about 1995 of Idoshore's acquisition of the occupation and conduct of the operations of the OSMC, being operations (as I have foreshadowed) extending beyond the grant of occupation of rooms to what may be described as the conduct of a clinic, Mr O'Shanassy took up occupation individually of an administrative office on level 1 of the OSMC building in order to manage those operations. He described that administrative role which he exercised as 'supervisory'. Thus he would liaise with the medical practitioners who used the premises the subject of the OSMC for their respective practices, and arranged their attendance rosters, and resolved finance, accounting and management issues for the practitioners, inclusively of attending to bulk billed Medicare claims. Idoshore did not acquire the freehold title to the OSMC at any material time and hence found itself from time to time in negotiation with the building owner. Until certain activities and innovations took place in 1998 and 1999, which I will address in the following segment of these reasons, Mr O'Shanassy said that '... there was little change in... the structure or staffing of Oxford Square medical'. There were a number of important aspects to the successful operation of that business at all times, the key aspect being the retention of competent medical practitioners for regular engagement in practice at the OSMC at specified times of the day or evening. As I have foreshadowed, during Idoshore's operation of the OSMC Mr O'Shanassy caused to be engaged for the most part general practitioners with differing specialist interests in areas such as sports medicine, sexual health, casualty and women's health. Mr O'Shanassy testified that a further factor, significant to what he described as the success of the OSMC, was Idoshore's retention of well-trained and experienced support staff, including a registered nurse, a centre manager (being the point of communication between the doctors and the administrative support staff and having a supervisory role in relation to other support staff) and a receptionist. 10 Mr O'Shanassy described the corporatisation of the medical services industry, as it emerged and evolved at least by the late 1990s, as the aggregation through purchase and/or takeover of smaller medical services businesses by larger corporate operations or infrastructures. He identified the then 'primary players' in that corporatisation process, apart from the Foundation Healthcare corporate group (inclusive of the respondents), as the Endeavour Healthcare and Primary Healthcare corporate groups, and he explained that '[c]ompetition between these entities for market share in the medical services industry involved the acquisition of medical centres and pathology labs across Australia'. The second respondent Foundation company was a public company which changed to a proprietary company in about January 2003, and thus subsequently to the sale of the OSMC assets from Idoshore to Foundation made in December 2000. 11 In or about 1999 Mr O'Shanassy caused to be further established and developed a complementary multidisciplinary services corporate group, which provided from time to time legal, consulting and associated services to its clients inclusive of medical practitioners, the parent company of that group being Sagacious Group Pty Limited. Throughout the submissions of the parties, the description 'Oxford Square Medical' was used synonymously for the expression Oxford Square Medical Centre. That corporate group was said to have retained the individual services of various professional and business employees, directly or indirectly. As managing director and major shareholder of the Sagacious Group of companies, Mr O'Shanassy caused to be offered business consulting services, as well as legal services, in the latter case in the name of Sagacious Legal. He also set about the development of retainer relationships at the OSMC with the medical specialists to whom general practitioners in practice at the OSMC could refer patients. Those specialists would attend the OSMC at pre-arranged dates and times on a weekly basis, for which they would pay an occupation fee to Idoshore. That became in time a significant source of revenue for the OSMC operations conducted by Idoshore. 12 At about the beginning of July 2000, Mr O'Shanassy caused to be leased additional space within the OSMC premises (that is additional to the status quo at the time of Idoshore's original acquisition of the OSMC) in the form of consulting rooms, which additional space produced rental income of about $30,000 per annum, and thereby added in relation to the OSMC operations a so-called 'bottom line revenue'. One such subtenant was Dr Diamond, a specialist obstetrician, and another was Dr Hakim, a specialist gynaecologist. In addition, he made an arrangement with Dr Tornya for the provision of consulting rooms on an ad hoc basis, in return for which Idoshore received one half of that consulting doctor's revenue derived from practice at the Centre. Those additional sources of income were said to have boosted OSMC's 'medical profitability', yet without any material increase in costs. Those operations did not bear directly upon the circumstances arising for present resolution. 13 The expanded corporatisation of medical services implemented by Idoshore from about 1999 involved an increase in the number of general practitioners from time to time engaged in individual medical practices conducted at the OSMC. I use the expression 'individual' in the sense that none of the general practitioners appear to have operated in partnership at the OSMC. For the purpose of advancing that professional reorganisation within the OSMC, Idoshore retained the services of Dr Peter Gesovic to secure an increase in the number of general, and also specialist, practitioners engaged professionally in practice at the OSMC. Dr Gesovic had formerly practised medicine at the subject OSMC premises, in or about 1995, being shortly prior to Mr O'Shanassy's commencement of Idoshore's activities. Dr Gesovic was a resident of the inner eastern suburbs, and Mr O'Shanassy explained that '[a]s a consequence ... he knew a lot of the local doctors', and further that '... unlike other professions, there is an advantage of having local doctors, as they tend to retain their patients'. Dr Gesovic continued to be retained by Idoshore until February 2002 as a liaison between Idoshore and the general practitioners engaged at the OSMC. He did not testify at the hearing of the proceedings. It was apparently at about the time of Idoshore's corporatisation of an increased number of general practitioners that Mr O'Shanassy set about negotiations for the amalgamation of the practices of then existing medical practitioners at the OSMC with two medical practices located at Kings Cross operated by Dr Joseph Grech in conjunction with two other medical practitioners. 15 Mr O'Shanassy expressed the view that '[t]he Commonwealth financial incentives were not the only reason why Idoshore entered into the merger with the Kings Cross practices, [since] [b]ringing in more doctors could generate more revenue and mean that Oxford Square Medical could become more profitable', and moreover that '[i]f my anticipation of the impending corporatisation in this sector of the industry was correct, increased revenue and profitability would enhance the value of Oxford Square [M]edical to an incoming purchaser, and increase the purchase price which Idoshore could obtain on any sale'. It was the circumstances related to and involving the subsequent sale of the entire OSMC operations and the assets thereof from Idoshore to Foundation that gave rise to the present complex litigation. As a consequence, the Kings Cross general practitioners Drs Grech, Paull and Mackenzie continued the provision of their respective services within the auspices of the OSMC, and as part of its overall or consolidated operations with those two Kings Cross practices. 18 Mr O'Shanassy testified that after the amalgamation of the OSMC with the Kings Cross practices of Dr Grech, the operating costs of the OSMC practice as thus reconstituted increased temporarily, by reason of first, the costs associated with the physical merging of the practices (for example stationery, advertising and removal costs), and secondly, of the short term retention of Dr Grech's support staff during the transition period. From about 1 July 2000, those additional costs were said by Mr O'Shanassy to have 'fallen away', and he testified to beginning 'to see positive benefits' from having these additional three doctors in operation under the OSMC administrative umbrella. That was said to be because of a significant increase in revenue coupled with a reduction in costs asserted by Mr O'Shanassy to have been achieved because of the two practices being thus assimilated, and because of Dr Grech's support staff, after a relatively brief time, being no longer retained. As already indicated, a related or corporate member of the HMP Finance group was apparently at all material times the freehold owner of the OSMC property. The Foundation Healthcare companies included of course the respondents. Medical centres with which the Foundation corporate group was by about that time associated were located in Auburn, Edgecliff, Liverpool and Penrith, and also on the Central Coast of New South Wales. Mr Meehan informed Mr O'Shanassy as to the sale of 'my medical centres into Foundation Healthcare Limited' and as to his having taken up an executive position in relation thereto. Mr Meehan enquired of Mr O'Shanassy as to whether he would be interested in selling the OSMC to Foundation and Mr O'Shanassy had replied in the affirmative. By about that time, the OSMC had assembled a management team, inclusive of Mr O'Shanassy as the chief executive officer, and comprising otherwise Mr S Nijssen-Smith as the chief financial officer, Mr Laere as a director, the earlier mentioned Dr Gesovic as the administrative director, and more recently the abovementioned Dr Grech as the medical director. Those persons headed up what was described as the support and practising medical staff in administrative office in relation to the OSMC. 20 Either at or a short time after that meeting in September 2000, Mr O'Shanassy had given to Mr Meehan a document bearing date July 2000 and headed 'Oxford Square Medical Centre' and 'Business Overview Prepared for Foundation Healthcare Limited', explicitly for the purposes of furnishing to Foundation '... an accurate summation of the medical practice known as the Oxford Square Medical Centre... and thereby provide sufficient information so that Foundation Healthcare can consider the acquisition of OSMC'. Attached to that document was comprehensive financial information bearing the description 'Maintainable Earnings Calculation' and containing the primary subheadings mentioned in the next paragraph below, each such segment relating to the year ended 30 June 1999 together with the further quarters ended 31 March 2000, 31 December 1999 and 30 September 1999. 21 In addition to that extent of comprehensive historical financial information related to OSMC earnings, there was set out figures for each of those corresponding financial periods of time relating to OSMC's 'Costs of Sales', 'Gross Margin', 'Expenses', 'Other Income', 'Profit (Loss) before Tax', 'EBITD Normalisation Adjustments', 'Adjusted EBITDA' and 'Annualised EBITD'. 'Explanatory Notes' were additionally provided, along with other explanations and details. The expression EBITDA is the abbreviation for 'Earnings Before Interest Taxation and Depreciation', and thus reflected the notion for measurement of income achievement used in the proceedings. Under the sub-heading '5. Financials & Growth Strategy', it was stated that '[b]y virtue of the... relocation and other initiatives, the revenue stream of the medical practice could be increased substantially, resulting in an EBIT of $400,000 - $500,000 per annum'. 'EBITDA' and the more restricted term 'EBIT' were both reflective of measurements of income derived from business operations, such as here in the case of the OSMC. The assets the subject of sale and purchase by the Agreement were described by the documentation subsequently entered into between the parties as 'Business', 'Goodwill' and 'Facilities and Service Contracts', and hence what may be described, in part, as intangible assets of the OSMC. 22 Mr O'Shanassy also met in September 2000 with Dr Ken Jones, the chief executive officer of Foundation Healthcare Pty Limited, Mr Meehan as chief executive officer of Foundation Medical Centres (NSW) Pty Limited (of course the previous name of the first respondent to the present proceedings), and Doctors Fox and Grech (by then of the OSMC). Each of those doctors have already been identified in these reasons. After a tour of the OSMC property, there occurred at the meeting a further discussion, in the course of which Mr Meehan was said by Mr O'Shanassy to have remarked, for what it may ultimately matter, that '[t]here is huge potential for this medical centre --- strategically speaking, it is ideally located and has the ability to expand in sheer size by either expanding into level 1 or relocating to larger premises', and '[t]o optimise the medical centres potential it would need to grow in size to benefit from the economies of scale etc'. This was due to the pressure of completing other Medical Centre purchases. We are prepared to purchase the above Medical Centre on a formula basis, based on 3x last year's earnings before interest, tax, depreciation and amortisation (EBITDA) with a further payment to be made at the end of either the first year after completing the purchase of the above Medical Centre or at the end of the second year where we would be prepared to pay the multiple of 5x the difference between purchase price EBITDA and the EBITDA achieved in whatever year (first or second year) were [ sic ] taken as the earn out year. The principle is that, if you are able to amalgamate the current medical centre and its doctors with other medical practices in the area and grow the business to the size required by Foundation, then they would be prepared to pay you a premium. The EBITDA would have to increase to at least $500,000 pa before the increased EBITDA was paid. Any costs incurred in achieving the earn out would be for your account or would be deducted from the increase in purchase price. There would be no claw back from the initial purchase price. We would wish to see all of your doctors sign a three-year Service Contract. I enclose the standard Foundation Health Care Service Agreement for doctors. Please amend this Contract so that your doctors would be comfortable to sign. I also enclose the Standard Foundation Health Care Purchase Contract, which will need to be amended. If you have any questions, please do not hesitate to contact me with regard to any matters relating to the purchase of the Medical Practices at the Oxford Street Medical Centre. Representing the owners of the property (10, 12 and 14 Oxford Square, Darlinghurst), I would see no problem in you surrendering your lease of the ground and first floors, subject to you giving suitable notice to the landlords, and allowing the landlords a reasonable amount of time after you vacate the premises to get a new letting in place. I would see this time frame as being a maximum of six months, if a tenant were in place before the six months had elapsed, we would refund to you any portion of the rent payment not needed to cover the rental shortfall. If it assists you, we would be prepared to take a surrender of the first floor lease before the ground floor lease. Alternatively, you may prefer to sub-lease the premises yourself. The above comments are without prejudice and would be subject to Contract. Foundation's offer was described as 'performance based', being made referrable to a starting base equal to OSMC's existing performance criteria, and thereafter to OSMC's performance criteria involving one or two years earnings etc (as the case may be) following upon completion of the takeover, being criteria in both instances related to the EBITDA formula. 24 A meeting occurred subsequently on 15 September 2000 between Mr O'Shanassy (of course of Idoshore) on the one hand and with Messrs Meehan and Mr Murphy together (of course of Foundation) on the other. Mr O'Shanassy stated that the Foundation offer was 'way too low', despite what he referred to as the 'additional incentive of a further earn up at the times multiple of [five] but this is all too uncertain...', and he further stated that '... I have a strong preference for just a competitive times multiple figure --- which I believe to be 7.5'. He added 'this is comparable, as I understand it, with the initial purchase price paid by Foundation... in recent acquisitions'. I can assure you that you can rely upon the underlying assumption, as I've just stated, because I intend to be involved in the management of Foundation and I have a vested interest in ensuring that Foundation is successful... the best I can do is increase the initial times multiple from 3 to 4.5 and give you two... further "earn ups" --- the 1 st earn up at the end of the first year and a 2 nd earn up upon relocating Oxford Square medical to a larger premises... you have my assurance that it will go the way I have described to you. Mr Meehan was said by Mr O'Shanassy to have further added 'I will in the meantime get Foundation to contact you for the purposes of undertaking the due diligence to establish the sustainable EBITDA', which was of course to comprise the benchmark formula as to performance of the OSMC at the material time for the purpose of the calculation of the sale price to ultimately crystallise for payment by Foundation. Of course the precise terms and conditions of the transaction the subject of the complex formal documentation which ensued (being essentially the subject Business Sale & Purchase Agreement later predominantly extracted in these reasons) govern the operation of the purported transaction negotiated between the parties, but the circumstances leading to the formation of that transaction assist at least to explain the circumstances attendant upon the unique nature of the ongoing contractual documentation between Idoshore and Foundation thereby formed. More than that, from the perspective of Idoshore, those circumstances provided the context to the controversial collateral warranties which Idoshore pleaded. 26 Following upon that meeting held on 15 September 2000, Mr O'Shanassy instructed Mr Douglas, a chartered accountant employed by the Sagacious Group of companies, to participate as that Group's representative in the due diligence process thereafter undertaken by Foundation in respect of the OSMC annual earnings and assets. Mr Douglas subsequently prepared a three page document headed 'Maintainable Earnings Calculation', which purported to identify the income, cost of sales, gross margin, expenses and other income which went to make up the periodic profit or loss before tax of Idoshore's OSMC practice and its operations, which figures were said by Mr O'Shanassy to have been then 'normalised' or 'adjusted' to remove 'extraordinary (usually "one off") income or expenditure'. The document contained calculations styled 'Adjusted EBITDA' and 'Annualised EBITDA', described by Mr O'Shanassy as 'designed to determine a suitable profit figure for the business'. The material containing those calculations appears on pages 48, 49 and 50 of TAB 6 of exhibit PGO-1 attached to Mr O'Shanassy's affidavit under the description 'Maintainable Earnings Calculation' of 'Idoshore Pty Ltd t/a Oxford Square Medical Centre'. Upon the footing of that material, Mr O'Shanassy considered that '... an estimated EBITDA... in excess of $250,000' was shown to be derived annually in respect of the OSMC as at November 2000. Whilst I did not prepare the "Maintainable Earnings Calculation", I was and am familiar with the financial statements and records of Oxford Square medical. I agree with the estimates of "Annualised EBITDA" shown on the "Maintainable Earnings Calculation". In particular, I consider that the adjustments made in relation to the month of November 2000 were appropriate and resulted in an estimated EBITDA for Oxford Square medical, as at November 2000, in excess of $250,000. 52. The $293,092 EBITDA calculation was made using the September 2000 quarterly historical financial figures. The full financial data for the year ended June 2000 did not take into account the actual operating income and expenses after 1 July 2000 and was not, in my view, indicative of the sustainable financial performance of the business --- as at November 2000. [That] was because (amongst other things), that full year encompassed a period in which the additional income from the doctors from the Kings Cross practice had not been optimised and did not reap the benefit of economies of scale inherent from this growth in revenue. In that regard I was referred by Idoshore to document 68 in the Foundation respondents' list of documents bearing date 27 May 2005, and in particular to pages headed 'Due Diligence Profit & Loss Summary' and 'Due Diligence Normalisation of Accounts --- Support Notes', which disclosed that Foundation had calculated a sustainable EBITDA for the quarter ended 30 September 2000 of $67,331, which produced the annualised figure of $269,324 there appearing. The fact that both Idoshore and Foundation arrived independently, by way of their respective discrete calculations, at figures within not a dissimilar range, provided the inference that '... objectively assessed the business was capable of producing that level of income or profit' of $250,000 per annum, as Idoshore contended, and in my opinion with justification. 29 On 28 October 2000, Mr O'Shanassy received draft Heads of Agreement from Foundation, which he described as having 'encapsulated the terms of the agreement that had been discussed at our meeting held on or about 15 September 2000'. An initial purchase price of 4.5 times the maintainable EBITDA of OSMC based upon the last 6 to 12 months trading figures ('EBITDA Benchmark'). Based upon the information provided by you and our preliminary investigations, the EBITDA Benchmark will be $250,000. 2. A one year earn up provision whereby Foundation will pay you an additional 4.5 times the incremental year 1 EBITDA above the EBITDA Benchmark (or any pro rata amount if the relocation described in Clause 3 occurs prior to the end of the first year). This calculation will take place within two months of the period and be payable to you one month after the calculation is agreed, in accordance with Clauses 4, 5 and 6 below. Condition 11 stipulated that such offer was made 'subject to Due Diligence process being completed and formal contract negotiations' taking place. No such relocation so provided for in relation to the OSMC in fact occurred at any material time, and consequently the occasion for crystallisation of the so-called 'second earn up', by way of increase in the 'Sale Price' the subject of the Agreement, did not materialise. There will be no changes to existing structure or operations without written mutual consent (not to be unreasonably withheld) with the executives of Idoshore Pty Limited taking an advisory role with its primary objective of ensuring OSMC achieves EBITDA and GP EBIT growth (whichever is applicable) over the one (1) year post sale period. 9. Foundation will require not less than 2 of the OSMC doctors to enter into contracts for terms of not less than 3 years. We understand that the two key doctors are Dr Joseph Grech and Dr David Fox. 10. As part of the growth strategy for OSMC and as detailed in the yearly business plans, we will, when appropriate, take over the leased premises on Level 1, 10-14 Oxford Square, Darlinghurst. Idoshore will, on a pro rata rental basis, make available space as determined by OSMC. In other words, Idoshore will be responsible, independent of the sale of OSMC to Foundation, to maintain its obligations under the current lease and sublet portions of OSMC/Foundation as OSMC/ Foundation requires. Documentation put in place prior to that offer disclosed that there were altogether seven medical practitioners, each being described as general practitioners, by then engaged in practice at the OSMC on so-called 'verbal arrangements', inclusive of Drs Grech and Fox identified in Condition 9 above as 'key doctors'. In addition there was employed at the OSMC three receptionists and two nurses. A final version of the Heads of Agreement was signed by Mr O'Shanassy on behalf of Idoshore on 31 October 2000, and forwarded on 1 November 2000 to Foundation under cover of a communication which indicated Mr O'Shanassy's intention to convene a meeting with Drs Fox and Grech for the purposes of tabling, negotiating and ultimately executing their respective three year employment contracts above foreshadowed. For what it may ultimately matter, Mr O'Shanassy testified that had Idoshore not first secured the benefit of those Heads of Agreement, he would not have caused Idoshore to enter into those Facilities and Services Contracts. On 23 November 2000, Mr O'Shanassy received a copy of an e-mail sent from Mr Douglas of Sagacious Legal ( ante ) to Mr Meehan attaching a copy of a document headed Practice Scheme Development. Thereafter Mr Meehan informed Mr O'Shanassy that he was '... welcome to use the practice development scheme that I have developed in my medical centre'. 32 On 14 December 2000, Mr O'Shanassy arranged for Sagacious Legal to finalise with Foundation's lawyers the terms of the 'Business Sale & Purchase Agreement', which was thereupon entered into on that day between Idoshore as vendor and Foundation Medical as purchaser, with Foundation Healthcare an additional party as guarantor of Foundation Medical (they are of course respectively the first and second respondents and cross-claimants in the subject proceedings). Mr O'Shanassy testified that prior to committing Idoshore to that critical Agreement, no representative of Foundation withdrew qualified or modified any of the representations allegedly made to him on behalf of Foundation in the course of the negotiations leading to the signing of that Agreement, and in relation to which representations he asserted his placement of reliance. The difficulty however which Idoshore faced in its ascribing ongoing significance to those representations made antecedently to the formation of that Agreement is that such representations were not wholly reproduced as warranties set forth in the written Agreement. Reliance thereon by Idoshore in the present proceedings faced moreover the defence pleaded by Foundation that the same did not go to the root of the contract and were not at least substantially reproduced in the Agreement subsequently entered into between Idoshore and Foundation and settled between the legal representatives of the parties. In order to achieve a return on the first earn-up (clauses 3.2 and 3.3 of the Agreement), Oxford Square medical not only had to sustain its EBITDA at the EBITDA Benchmark level, but had to grow EBITDA beyond the benchmark level. In order to achieve the second earn-up, the business had to relocate and grow to achieve increases in EBITDA. The ability of Idoshore to be involved in and monitor the management of Oxford Square medical was critical in ensuring that the business was on track to meet and exceed the required EBITDA targets...'. The ability of Idoshore 'to be relevantly involved in any management of the OSMC' was not specifically authorised by the provisions of the Agreement, as clause 7 thereof headed 'Possession' makes clear. 34 Following upon the exchange of mutually signed copies of the Business Sale & Purchase Agreement on 14 December 2000, there was sent by Mr O'Shanassy to each of the six medical practitioners, by then in practice at the OSMC, so-called 'practical development scheme' correspondence in order, so he testified, to provide those doctors with an incentive to remain focused on the financial performance of the OSMC in terms of 'patient billing' performance. Completion of the Business Sale & Purchase Agreement took place on 1 February 2001, when Foundation paid over to Idoshore $221,576.50 representing twenty per centum (20%) of the purchase price paid by way of so-called 'warranty deposit' for lodgment into the trust account of Holman Webb, the balance of the purchase price remaining to be determined after quantification of the total 'Purchase Price' comprising (as thus defined in the Business Sale & Purchase Agreement) 'the amounts so detailed in Item Ten of Schedule One' to that principal Agreement. Those 'amounts' were specified as '4.5 times the EBITDA Benchmark' and thus comprising the sum of $1,125,000.00 therein specified, and 'Plus Consumables Less Accrued Entitlements' by then not mathematically quantified and remaining implicitly to be quantified on 'Completion' of the Agreement. Foundation 'assumed control of the operations of Oxford Square medical', to adopt Mr O'Shanassy's affidavit description. That 'Purchase Price' was stipulated by the Agreement to be partly satisfied by the issue of shares in Foundation as I will shortly explain. The Agreement first set out the numerous definitions in clause 1.1 thereof, which I have reproduced below to the extent here material (being in fact virtually all); many of the definitions contain expressions further defined within that clause 1.1. As I have earlier foreshadowed, the party of the first part is of course Idoshore Pty Limited as 'Vendor', the party of the second part and abbreviated therein to 'Purchaser' is Foundation Medical Centres (NSW) Pty Limited and the party of the third part and abbreviated therein to 'Foundation' is Foundation Healthcare Limited. [I would interpolate to record that such registered business name was of course 'Oxford Square Medical Centre', and the meanings of 'Goodwill', 'Plant and Equipment' and 'Premises' are respectively reproduced below; I have not however reproduced the definitions of 'Book Debts' and 'Consumables', which are sufficiently self explanatory. In extracting most of those defined terms above, I do not imply that what remain may not be relevant. The care and precision afforded to the numerous defined expressions underline the mutual endeavour of the parties to anticipate future circumstances which might crystallise in the course of operation of that critical Agreement. What I have reproduced from the Agreement is intended to assist comprehension of its context to the issues arising in the proceedings and of the complexity of the anticipated future relationship between the parties. That detail is such as to render as further formidable the task sought by Idoshore of assigning legal significance to collateral terms and conditions not already incorporated explicitly therein, being a subject of controversy which I have already touched upon. The Purchaser has conducted due diligence of the Business in accordance with its normal practices and relying on the books and materials provided by the Vendor has satisfied itself as to the Business, the financial position of the Business, and Accounting Records and all other matters the Purchaser considers necessary and relevant to the purchase of the Business. Having completed the due diligence, the Purchaser has accepted the EBITDA Benchmark as $250,000.00. For the purposes of clauses 3.3 and 10.1, the date of Relocation will be the date the Business commences operation at the New Location. Subject to clause 10.5(a), the Purchaser will pay the Vendor the 1 st Adjustment to Purchase Price no later than three (3) months from the 1 st Adjustment Date. Any dispute between the parties in respect to the method of calculation or the amount of the 1 st Adjustment to Purchase Price will be resolved in accordance with clause 16. Subject to clause 3.9, the Vendor agrees not to object to any Relocation of the Centre. "Year one (1) Relocation GP EBIT" = the GP EBIT for the 12 month period commencing from the date of Relocation. Subject to clause 10.5(a), the Purchaser will pay the Vendor the 2 nd Adjustment to Purchase Price no later than three (3) months from the Adjustment Date. Any dispute between the parties in respect to the method of calculation or the amount of the 2 nd Adjustment to Purchase Price will be resolved in accordance with clause 16. If the sum of either of the calculations required by clauses 3.3(a), (b) or (d) is negative, it shall be taken to be zero. For the purposes of determining the number of Foundation Shares to be issued as part of the 1 st Adjustment to Purchase Price and the 2 nd Adjustment to Purchase Price, each Foundation Share shall be issued at a share price equal to the average closing price for Foundation Shares on ASX over the preceding five (5) days prior to the 1 st Adjustment Date and the 2 nd Adjustment Date respectively. The issue of Foundation Shares as part of the Purchase Price or any subsequent adjustment is conditional upon Foundation or the Vendor satisfying all relevant requirements of the Corporations Law, the ASX Listing Rules or its Constitution in respect of the issue. If Foundation or the Vendor is unable to satisfy those requirements within thirty (30) days of the relevant due date, the adjustment shall be paid in cash. The Vendor shall be solely responsible for all remuneration and Accrued Entitlements of such Employees up to and including the Completion Date. The Purchaser shall offer employment to all current Employees commencing on the Completion Date. The Stakeholder will act on the terms of the claim notice within seven (7) days of receiving the said notice, unless the Vendor objects in writing ("objection notice") to the terms of the claim set out in the claim notice, during the said seven (7) day period. . Clause 17 thereof stipulated for 'Foundation' (ie the first respondent, Foundation Medical Centres (NSW) Pty Ltd, and the second respondent, being then named Foundation Healthcare Limited) to be '... jointly and severally liable to [Idoshore] for the due performance of all the terms on the part of [Foundation Medical Centres (NSW) Pty Limited] contained in the Agreement'. Hence of course both Foundation companies were made respondents to the present Idoshore proceedings. Idoshore pointed out that its calculations recorded 'Maintainable Earnings' of the OSMC for the quarter ended 30 September 2000 as having amounted to $73,273, and on an annualised basis therefore to $293,092, and the Foundation version of those calculations amounted to $67,331, and on an annualised basis therefore to $269,324. Those calculations being made of course on an EBITDA basis, no regard was paid of course by way of deductions for interest, taxation, depreciation or amortisation (see again the defined meaning of 'EBITDA' which I have earlier extracted from the Business Sale & Purchase Agreement). 40 Idoshore emphasised understandably that the circumstance that both Idoshore and Foundation had implicitly undertaken that same calculation exercise and had arrived at congruent figures for crystallisation of the Benchmark EBITDA as the sale price multiple 'strongly suggests that objectively assessed, the business was capable of producing that level of income or profit'. Moreover Idoshore submitted that the thesis of Mr G C A Gower, chartered accountant and expert witness for Foundation, to the effect that the $250,000 EBITDA figure was a 'flash in the pan' result and was incapable of being achieved by Foundation subsequent to completion of the purchase by Foundation of the OSMC business, was plainly insupportable as a proposition having regard to the evidence. There is clearly objective evidentiary support inherent in that Idoshore submission. 41 Idoshore made the telling point therefore that Foundation must face the problem of explaining '... how it is that a business that had been assessed... as producing more profit than $250,000 per annum ([calculated at] $293,092 by the vendors and at $269,324 per annum by the purchaser) under [Foundation's] management was capable of generating a loss in its second 12 months of operation', particularly given the circumstance that 'the sale agreement made specific provision that no adverse change could be made to the business without the consent of Idoshore', Idoshore thereby referring at least to clause 3.9 of the Business Sale & Purchase Agreement which I have earlier extracted. There is prima facie strength in that further Idoshore submission. Idoshore thus explained that after the Business Sale & Purchase Agreement was put in place and completed, what was operated and recorded 'in the sense of accountancy' by Foundation was not 'a stand-alone business conducted by a single corporation conducting a single business'. Idoshore's expert witness Mr Phillips of Deloitte Touche Tohmatsu expressed the view in that regard for the purpose of his report placed in evidence that a contractual stipulation in relation to the consideration payable in respect of the sale of a business ordinarily carried the implication that any EBITDA calculation involved would inherently fall to be assessed on the same basis after acquisition as the basis used to calculate that benchmark before acquisition. Idoshore postulated that the Agreement envisaged that the business after acquisition would remain essentially the same business, in terms of scope and structure of operations thereof, as was conducted by Idoshore before its acquisition by Foundation, in order that the full monetary consideration to be provided by Foundation to Idoshore could be quantified in the light of post-completion performance. Necessarily or inherently, so Idoshore therefore explained succinctly, the EBITDA of the post-acquisition business, 'considered as a stand alone generator of revenue and incurrer [ sic ] of costs', was required to be directly comparable in scope of operation and performance to the EBITDA of the pre-acquisition business. Or put another way, when the 'EBITDA Benchmark' was encapsulated by the Agreement, what was mutually intended to be addressed would be a 'stand-alone' business fulfilling the defined meaning of 'Business' conducted by a single corporate entity. There is clear force in those submissions from an accounting and an otherwise business perspective and most importantly in terms of an appropriate as well as reasonable operation of the relevant provisions of the Business Sale & Purchase Agreement, and in particular that provision which became the subject of critical focus from Idoshore's perspective, being clause 3.9 of that Agreement. 44 Idoshore contended accordingly that '[i]n large measure the issues in this case concerning the post acquisition EBITDA arise because Foundation have, for their internal accounting purposes, "notionally" applied to the calculation of the results of the OSMC business costs that were not incurred by that business [pre-acquisition], because it's not a legal entity, and would not have been incurred by the business if it were being separately conducted on a stand-alone basis outside Foundation and its influence, and was managed in accordance with the [Business Sale & Purchase Agreement]'. It was further contended by Idoshore that '[o]nce that point is understood, the objection to the method of calculation [by Foundation] of post acquisition EBITDA becomes much clearer'. That was further said by Idoshore to be the case because '[t]he argument is not whether particular costs were or were not incurred by Foundation', but rather '... whether it is appropriate to apply some particular costs to the calculation of EBITDA of "the Business" when those are not costs that would have been incurred by the business on a stand-alone basis, were not incurred before acquisition, and are not apparently necessary as a cost of the business'. It will be recalled that the definition of 'Business' stipulated by the Agreement commences 'the business of providing facilities and services to medical practitioners to facilitate the conduct of their individual medical practices carried out in and from the Premises...', and thereafter catalogues seven relatively disparate matters to be included in the definition, together with three matters to be excluded from the definition. It was emphasised by Idoshore that '[t]o the extent that they are costs incurred as a result of changes of organisation, strategy and operations of the Business without Idoshore's consent, they are simply impermissible costs to be recognised at all'. There is clear force in principle in those submissions. 45 Further as to issues involving criteria related to the costs of operation of the OSMC, Idoshore contended that 'similar observations can be made in relation to income' of the OSMC. The hypothesis was postulated in that regard to the effect that, if either for 'some wider policy reason' or 'because of sheer ineptitude or laziness', it had been the case that Foundation 'for its own internal purposes [had been] content to sacrifice income sources of a particular Centre', that would be 'a matter for Foundation', but nevertheless that was '... not an outcome that can be laid at the feet of the Business for the purposes of calculating post acquisition EBITDA, unless it can be shown that the business would have been in no different position had [it] been managed according to its own interests'. There is clear force in that further Idoshore contention. 46 Idoshore summarised its principal claim therefore to the effect that '... when the income sacrificed is added to the costs applied to the business which have no place in the calculation of post acquisition EBITDA and the [relevant] sum added to the reported profit, it is perfectly clear that Idoshore not only should have received the benefit of the balance of the purchase price but also was entitled to a very substantial "Earn-up" on the application of the 4.5 multiplier to the EBITDA, less $250,000 that should have been earned, which [earn-up] on any view, significantly exceeded $250,000'. That reference to the '4.5 multiplier' was contextually of course made in relation to the operation of the lengthy and complex 'Adjustment to Purchase Price' provisions of clause 3.3 of the Business Sale & Purchase Agreement, and sub-paragraph (a) in particular relating to initial one year 'earn-up': see again [37] above. 47 Apart from reliance upon the explicit provisions of the Business Sale & Purchase Agreement that I have already extracted, Idoshore pleaded, as I have foreshadowed, a further case based on warranties and representations asserted to have been made orally by Foundation collaterally to the provisions of the Agreement and to be operative under the general law, and also to have been 'actionable... pursuant to s 52 of the Trade Practices Act '. I would observe that although the Business Sale & Purchase Agreement does not contain any so-called 'entire agreement' provision as frequently inserted in contracts in order purportedly to exclude anything other than explicit terms, it was nevertheless very comprehensive in scope. Accordingly there are formidable obstacles in the way of Idoshore's case for reliance upon the oral warranties and representations which it sought to establish independently and collaterally to such comprehensive documentation as is the subject of that Agreement. It is with those caveats that I will complete Idoshore's submissions made in advance of what was its case additionally or alternatively to that founded upon the explicit terms of the Agreement. 48 Each of the collateral warranties and representations asserted by Mr O'Shanassy to have been made to Idoshore by Foundation were claimed by him to have remained uncontroverted. Those warranties and representations (whichever be the strictly more accurate characterisation) were purportedly recorded at some length in pars 44 and 47 of Mr O'Shanassy's affidavit sworn on 20 February 2006, and in a context in the course whereof Mr Meehan was asserted by Mr O'Shanassy to have further represented, as I have foreshadowed, that '[t]here is huge potential for this medical centre --- strategically speaking, it is ideally located and has the ability to expand in sheer size by either expanding into level 1... or relocating to larger premises', and further that '[t]o optimise the medical centres potential it would need to grow in size to benefit from the economies of scale...', and yet further that '[b]ased upon what I have outlined, you will be financially far better off accepting a lower initial purchase price that provides you with further earn up... I intend to be involved in the management of Foundation and I have a vested interest in ensuring Foundation is successful'. It would be difficult for the Court to ascribe decisive significance or operation in relation to those and similar collateral statements on Mr Meehan's part, given that the parties subsequently reduced their contractual arrangements to writing in such detailed and comprehensive documentation as the Business Sale & Purchase Agreement at least implicitly settled in form between the legal representatives of the parties. All the more so would that be implicitly the case, given the terms of Foundation's offer made antecedently to the Agreement, which concluded with the traditional phraseology 'subject to Contract' (see [23] above). 49 Idoshore's summary of the operation and effect of the representations attributable by it to Foundation, and to Mr Meehan in particular on its behalf, as having allegedly induced Idoshore's subsequent entry into and its completion of the Business Sale & Purchase Agreement, appeared in comprehensive detail in its written submissions. It was Idoshore's contention that '[w]ith respect to recollections of events, [Mr O'Shanassy's] answers... demonstrated an honest and genuine recollection of conversations, [recorded] in his affidavit, and as tested in the witness box', and were 'utterly uncontradicted'. It was Idoshore's further contention that his evidence as to reliance upon the oral representations asserted to have been made by and on behalf of Foundation was entirely credible, it being argued that there was an immediate and logical connection between the alleged representations and the subject matter of pre-contractual discussions, such as to render absence of reliance 'more incredible than reliance'. Moreover Foundation adduced no oral testimony at all from Mr Meehan of Foundation, by way of denial in whole or in part of those representations attributed to him. The difficulty however for Idoshore remains that there was subsequently concluded with Foundation a very comprehensive written Agreement which made no reference to any such collateral representations on Foundation's part. 51 It is appropriate here to record that I gained a favourable impression of Mr O'Shanassy as a credible and reliable witness, who presented as a person evidently conscious of his duty to be truthful in testifying on oath of course to the Court, and who did not unduly advocate Idoshore's case in response to the careful and comprehensive cross-examination of counsel for Foundation. The difficulty for Idoshore is not therefore any concern of the Court as to shortcomings in credibility or reliability of Mr O'Shanassy's evidence, but rather the extent of significance that may be ascribed to that evidence in the light of the comprehensive provisions of the Agreement ultimately put in place, and which implicitly purported to cover the field of the complex contractual arrangements to ultimately prevail between the parties (compare incidentally clauses 15.1 and 15.2 thereof). I will expand upon that characteristic of the Agreement in later discussion of the operation of the Agreement. No judicial precedent was cited by Idoshore involving circumstances where a contracting party committed itself, subsequent to the making of misrepresentations complained of, to a comprehensively documented transaction, such as the present Agreement, where that document had been comprehensively settled between the legal representatives of the parties. Moreover Idoshore was an experienced owner and operator who stood at arm's length from the purchaser, and in relation to the formation of which transaction each of the parties was independently represented by its lawyers; indeed the apparent corporator of Idoshore Mr O'Shanassy was himself legally qualified. As to invocation of the Trade Practices Act in relation to the conduct alleged to have had legal significance, it is not easy to comprehend the commercial reality of a representation having induced entry into such a complex instrument settled by the legal representatives of the parties, yet finding no expression in such an elaborate instrument as the Agreement. Idoshore asserted that the non-exclusively defined expression 'Business' was 'a logical construct' and was not indicative of a legal entity. It was further argued by Idoshore that the defined notion of 'Business' found expression in activity conducted 'within the Foundation corporate organisation' following upon the subject acquisition, albeit confined in nature to 'the business operation' which had been conducted by Idoshore before the subject acquisition. There is a need to elaborate upon that submission at the outset to the extent that the definition of 'Business' the subject of clause 1.1 of the Agreement includes 'Goodwill' (being a defined term), 'the right to occupy the Premises', 'Plant and Equipment' (again a defined term), and 'the right to receive income from any sub-lease or license at the Premises', but all that does not involve any controversy, at least of substance, to my perception of the substantive issues arising. 55 As I have foreshadowed, Idoshore contended that the operation of the definition of EBITDA post-acquisition requires an examination to be undertaken of what revenues and expenses were relevantly involved in Foundation's operations at the OSMC after completion of the Business Sale & Purchase Agreement, in order to determine whether the same 'belonged' (to adopt Idoshore's expression) in some logical way to the 'Business' as so defined in and by the Business Sale & Purchase Agreement. Put another way by Idoshore more specifically, '[t]he issue is not whether they are costs and revenues of Foundation', since '[a]ll costs of the Business will be costs of Foundation because it is the corporate owner' of the Business, and further that '... necessarily, not all costs of Foundation incurred generally or in relation to the Business [were] costs of the Business' (the emphases being that of Idoshore). So much is in my opinion correct in principle. Moreover it was further said by Idoshore that regard should be paid to the definitions of 'Losses and Liabilities', 'Operating Costs' and 'Outgoings' appearing in clause 1.1 of the Agreement in order to gain an appraisal of the validity or otherwise of the descriptions or illustrations given by Idoshore to the broad notion of '[a]ll costs of the Business'. To those defined expressions may be incorporated reference to at least the definitions of 'Premises', 'Service Fees' and 'Taxes' appearing also in clause 1.1. It would be difficult to rationalise a proposition to the effect that costs of those descriptions, being personal or otherwise peculiar to Foundation, could have been objectively envisaged mutually by the contracting parties as being accommodated contextually within the costs measurement formula of EBITDA, those being costs originating on a non-arm's length basis and having no reflection correspondingly in the EBITDA components appertaining to Idoshore. In that latter regard, inherent in the Agreement's defined notion of 'outgoings' is that the same be 'of the Business' (as of course in turn defined). Idoshore emphasised, rightly I think in principle, that whilst 'Foundation could choose for its own reasons to incur costs or simply have them inflicted on it because of its peculiar characteristics', nevertheless Foundation '... could not... bring them to account in calculating the EBITDA of the Business after acquisition'. 59 Additionally to those principal breaches which Idoshore sought to thus frame, Idoshore postulated what it described as a 'second level of breaches of Clause 3.9 concern[ing] revenues'. Nevertheless Foundation failed to provide a sufficient explanation for such declines in revenue. It was submitted by Idoshore in that regard that '... a change in income stream (sundry and rental) of that magnitude, shows that it is more likely than not that Foundation made changes to the business which produced the collapse in sundry/rental income, and that although a reduction in income may have been unremarkable... a complete disappearance of income is inexplicable'. There is force in that submission but it is not a simple task, without more detail, to afford at least entire significance thereto. It was pointed out by Idoshore in any event that '[a]ny change sufficient to have that dramatic an effect would be a material change to the business', yet there was no cross-examination of Mr O'Shanassy as to whether he was consulted about any change in the management or in the running of the business, as Foundation was contractually required to do (see again clause 3.9). In outlined summary of Idoshore's case therefore, Idoshore contended that on the balance of probabilities, and in the absence of any satisfactory explanation by Foundation otherwise, which was said to have been not forthcoming, '... the loss of income reflected in Mr Gower's [evidentiary] table for the years 2002, 2003 and 2004 was caused by a material change in the way Foundation conducted its business, which in turn deprived Idoshore of the Earn-up, and contributed to Foundation's [so-called] embarrassing warranty claim', with the consequence that the loss 'ought to be restored to the account as income'. Well, can we then come back very briefly to the analysis of these three years and your page 13? If we go to the 2004 year, we have, yet again, a loss of about $100,000 of income by reason of the retention rate having gone from 53 per cent down to 43 per cent...? [Mr Gower] That's --- the difference there is about $124,000, I think. And, likewise, we have a loss of the rental income of about $54-odd thousand? [Mr Gower] It's reduced by approximately that, yes. [Mr Gower] That's approximately right, yes... . And so taking those four components into consideration, and the fact that the business earned [$]92,000, even under those circumstances, if the business had been conducted as it was being conducted in September 2000, or in relation to the revenue line as it was being conducted in the year ended February 2002, the business would have earned about $400-odd thousand, would it not? [Mr Gower] That's --- on these numbers, that's approximately right, yes. Yes'. Idoshore contended that in the course of the expert evidence of Mr Gower, given in support of Foundation's case, Mr Gower asserted that the '1st Adjustment to Purchase Price' was incapable of achievement, because it required the OSMC to 'significantly outperform' its own historical earnings and various other financial benchmarks, inclusive of '[r]evenue achieved by the [OSMC] both before and after Foundation's acquisition' (Gower, 1 st Report, para [15]). Idoshore rejoined to the effect that the evident purpose of the attack was to justify and give some credence to the subsequent and 'dramatically lower' EBITDA for the years 2002, 2003 and 2004. That so-called 'attack on the EBITDA Benchmark' was said by Idoshore to have failed for reasons advanced by Idoshore, which I will summarise below. 70 The first reason so advanced by Idoshore was that the 'EBITDA Benchmark' was agreed by Foundation with Idoshore following the due diligence process, and thus antecedently to the formation of the Business Sale & Purchase Agreement. If the EBITDA benchmark was 'as profoundly overstated as a possible result for Business as Mr Gower's subsequent EBITDA calculations suggest', then as Idoshore thereupon postulated, the conduct of the respective parties in selecting that EBITDA (of course $250,000) was 'absurd'. It was submitted further by Idoshore that '[t]o the extent the collapse of post-acquisition EBITDA was a result of the bringing to account of costs not incurred previously and incurred apparently in breach of the Agreement', the selection of a $250,000 EBITDA benchmark, constituted for the purpose of course of giving definitive effect to that Agreement, was 'nothing short of a scheme to cause Idoshore to go into breach [of] the warranties, and [for] Foundation to recover that very excessive and unauthorised expenditure as a claim on warranties'. 71 The second reason advanced by Idoshore was that 'the evidence confirms that the EBITDA Benchmark was in fact economically rational'. In that regard, both parties were said to have at least implicitly or intrinsically agreed 'pre-purchase' to that circumstance or proposition. It was contended by Idoshore therefore that 'but for the changes in costs structure and revenues structure, the [Benchmark] would have been earned', that is to say, at least such 'Benchmark' figure would have been thereafter derived by the OSMC in the normal course, or would normally and reasonably have been so expected or anticipated. It was pointed out by Idoshore in that regard that '[w]hile the EBITDA was less for the period before 1 July 1999, when revenues were lower and costs higher in the amalgamation of the two practices' (ie the OSMC practice and the Kings Cross practice of Dr Grech), 'the circumstances of the business had changed by [that time]', such that the position of the OSMC, and thus the components of the OSMC business assets Foundation was buying would have improved 'as a result of various management decisions made and implemented by Mr [O'Shanassy]'. 72 The third reason advanced by Idoshore was that in the opinion of Deloittes' Mr Phillips, 'the use of the results [of the OSMC] to September 2000 for the benchmark was proper, and in fact was confirmed as proper when his analysis was done of [the] subsequent months' results'; I was referred generally in that regard to Deloitte's Final report made by Mr Phillips on 5 February 2007, as expert witness of course for Idoshore. 73 The fourth reason advanced by Idoshore was that the gross income of the business of the OSMC derived as from 1 February 2001 (when of course Foundation assumed control thereof following upon completion of the Business Sale & Purchase Agreement on the scheduled date of 31 January 2001) and continuing up to 31 July 2001, 'showed no decrease at all', and in fact 'showed an increase in gross income on Foundation's own figures', being a trend which Deloitte addressed specifically in the course of its analysis. 74 One of the 'central propositions' of Mr Gower's evidence was said by Idoshore to be that the September 2000 quarterly results of the OSMC 'were significantly better than previous results', that being explained by Mr Gower as the reason why the subsequent EBITDA calculations of Foundation for 2002, 2003 and 2004 'were so dramatically low', to adopt Idoshore's description. However it was submitted by Idoshore that the proposition so put forward by Foundation was 'destroyed' by Idoshore's analysis of the evidence as 'correctly undertaken and reasoned'. In that regard, exhibited to Mr O'Shanassy's affidavit was a table of gross revenues headed 'Oxford Square Medical Centre RX Summaries', which showed that the revenue figures of the OSMC for February 2001 to June 2001 and through to August 2001, were for each of those months $97,423, $122,621, $108,961, $124,982, $113,138, $123,706 and $109,748 respectively (it will be recalled that completion of the Business Sale & Purchase Agreement took place on 31 January 2001, having been entered into on 14 December 2000). [Mr Gower] Approximately it appears to be, yes. [Mr Cotman] Then [it] starts to grow quite strongly subsequent to purchase through to August of 2001? [Mr Gower] That's right, the revenue does grow. [Mr Gower] Certainly from March onwards it does, yes. [Mr Cotman] So that we're not looking at winters and we're not looking at peculiar features of the September quarter in relation to the revenue aspect of the equation are we? [Mr Gower] Well, I don't know. These --- I don't know whether there are such features. These figures tend not to indicate it. [Mr Gower] They tend to be reasonably stable. [Mr Gower] That's correct, yes. What was submitted by Idoshore to be exceptional was the post-acquisition expenses and collapse of 'net revenue (after retentions) and other income' of the OSMC. There is force in those Idoshore submissions. For essentially the comprehensive reasons propounded by Idoshore, it is readily apparent that Foundation's attack on the viability of the 'EBITDA Benchmark' as a basis relevantly for measurement failed and must be put aside. 77 Further in the foregoing context of Idoshore's submissions, reference was made thereby to Mr Gower's use of 'CCH Industry Benchmarks'. Idoshore contended that in the second Deloitte report, bearing date 5 February 2007, Mr Phillips explained why the use of CCH Benchmarks by Mr Gower was inappropriate. [Mr Gower] That's correct. [Mr Cotman] And what we are here looking at is a business providing facilities to doctors who conduct medical practices, the business of this operation being the facility-providing? [Mr Gower] That's correct. [Mr Gower] There is a potential doubling up of costs, yes. 78 What was therefore submitted by Idoshore to follow was that Mr Gower's explanation for the so-called 'dramatic reversal in Foundation's EBITDA calculations for 2002, 2003 and 2004 --- being that the original $250,000 Benchmark was set too high --- must fail', and that the reasons advanced by Foundation for the conclusion that the September quarter involved a 'spike' were 'recanted by Mr Gower', and yet further that his purported comparison with the CCH Benchmark 'was wholly inapt'. In my opinion, so much is clearly demonstrated by the thrust of those Idoshore submissions, which were made upon the basis of material which I have summarised. 79 Accordingly it was submitted by Idoshore, upon the basis of evidentiary material it addressed, that 'the only logical alternative explanations' were first, that 'the figures have been made up by Foundation', or secondly 'that something material happened in the business after about July 2002 which caused the 2002, 2003 and 2004 EBITDA calculations to fall dramatically in Foundation's favour', and thirdly that '[g]iving Foundation the benefit of the doubt [on that first proposition], in the absence of any probative explanation from Foundation, the Court can [and should] more readily draw the inference' inherent in that second proposition'. Those were formidable submissions. Upon the footing of the material I have reviewed, and in particular Foundation's resort to purported reliance upon non-arm's length expenditure, it suffices for me in all such circumstances to uphold the validity of the second proposition. It was stipulated that such Facilities and Services Contract was to be in force for a term of three years commencing from the purported date of its execution on 15 November 2000. The consideration for the formation of that contract was a so-called 'key man payment' to be made to Dr Fox of $70,000. That arrangement was described in Idoshore's submissions as involving 'a deal similar as that made with Dr Grech'. 81 Sometime shortly after 15 May 2001, Foundation notified Mr O'Shanassy that unless Dr Fox 'receives a key man payment then he may reconsider his position at Oxford Square medical and go elsewhere to practice medicine'. That information was conveyed to Mr O'Shanassy by Dr Ken Jones on behalf of Foundation. In relation to Dr Grech's departure from the Medical Centre in November 2001, Dr Ken Jones was said by Mr O'Shanassy to have added the assurance that 'Foundation will use its medical industry connections to find a suitable replacement for Dr Grech and we [Foundation] are still committed to relocate Oxford Square medical --- the developer of the CBA site will give us a response in June [2001]'. Dr Grech was of course one of the seven general practitioners falling within the definition of 'GP' in the Business Sale & Purchase Agreement, as was Dr Fox. Dr Grech had given notice in writing, four days earlier on 11 May 2001, of his resignation '... as Medical Practitioner and as Medical Director for Idoshore... to take effect by 11 November 2001...'. The so-called 'CBA site' comprised Commonwealth Bank premises located on the corner of Oxford and Crown Streets Darlinghurst, to which consideration was by then apparently being given for relocation of the OSMC operations. Mr O'Shanassy described those premises as '... ideal for a multi-faced medical centre'. 82 Shortly thereafter on or about 17 May 2001, Mr O'Shanassy attended a meeting at the offices of Foundation with Dr Ken Jones of Foundation and Drs Fox and Gesovic of the OSMC, in the course of which Dr Jones was said by Mr O'Shanassy to have stated to Dr Fox, in response to Dr Fox's assertion in the nature of an ultimatum thereupon made, that he could get a $250,000 key man payment elsewhere. Dr Jones was said to have responded by stating that 'Foundation will agree to pay you a further $250,000 provided your contract is extended by another couple of years'. [Dr Jones]: Look, we need to keep doctors like Fox happy, we will all benefit from his continued involvement at Oxford Square medical. I propose that the funds necessary for the proposed key man payment should come out of Idoshore's Warranty Deposit. [Dr Jones]: I would prefer not to have to go back to head office [Perth] for these additional funds --- it will be time-consuming and potentially create problems. When we relocate the medical centre to larger premises and you get a second Earn Up this will more than justify this contribution. The alternative is that Dr Fox leaves and the turnover for Oxford Square medical will be adversely affected. [Mr O'Shanassy]: You have me between a rock and a hard place. So that there can be no misunderstanding, you are assuring me that as far as Foundation is concerned you are in agreement that Oxford Square medical can relocate to larger premises. [Dr Jones]: Yes that's correct --- I understand there are a couple of prime property development opportunities coming up in Darlinghurst. [Mr O'Shanassy]: Based upon your assurances I will reluctantly agree to using the Warranty Deposit monies to pay Dr Fox a further key man payment on one proviso --- that 50% of the money used from Idoshore's Warranty Deposit be treated as a loan to Foundation and repayable within 12 months. [Dr Gesovic]: This deal of Dr Fox needs to be kept strictly confidential, otherwise every other doctor at Oxford Square medical will be seeking key man payments. The reference made, in the conversation in the preceding paragraph, to " prime development opportunities in Darlinghurst " I understood to mean at least the CBA site on the corner of Oxford & Crown streets Darlinghurst. 84. There had been no forewarning concerning Dr Grech's resignation on 11 May 2001, and this event gave a greater importance to ensuring that Dr Fox continued to practice at Oxford Square medical. In other words, any resistance I had, in relation to Dr Fox getting an additional $250,000 key man payment, was influenced by the fact that Oxford Square medical could potentially lose both Dr Grech and Dr Fox who accounted for about 40% of the patient billings income. If there had not been an assurance that Oxford Square medical would be relocating, or in default of relocation, expanding to occupy level 1 of the Premises, I would never have agreed to fund the key man payment out of the Warranty Deposit. The relocation was significant because it would have resulted in the ability to grow the business and achieve economies of scale. This in turn would have led to a payment under the second earn up provisions of the [Business Sale & Purchase] Agreement. The latter two sentences above were treated by the Court as being the nature of a submission and not of expert testimony. Dr Fox was not a party to that Deed of Variation. On 12 December 2000 the parties entered into a Business Sale and Purchase Agreement ("Agreement") whereby the Purchaser purchased the business of the Vendor as therein defined. B. A term of the Agreement was that the Purchaser lodge a warranty security deposit being 20% of the Purchase Price on Completion, 20% of the first Adjustment Purchase Price and 20% of the Second Adjustment Purchase Price. C. The parties have agreed to utilise the funds in the warranty security deposit as hereinafter described and for that purpose the Agreement is amended on the terms described below. 2.2 The choice of a Contracting Medical Practitioner to whom payments may be made is subject to mutual agreement between the Vendor and the Purchaser. The Vendor may not make any representations that the Purchaser will enter into an agreement with a medical practitioner without the Purchaser's written approval. Subject to clause 3.9 of the Agreement, the Purchaser may enter into such contracts with a medical practitioner in connection with the Business without utilising any funds comprising the Warranty Security Deposit. (b) The Vendor and the Purchaser will be equally responsible for the payment of such agreed amount. The Vendor and the Purchaser's share (including their reasonable legal fees incurred in connection with the preparation, negotiation and finalisation of this Deed and a Facilities and Services Contract with a Contracting Medical Practitioner) may be satisfied by drawing from the Warranty Security Deposit. If either party wishes to increase the amount payable to a medical practitioner beyond the amount mutually agreed then that party may do so but has no recourse against the other party in respect of any amount paid in excess of the agreed share. (c) Any payment made to a Contracting Medical Practitioner pursuant to this Deed (including the parties reasonable legal fees contemplated in clause 2.3(b) above) will be treated as a capital payment and amortised and depreciated over 7.5 years from the date of payment. ... . Pursuant to clause 3.2, we hereby instruct your firm, as the purchasers solicitor, to draw down the amount of $210,000 from the Warranty Security Deposit. This money is to be used by Foundation in accordance with the Facilities and Service Contract between Foundation and Dr David Fox. (We have not specified the total amount presently held (approx $223,000) in light of legitimate legal expenses which will need to be met from the Warranty Security Deposit monies in the near future). There is force in Idoshore's submission that the consideration for and purpose of the payment of the $210,000 failed, and that the totality of those warranty retention moneys should be returned to Idoshore beneficially. There is no evidence before the Court that challenges at least the substance of Mr O'Shanassy's account of the circumstances regarding the drawing down of the Warranty Security Deposit to pay 'one half of the sum demanded by Dr Fox'. No claim has been advanced in the proceedings referrable to sub-clauses (b) and consequentially (d) of clause 3.3, because there has not taken place any relocation of the 'Business'. The provisions of pars (a) and (c) have been of course characterised by reference to the shorthand expression 'first earn-up', as I have already mentioned. 89 Idoshore's quantification of entitlement to first earn-up depends upon my resolution in the first place of the issues raised by Idoshore concerning the costs and expenses of a non-arm's length nature which Foundation has sought to attribute to its operation of the subject 'Business' (of course as defined by the Agreement) in respect of the first year's operation thereof by Foundation following upon 'Completion' (again as defined) of the Agreement. Given the reasons and conclusions I have given as to Foundation's breach of clause 3.9 referrable to Foundation's effectuation of 'material changes', it follows that Idoshore is entitled in principle to payment of moneys by way of an 'earn-up' at least on that basis. There remains however for determination Idoshore's calculations as to its first earnt-up entitlement, which were submitted to the Court for consideration and concerning which Foundation has not seemingly provided detailed submissions. As has been earlier set out in the text of the Agreement which I have earlier reproduced, the Agreement stipulated for the '1 st Adjustment to Purchase Price', to take effect as at 'twelve (12) months from the Completion Date', to equal '4.5 x (year one (1) EBITDA [minus] EBITDA Benchmark)', where that benchmark amounted to $250,000.00 and the 'Year one (1) EBITDA' related to '... the period commencing from the Completion Date to the 1 st Adjustment Date'. 'Relocation' for the purposes of clause 3.3(b) never of course occurred at any material time or at all. Thus the foreshadowed ultimate objective of the arrangement, upon the footing whereof payment was agreed by Idoshore to be made on its part, at the request of Foundation, never eventuated. 92 Idoshore asserted that instructions 7 and 8 of Schedule 7.1 and 7.2 of Phillips' final report are 'directed to repairing the Foundation/Gower account to arrive at the true EBITDA figure' for what Idoshore termed 'the First Earn Up'. As previously outlined, Idoshore contended that the aforementioned report suggested that the figures provided by Mr O'Shanassy purportedly demonstrated a growth trend for the 'Business' at least up to 30 June 2002, being calculated by Mr Phillips. Foundation's due diligence report commissioned in the context of its negotiations with Idoshore to acquire the OSMC recorded that 'there would be a need to secure agreements, [for a] minimum of 3 years, with the 2 principal general practitioners currently practicing at the medical centre', referring thereby to Drs Grech and Fox, and to the OSMC. ... . 97 It was subsequently on 11 May 2001, as I earlier foreshadowed, that Dr Grech gave his controversial six months' notice of resignation from the OSMC, with a departure date consequentially from the OSMC of 11 November 2001. It will be recalled that the Business Sale & Purchase Agreement had been completed earlier on 31 January 2001. On 15 September 2001, Dr Grech purported to bring forward the date for his departure from the OSMC from 11 November 2001 to 21 September 2001, thus not serving the period of time the subject of his earlier six months' notice, so Idoshore further recorded. 98 Idoshore raised the Dr Grech departure issue with Foundation by letter dated 17 September 2001, and further by letter dated 18 September 2001, but Foundation was said to have declined to cause to be taken any appropriate action against Dr Grech, whether explicitly or implicitly on its part. Furthermore, Dr Grech took up new medical practice on his own account within a two kilometre radius of the OSMC, in circumstances further said by Idoshore to constitute breach of his contractual obligations. Foundation's inactivity in that regard constituted a subject of complaint on Idoshore's part in the proceedings. I would mention in passing that an order for specific performance of an employment contract is not obtainable by an employer against an employee (see Meagher R, Heydon D, Leeming M, Equity Doctrines & Remedies (4 th ed, Butterworths, 2002) at [20-055]), but of course an action for damages at common law is an available remedy for an employer against an employee for breach of an employment contract. Proof of damage actually sustained would have been conceivably open to establishment, though the conceptual practicalities of any such proof may well have presented as an imponderable if not largely unrewarding course to be undertaken in terms of outcome. 99 The Deloitte report (made of course by Mr Phillips on Idoshore's instructions) calculated the loss sustained by the OSMC as a consequence of cessation of the benefit of Dr Grech's patient billings for 44 working days, being billing days said to have been lost by his early departure, and of the on-going loss to the OSMC occasioned by the absence of replacement by the OSMC of Dr Grech with a qualified general medical practitioner of similar professional capacity. That calculation of loss was put at $22,394 upon the basis of 44 working days denied to the OSMC, and a calculation allowing for 'Clinician retention (50% of billings)' referable to Dr Grech's average daily billing for the period from 1 February 2001 to 24 June 2001. Moreover the Deloitte report calculated a so-called 'Annual impact on OSMC' of $122,151 in respect of the period of time from 1 February 2001 to 24 June 2001 comprising 102 working days and allowing once more for the same pro rata as to so-called 'Clinician retention'. 100 In the compilations of those monetary claims, Idoshore asserted that there was 'no doubt' that Dr Grech's departure constituted or effected a material change to the operations of the OSMC. I was referred in that regard to Foundation's identification of him as one of the two so-called 'key men' employed at the OSMC. It will be recalled that Dr Grech's relationship with Idoshore commenced with the merger of his two Kings Cross practices with the OSMC back in August 1999, upon the contractual footing of a restraint of trade of two years and within a two kilometre radius of the OSMC was obtained from him. 101 Idoshore appeared to accept that the clinical retention assumed by Deloitte in its calculations of 50 percent should have been 60 percent. The foregoing calculations purportedly extend to general damages for breach of the warranties and representations made collaterally to the formation of the Business Sale & Purchase Agreement and therefore to claims extending beyond the scope of operation of the Agreement and clause 3.9 thereof in particular. Moreover the calculations apparently encompass the Dr Grech issue, assuming its resolution in favour of Idoshore, contrary to my finding on that issue. It suffices for me presently to place the foregoing calculations on record, but given my findings in relation to Idoshore's more limited entitlement to damages confined to breach of clause 3.9 of the Agreement and not more broadly as it were for breach of representations and warranties collaterally made to the formation of the Agreement, and as to exclusion of Idoshore's entitlement in relation to Dr Grech, it becomes necessary for general damages to be assessed on a more restricted approach to calculation. It will be recalled in that regard that the 'Completion Date' for the Business Sale & Purchase Agreement was stipulated to be 31 January 2001. However, the first earn-up provisions of clause 3.3(a) did not crystallise in operation until one year from Completion, and thus on 31 January 2002. Alternatively Foundation contended, as I foreshadowed earlier in these reasons, that if those pleaded representations and warranties were found to have been made, the same were not promissory in nature or otherwise did not go to the root of the contract, and were not representations as to future matters within s 51A of the Trade Practices Act . In any event those representations were said to be such that Foundation had reasonably sufficient grounds for making the same. By way of cross-claim, Foundation sought damages for non-fulfilment of the warranties on Idoshore's part the subject of pars (n) and (p) of clause 10.1 of the Business Sale & Purchase Agreement (extracted of course earlier in these reasons), and did so purportedly in the light of clause 10.2 thereof concerning 'imputed reliance'. It was Foundation's further case the subject of the cross-claim that such damages were required to be assessed in Foundation's favour by reference to 'the difference between the [maintainable] $250,000 'EBITDA Benchmark' (as defined) and the actual EBITDA for [each of] the three years following the completion date', in the latter case of course asserted to have been experienced adversely by Foundation. Emphasis was placed in that regard on Mr O'Shanassy's qualification as a lawyer as well as an experienced businessman 'holding an MBA', and what he therefore should be taken to have appreciated in terms of significance or otherwise as to what was, and conversely was not, including ultimately within the text of the Business Sale & Purchase Agreement. I have already acknowledged the force of an emphasis broadly stated thereby made by Foundation to that effect. 112 Foundation summarised its case to the effect that 'the representations' relied upon by Idoshore in the present proceedings 'do not form any part of the [Business Sale & Purchase Agreement], nor is there any reference in the Agreement to reliance or any representations', and further in that regard that the Agreement contained '... none of the collateral warranties alleged nor any hint of their existence either'. So much was correct, as I have already postulated. Furthermore in that context, Foundation pointed to that warranty as 'clear evidence that the parties appreciated there was a potential for the [EBITDA] Benchmark not to be met', that benchmark being defined by the Agreement, it will be recalled, as 'the maintainable EBITDA of the Business which has been agreed by the parties to be $250,000.00'. It was further pointed out by Foundation in that context moreover that the Agreement was 'silent as to any reciprocal guarantee on the part of Foundation', though in that regard of course the agreement and acknowledgment of Foundation the subject respectively of clauses 3.9 and 3.10 need nevertheless be kept in mind; in relation to clause 3.10, I observe that the same speaks of the intention, though not the representation or promise of Foundation 'to grow and expand the Business'. 115 In any event, so Foundation's submissions continued, any representation to the effect that Foundation would work to grow the Business was asserted to have been made 'on reasonable grounds', Foundation emphasising that '... given Foundation's ongoing operation as a large public company operating many medical centres, [then] without direct proof of intention on the part of Foundation not to meet the Benchmark, the reasonable grounds are established', and further that '[i]t is not sufficient that matters represented may have been subject to a change of mind'. Foundation referred in that regard to dictum in James v Australia And New Zealand Banking Group Ltd and Others (1986) 64 ALR 347 at 372 where Toohey J drew attention to principles to the effect that '[t] he mere fact that representations as to future conduct or events do not come to pass does not make them misleading or deceptive', though further that '[n]evertheless, a statement relating to the future may contain an implied statement as to present or past fact [and] may represent impliedly that the promisor has a present intention to make good the promise and it may represent impliedly that he has the means to do so' . Of course so much often depends upon the context to and the subject matter of a representation, but in any event Foundation submitted that the decision 'relating to relocation' was inherently of that general character. 116 In addressing the 'primary objective' theme of clause 3.9 of the Business Sale & Purchase Agreement, that clause being the provision of the Agreement per se upon which Idoshore of course placed significant reliance, Foundation asserted that 'an objective' was to be distinguished from a guarantee or warranty and that clause 3.9 was 'couched in appropriate terms as an objective'. It was further contended that if the purpose of the clause was to provide a guarantee or warranty 'it would have been phrased in definitive terms'. Achievement of growth as such, without nomination or specification for instance of a minimum or maximum standard or parameters for the growth, carries somewhat imponderable implications of difficulty in a contractual setting such as clause 3.9. In any event that clause has significance independently concerning the making by Foundation of 'any material changes' without consultation or consent. 117 As to the operation of clause 3.10 of the Business Sale & Purchase Agreement, which records the unspecific themes as to Foundation's stated intention '... to grow and expand the Business and, subject to clause 3.9, [not to] impede the Purchaser', Foundation submitted that the same constituted a 'motherhood' statement, since '[n]o purchaser would pay $1.125 million dollars for a business without intending to grow and expand it'. Nevertheless contractual significance should be assigned to that contractual acknowledgment, however confined in scope it may be. Foundation submitted further those contractual passages were not to be interpreted as saying that 'performance can be expected to automatically continue at existing levels or outstrip them'. Foundation was already engaged of course in business operations similar to, though apparently much more substantial than, those conducted by Idoshore at the OSMC at the time the Agreement was formed. 118 As to the claim of Idoshore that significantly increased costs in relation to the management of the OSMC, termed by Idoshore as 'load up', at least contributed to the failure of the business conducted at the OSMC to meet the EBITDA Benchmark, Foundation sought to explain that '... changes in the cost structure within OSMC' were 'not shown by [Idoshore] to be costs that could have been avoided or costs that Mr O'Shanassy with his experience would not have anticipated'. So much would depend of course, in the context of debate of that issue, as to what costs or categories of costs were the subject of scrutiny, and whether such costs were outlaid at arm's length. Nevertheless it may be said that Idoshore's essential post 'Completion' complaint was necessarily based on what it contended to be an unexplained trend downwards of significant proportion, such that an evidentiary onus passed inherently or reasonably to Foundation, especially where that trend occurred in non-arm's length circumstances. Foundation submitted that '... it is not clear from [Idoshore's] case what are the adverse changes as opposed to disappointing results on which [Idoshore] bases its case', but I do not think that the submission is correct, or at least substantially so. It was further pointed out by Foundation that the OSMC operations, in the period of time following the so-called 'exchange of ownership', were 'effectively overseen on behalf of Idoshore by Dr Gesovic', who was asserted to have 'not only remained in regular contact both with the doctors of the OSMC through the first year [of Idoshore's operation of the OSMC], but also [with] Mr O'Shanassy', thereby providing Idoshore with so-called feed back. Whether those latter factors would have ensured or contributed to ensuring the confinement by Foundation of its costs of operation of the OSMC, at least to the extent that the same became controversial or otherwise not reasonably or appropriately comparable to pre-purchase circumstances, is another matter. Foundation cited Mr O'Shanassy's testimony that although Dr Gesovic reported back 'on an infrequent but regular basis...', he conceded that 'I'm sure if there were things that were taking place that would [be] adverse to our interests [Gesovic] would let me know'. 119 It was contended by Foundation furthermore that Mr O'Shanassy '... did not see issues of staffing as constituting [the] organisational structure, operations and strategic direction [of the Business or the Centre] as envisaged... in clause 3.9'. Foundation drew attention in that context to '... the unexplained failure of [Idoshore] to call evidence from Dr Gesovic', who as I earlier recorded remained employed at the OSMC after 'Completion' of the Agreement and until February 2002. Presumably it would have been equally open to Foundation to have adduced evidence from Dr Gesovic as to circumstances relevantly prevailing during even the initial period of time of Foundation's operation of the OSMC business activities, given that it was Foundation who had by then formed a working relationship with Dr Gesovic at the OSMC. 120 Specifically as to the departure of Dr Grech from his professional working association with the OSMC, Mr O'Shanassy was said by Foundation to have been in fact consulted 'in relation to the loss of Dr Grech' and to the demand for an increase in 'keyman' medical assistance. Foundation submitted broadly that those matters involved 'service contracts with doctors where decisions were required to be made in relation to questions of goodwill and commercial benefit in pursuing a doctor for a limited period of service'. Foundation rejected the notion that such matters so encountered concerned 'adverse changes' for which Foundation was responsible. The critical point of controversy remains however whether whatever 'changes' were so involved constituted 'material changes' of the nature and scope falling within clause 3.9, yet were made without consultation or consent. 121 As to the complaint raised by Idoshore concerning the 'management, corporate overhead and group tax costs being brought to the balance sheet... in contravention of clause 3.9' of the Business Sale & Purchase Agreement, Foundation characterised the same as 'unfounded', pointing out thereby that '[t]he trade-offs provided by economy of scale, as noted in Mr Gower's report and the evidence of Ms Kennedy [Foundation's chief financial officer and company secretary who testified in the proceedings] have to be taken into account'. I would observe that much would depend upon whether the relevant changes were 'material... to the organisational structure, operations and strategic direction of the Business or the Centre' within clause 3.9 of the Agreement. Foundation emphasised that '... changes [are] unavoidable when a large public company takes over a comparatively small medical centre', and moreover that any such matters 'if they were to be covered by clause 3.9 should have been [spelt out] in unambiguous terms', but I do not think that there has been any ambiguity relevantly involved in those submissions of Idoshore which I have acknowledged to have significant force, such as in the case of quantification of non-arm's length expenditure incurred after 'Completion' by Foundation. 122 It was next submitted by Foundation that the clause 3.9 expression '... organisational structure, operations and strategic direction [of the Business]' referred to 'major aspects and not general staffing issues and day to day running of the medical centre', and further that '[t]he only word that could conceivably refer to day to day running' of 'operations' must be 'read in its context in clause 3.9 as referring to the services to be provided in terms of specialists and major changes to things such as opening hours, advertising and matters of general strategy'. However it is difficult to follow why the scope of the expression at least of 'operations', if not also of 'organisational structure', in the context of clause 3.9, would not have included reference for instance to 'general staffing issues', or any other issues involving monetary outgoings or commitments at least of significance and relevance to the operational overheads of 'the Business or the Centre' for the time being. In the context of the decline in business income of relative significance which occurred subsequent to the Foundation takeover, a stage could conceivably be reached in principle and reality whereby it might rightly be said that a downturn in or loss of revenue inherently involved such significance as to indicate prima facie default relevantly of Foundation in compliance with clause 3.9 to an extent 'material', in the absence of some rational or cogent explanation. Foundation argued further that Idoshore's '[a]ssertions of unintended passive behaviour are unsubstantiated and even if proved cannot constitute an active attempt to thwart [Idoshore's] ability to secure "earn-ups"' within clause 3.3; as I have already indicated, so much puts the requisite test for contravention of clause 3.9 too high. 124 It was further submitted by Foundation that Idoshore had not shown that '... there was an adverse change and a deliberate intention on the part of [Foundation] not to grow EBITDA', and further that it was 'incumbent' on Idoshore to demonstrate such an intention, neither of which propositions Idoshore was said to have addressed, or addressed adequately, by way of evidence concerning '... what took place 7 years ago'. Or as Foundation emphasised in the same context, 'there is no evidence that would establish any intent on the part of Foundation to limit the growth of OSMC's business'. Aside from the non-arm's length outgoings incurred by Foundation, I think that the need for Idoshore to establish an intent on Foundation's part to infringe the operation of clause 3.9, whether or not contextually to the operation of clause 3.10, puts the requisite test again too high. Breach of contract does not normally of course require necessarily the presence of an element of intention of the party in alleged default in order for a breach to be established, and I am unable to accept that any such requirement would be here required in relation to the operation of clause 3.9. 125 Addressing the issue of reliance on Idoshore's part upon the representations of Foundation, referring thereby to the alleged representations made by Foundation collaterally to the formation of the Business Sale & Purchase Agreement, it was disputed by Foundation that any such factor had been established. Foundation asserted, somewhat repetitively, in relation to Mr O'Shanassy's decision to enter into the Business Sale & Purchase Agreement, that '... an astute and experienced businessman with legal training would be expected to protect his position by having the representations claimed to be relied upon committed to the contract document, particularly when it was [Idoshore] who was providing details of earnings and warranting that the EBITDA would not fall below ninety percent'. As I have foreshadowed, there is force in that Foundation response, so far as those collateral representations (or warranties) were not reflected in explicit terms or conditions of the Agreement. 126 Foundation contended further that Idoshore's evidence (per medium of Mr O'Shanassy) as to reliance on the representations of Foundation alleged, was in any event 'limited'. After referring to conversational material involving Dr Jones and Mr O'Shanassy, deposed to by Mr O'Shanassy, Foundation submitted that the Court should find in any event that the representations alleged constituted 'negotiation and/or puffery in a negotiating context', rather than amounting to 'representations', being related to 'the financial strength of Foundation and its ability to expand businesses through access to capital', being matters said by Foundation to be 'not largely in dispute'. The Court ruled against the admissibility of certain purported reliance evidence the subject of par 59 of Mr O'Shanassy's affidavit sworn on 20 February 2006, and Foundation pointed out in that regard that 'no further evidence was adduced in relation thereto'. Foundation further contended that the representations upon which Idoshore relied were '... largely borne out in explicit terms in the [Business Sale & Purchase] Agreement in any event', and yet further that '... it should only be those explicit terms relied upon, and not other assertions that [Idoshore], through Mr O'Shanassy, was induced to enter into the contract on the basis of representations or collateral warranties outside the entire contract'. As I have already indicated, there is inherent force in what was that repetitive theme of Foundation's submissions, which I have only recorded for completeness. 127 Foundation next submitted, in relation to its description of 'Alleged Breaches', that for Idoshore to assert that Mr O'Shanassy was 'induced' to commit Idoshore to the Business Sale & Purchase Agreement '... [was] to put a colour on Mr O'Shanassy's evidence'. Foundation referred in that regard to Mr O'Shanassy's affidavit evidence appearing in particular from pars 40 to 47 thereof under the heading 'Negotiations to sell Oxford Square medical', which deposed largely to conversations said to have occurred between himself and Mr Meehan during August and September 2000. The significance which Foundation purportedly ascribed to that affidavit evidence was that '[r]ather than Mr O'Shanassy being "induced" [by Mr Meehan], the conversations attested to indicate a strong negotiating position undertaken by Mr O'Shanassy'. Whilst I think that submission was somewhat of an overstatement on Foundation's part, I have already indicated in any event my juridical difficulty with Idoshore's case, to the extent that it placed reliance upon oral warranties and representations concerning the OSMC 'Business' allegedly made collaterally to the formation of the Agreement. 128 Foundation drew attention to the further circumstances that the evidence disclosed that the '... parties continued to consult in relation to the operation of the OSMC throughout the first and into the second year' of operation of the Agreement, and that whilst Idoshore had advanced submissions concerning the '... costs of management, corporate overheads and group tax, those sums have to be seen in what is acknowledged [by Idoshore]... as a growth trend in revenue from July 2000 through to at least June 2002'. Foundation submitted further in that context that '[t]he difficulty remains for [Idoshore] is that it continues to use pejorative and exaggerated terms such as "sacrifice income sources" and "sheer ineptitude or laziness"..., but does not provide any substantiation for such... accusations'. I think that I have already said enough in these reasons appertaining to the matters the subject of those submissions. 129 Foundation emphasised that '... difficulties were experienced in retaining doctors, specifically Dr Grech but also Dr Fox who demanded further keyman money', and further that '... the specialists who, through the auspices of Mr O'Shanassy, only signed up for twelve month lease terms... did not renew', but did not relate those incidents, which of course I have earlier addressed, in any way specifically to Foundation's post-completion conduct of the Business the subject of Idoshore's complaints. According to the testimony of Foundation's witness Ms Kennedy, the OSMC doctors were 'disinclined to refer patients to specialists within the Centre, preferring specialists with whom they had existing working arrangements', but that factor was not developed in terms which come sufficiently to issue with Idoshore's case. It was submitted by Foundation in any event that 'it was not surprising that the leases were not renewed', and further that '[t]here is utterly no evidence of any inaction or ineptitude or intention on the part of Foundation to bring those leasing arrangements to a halt nor any evidence that could substantiate any claim that there was anything Foundation could have done to retain those parties'. Certainly it may be acknowledged that no conduct relevantly of Foundation has been cogently shown to have contributed materially to the unfortunate departures of Drs Grech and/or Fox from the OSMC. 130 Foundation complained generally of Idoshore's use of the words 'materially changing' in relation to 'the organisational structure' of the OSMC, but 'without providing concrete evidence of such action on the part of Foundation, nor pointing specifically [as to] how those changes in the overall flow of income and expenditure reduced the EBITDA'. In that context however, it remains appropriate to keep in mind that EBITDA is defined by the Agreement as '[e]arnings before interest, tax, depreciation and amortisation, determined in accordance with Accounting Standards', and not income and expenditure generally according to their respective general law connotations. Foundation made the further contention that the Court should '... pay no heed to the ludicrous suggestion that a corporate entity [would have]... conducted the financial and business affairs of the business not with [the] primary objective being to ensure that the purchaser achieves EBITDA', that being described as an alleged intention on the part of Foundation as a public company which could 'rarely be inferred and certainly not on the limited evidentiary material available to the Court in these proceedings'. In the context of inter-corporate transactions conducted within a wholly owned corporate group, however there may well be sound reasons to transfer profits or losses. In that context, in any event, Foundation submitted that Idoshore 'has not established a lack of good faith on the part of Foundation', that alleged shortcoming being described by Foundation as '... a point that is critical to [Idoshore's] case', and further that Idoshore was required to '... show a deliberate attempt on the part of [Foundation] to hold back the growth of the business such as to prevent the EBITDA from reaching and sustaining the agreed Benchmark', or '[i]n other words, [Idoshore] must show that [Foundation] did not act in good faith', all of which Idoshore 'has failed to do'. All that may be correct in terms of propositions in the ordinary course, but what falls for critical consideration, aside from the Doctors Fox and Grech issues and the collateral warranty issue, all of which I have separately addressed, is the major issue as to breach or otherwise of clause 3.9 of the Agreement. 131 Foundation then drew attention to what was described as '... [Idoshore's] unsupported assertion that there was an implied contractual obligation on [Foundation's part] to, in effect, keep things the way they were'; the existence of any such implied term, to any extent ultimately relied upon by Idoshore, was rejected by Foundation not unexpectedly, but in any event I do not think that any such issue has realistically survived for close examination. It was asserted by Foundation in any event that Mr O'Shanassy '... knew all along that he was selling to a large public company with different structures from his own', though precisely what were those 'different structures' and the significance relevantly thereof was not particularised in the context of the submission. Foundation further submitted that if Mr O'Shanassy 'had wished to preserve the exact accounting and operating structures [so much] should have been set out in the [Business Sale & Purchase Agreement] which he prepared', though the nature and intended significance relevantly of 'exact accounting and operating structures' was not particularised, whether by way of comparison to those structures actually put in place by Foundation after the acquisition of the OSMC, or otherwise. 132 Foundation emphasised that what it described as the 'implied assertion' of Idoshore, that 'constancy in relation to organisational structure, operations or strategic directions' would have meant that the EBITDA was met, had not been substantiated. However once more, I doubt whether the submission confronts adequately the nub of Idoshore's case, as it ultimately crystallised. Foundation also emphasised that '[a]s in any business, there are too many variables to say with certainty that the EBITDA would have been met in any set of circumstances', and further that, '... there was no guarantee that the EBITDA would have been met had the business not have been sold and Idoshore continued as the proprietor', but once again, the submission did not seem to me to come sufficiently to issue with Idoshore's critical or most critical case as to contravention or otherwise of clause 3.9 of the Agreement. 133 Continuing its submissions by way of emphasis upon the need for Idoshore 'to prove its case', further reference was made by Foundation to 'the role played by Dr Gesovic in relation to the ongoing operation of the OSMC', and to Mr O'Shanassy's evidence that '... in terms of billings OSMC from February 2001 to June 2001 had performed well', and also to his consequential 'remark' that 'the financial results were pleasing'. Foundation drew attention moreover to Mr O'Shanassy's attestation that as at July 2001, he retained confidence that Foundation was a strong and growing company that would carry out its strategic plan. The month of July 2001 was on the other hand of course no more than six months following upon completion of the Business Sale & Purchase Agreement, and I think that Mr O'Shanassy's comment in that regard was seemingly referrable to Foundation generally as a corporate group. Foundation submitted in that further context that there was nothing in Idoshore's evidence adduced in the proceedings that suggested that 'Foundation ever resiled from its desire to continue to grow [the business]', and further that it was '[i]ndeed axiomatic that a public company would pursue that course'; once more the submission ultimately affords insufficient significance to what boil down to the critical evidentiary issues raised by Idoshore. 134 Foundation asserted next that '[t]he departure of Dr Jones and Mr Meehan from the ranks of Foundation is not a matter that goes to the issue in this case', which I would understand to be so, though whether so much dissolves any significance to Foundation's absence of adducement of evidence in particular from Mr Meehan, as the former apparent principal of Foundation, is another matter. Reference was made also to the testimony of Mr O'Shanassy concerning his having stated in August 2001 to Foundation's (by then) new chief executive officer, Mr Ralph Shreeve, that 'the sale of OSMC was predicated on assurances by Meehan and Jones about growing the business "by relocating to larger premises, Idoshore having ongoing involvement, and as a consequence of these things the greater likelihood of further earn-ups payable to Idoshore"'. Foundation accordingly submitted that '[g]iven the involvement of Dr Gesovic throughout this time it is hard to understand exactly what more "ongoing involvement" Mr O'Shanassy expected', and it asserted that '[m]ost tellingly, Mr O'Shanassy in effect acknowledges that at its highest the expectation is "a greater likelihood" rather than an absolute certainty'. 135 It was next maintained by Foundation that Mr O'Shanassy was 'clearly concerned with only relocation and not other aspects of [the] operation', though it was unclear what were definitively those 'other aspects'. As to 'relocation', so Foundation's submissions continued, '... it is clear from the [Business Sale & Purchase Agreement] that there was no obligation on the part of Foundation to move OSMC to larger premises on site or in the immediate locale'. So much I would observe was supported at least by what first appears under the clause 3.3(b) heading '(Relocation and 1 st Adjustment to Purchase Price)', commencing '[h]owever if the Vendor and the Purchaser agree to a Relocation...', and consistently therewith clause 3.3(d) commenced '[i]f the Purchaser and Vendor agree to a Relocation...'; see also clause 10.1(p), which commences 'where the parties do not elect to relocate the Business as contemplated...'. It was submitted by Foundation moreover that Idoshore could 'point to no evidence that would substantiate its apparent claim that moving to larger premises would have automatically increased OSMC's earnings', and also that '[g]iven the difficulties in retaining specialists in [the] existing Centre and the difficulties in retaining Dr Grech and having to pay further money to Dr Fox, moving to larger premises could well have had a countering effect'. Hence perhaps a principal thrust of Idoshore's case was seemingly directed to the objective of at least maintenance of the status quo of operational earnings of the OSMC, in terms of course of EBITDA measurement, whether the OSMC was to be conducted at the existing location of the OSMC or otherwise, and if possible further reward by way of the first 'earn up' provisions of clause 3.3(a). I am unable to draw the inference in any event, for which Foundation seemingly contended, that Idoshore was '... clearly concerned with only relocation and not other aspects of the operation'. 136 As to the subject of moving the OSMC operations from Oxford Square to more expansive premises, Foundation also drew attention to Mr O'Shanassy's affidavit evidence as to having additionally informed Mr Shreeve of Foundation, back in August 2001, that 'I want Foundation to reconsider its position in respect of [the] CBA site and put in an "offer to lease" for these premises'. Upon that basis, it was submitted by Foundation to be 'clear that Mr O'Shanassy was aware that Foundation was reconsidering the question of relocation' completely. Moreover it was pointed out by Foundation that Mr Shreeve 'did not dismiss the prospect of relocation completely' and indeed that he was 'willing to reinstate our expression of interest to lease but we will need to have a close look at the sub-tenancy commitments we have'. Mr O'Shanassy's response was said to suggest 'encouragement', but not support for the assertion that there existed a contractual obligation on the part of Foundation to undertake a relocation, contrary to what Foundation purportedly described as '... now the thrust of [Idoshore's] case'. Foundation characterised that conversation as 'very telling', and pointed out that at no time did Mr O'Shanassy 'express any concern in relation to the operation of [the] OSMC, or a relocation, beyond a hope... that relocating the business would help to make it grow'. Consistently with what I have already recorded from Foundation's submissions, that 'hope' was said by Foundation not to be supported by any 'hard evidence that [growth] would have been [the] inevitable consequence of a relocation', which I think to be per se inevitably correct as a matter of reality in terms of the usual exigencies of business or commercial affair. Again however I do not think that the submission came wholly or sufficiently to critical issue with the way in which the presentation of Idoshore's case ultimately evolved at least in the course of the hearing of the proceedings. 137 Mr O'Shanassy's letter of 30 August 2001 was next said by Foundation not to assist Idoshore, since '[t]he conversation evidence set out in paragraph 98 of Mr O'Shanassy's affidavit', concerning his meeting on 29 August 2001 with Drs Gesovic and Fox and also with Messrs Shreeve and Sloane, did not disclose any 'agreement in principle', nor was it understood by Foundation to the effect that Idoshore now 'pleads as part of its case that a further agreement was reached on 29 August 2001 to definitely relocate the OSMC'. The Court was next referred by Foundation to par 102 of Mr O'Shanassy's affidavit, where he spoke of a telephone conversation on 6 September 2001 with Mr Brett Sloane of Foundation, and in the course of which Mr Sloane was said by Mr O'Shanassy to have indicated that Foundation would not relocate to the so-called 'CBA site'. Mr O'Shanassy testified to having responded that such decision was 'extremely disappointing' and 'contrary to every assurance we have been given', and further, to asking what was Foundation's justification for not relocating, though he did not testify at that time ('quite properly' so Foundation submitted) that there was any contractual obligation on the part of Foundation to relocate. In the overall context therefore, so the evidence was summarised by Foundation, no assurances were made amounting to any representation to the effect that Foundation would 'definitely relocate OSMC'. 138 Returning to the critical focus ultimately on clause 3.9 and its reference to Idoshore's achievement of EBITDA, relevantly of course to the operation of the comprehensive 'earn-up' provisions of clause 3.3 of the Business Sale & Purchase Agreement, the concluding thrust of Foundation's submissions in chief was that '[w]hilst there was much evidence before the Court from the experts as to what may or may not have caused the OSMC not to reach its EBITDA, the fact is it did not', and further that nothing 'contained in the evidence provides a concrete basis for [Idoshore's] claim', and therefore that '[a]bsent proof of a deliberate attempt by [Foundation] to not meet the EBITDA, the Court cannot go to the aid of [Idoshore] for the making of an imperfect bargain'. It was 'equally' postulated by Foundation that 'the Court would not go to the aid of [Foundation] had [Foundation] not included in [the Business Sale & Purchase Agreement] the warranty at clause 10.1(p)', which I have of course earlier extracted, and which commenced 'where the parties do not elect to relocate the Business as contemplated in clause 3.3(d)...'. The formidable obstacle however to Foundation's invocation of clause 10.1(p) by way of cross-claim is whether the non-fulfilment of that sub-clause was occasioned by the conduct of Foundation in contravention of clause 3.9. 139 In any event, Foundation concluded its submissions as to its rejection of Idoshore's principal case to the effect that '[i]n a perfect business world all companies would make profits and continue to grow', but the fact '[t]hat did not happen in the [present] particular case in the first year after the sale transaction... does not justify the applicant's claim in these proceedings'. That submission, however, is predicated also implicitly on Foundation not having occasioned the shortfall, or materially contributed thereto, by its own business conduct involving in particular non-arm's length transactions and transactions otherwise the subject of complaint as I have earlier recorded, being conduct said by Idoshore to have been in contravention of clause 3.9. 140 Foundation's principal defence in summary was that the Court should not find the representations and/or collateral warranties, as alleged or propounded by Idoshore, to have been made by Foundation, nor the alleged breaches of clause 3.9 (or otherwise of the Business Sale & Purchase Agreement) on its part to have been substantiated, and that the Court should accordingly dismiss Idoshore's claims. As I have made clear however, I think that aside from the Drs Fox and Grech issues which I have separately addressed, it is the issue as to breach of clause 3.9 of the Agreement, and its implications in terms of Idoshore's claim for the 'first earn-up' pursuant to clause 3.3(a) of the Agreement that I must address for the purpose of assessment. 141 As to Foundation's cross-claim against Idoshore, Foundation framed the same upon the circumstance allegedly on Foundation's part that the EBITDA was less than 90% of the Benchmark agreed to by the parties and therefore the warranty on the part of Idoshore contained in clause 10.1(n) must apply. The full text of that warranty has been of course earlier extracted. Foundation asserted that the Court should '... deal with the specific and that is the readily quantifiable loss being the difference between the Benchmark EBITDA and the actual EBITDA for the three years post sale'. In the premises, 6(b) and (c) above constituted breaches of the warranties and express conditions of the Agreement at the hands of the Cross-Respondent. I will merely record those submissions for completeness, though I do not think that I need to have recourse thereto for the purpose of supporting such views and conclusions I have reached in these reasons concerning the meaning and operation of the Agreement. In my view this is in these days the expected standard, and anything less is contrary to prevailing community expectations. It depends upon its interpretation in the wide sense; not the mere construction of the language in which it is expressed, but the extraction from the documents and the circumstances to which they refer and in which they were made of the full intention which the parties had or are to be considered as having with reference to the question now arising from the events that have occurred' (that emphasis appearing in the foregoing dictum was that of Dixon J). Meagher JA reached the same outcome in decision-making, upon the operation of the contractual material addressed, as did Priestly and Handley JJA, though (at 275) his Honour rejected the notion '... that reasonableness could be imported as a limitation on the existence of cl 44 powers...' , upon the basis that '[s]uch a limitation, if it existed, could only arise either from the express words of the contract or by way of an implied term' . That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP and the purpose and object of the transaction. As I have foreshadowed, at the time of formation of the Agreement, Foundation was already itself engaged extensively in the operation of business activities of that general description, though on a much larger scale than Idoshore. 149 As I have earlier indicated, substantial controversy lay especially in relation to subparagraphs (a) and (b) above, given that the parties committed themselves, following upon the conclusion of their negotiations, to comprehensively framed documentation in the form of the Business Sale & Purchase Agreement, the text of which was at least finalised, as a matter of implication, between the parties' legal representatives on their respective behalves. For that reason, those matters must be discarded as not justiciable for reasons I have earlier explained in detail. Idoshore proceeded to submit, in the context however of the remaining issues, that '[t]aken together, it is quite plain that the parties' intention was not [directed] to a contract whereby [Foundation] could passively allow revenue to be lost and was not one which contemplated loading additional costs to the business and thus to the EBITDA calculations, [and further that] the reliance [of Foundation] on the absence of any express requirement not to do these things... would entirely defeat the efficacy of the Purchase Price adjustments' (referring apparently thereby principally to clause 3.3 of the Agreement). Rather, so the Idoshore submissions continued, '... by referencing the Purchase Price to an EBITDA Benchmark, and by the Earn-Up provisions, the parties contemplated a continuing contractual relationship, and positive obligations on [Foundation] in this regard'. It seems to me that the 'positive obligation', relevantly to the present dispute, was indeed clause 3.9 of the Agreement. 150 A further emphasis of Idoshore's case in purported reply was that Foundation had been 'unable to offer any good explanation for the introduction of large cost items', such as 'wage costs, on-costs of employment and management fees', following upon completion of the Business Sale & Purchase Agreement, despite Foundation's assumption of control of the subject Business (as of course comprehensively defined by the Agreement) on the one hand, yet the sustaining by Foundation of 'loss of revenue from key income sources' on the other hand, which costs and losses were alleged by Idoshore to have caused or substantially caused 'a post-acquisition EBITDA calculation that was lower than the EBITDA Benchmark' of $250,000. That Idoshore submission in reply was advanced in the context of Idoshore's complaint that no explanation or satisfactory explanation was provided, much less demonstrated, by or on the part of Foundation in relation to changes of significance, made after 'Completion' of the Agreement, in the operation of the OSMC, being changes having consequences as to downturn in levels of EBITDA experienced following upon 'Completion' of the Agreement on 31 January 2001. The response of Foundation by way of amended defence and amended cross-claim was filed on the first day of the hearing of the proceedings. The substantial amendments made on 21 March 2006 to the original pleadings, followed by the nature and extent of the submissions presented by Idoshore to the Court on 29 March 2007, exemplified the difficulties experienced by Idoshore in framing comprehensively its various causes of action which it has sought to pursue. I should perhaps repeat what I have indicated at the commencement of these reasons that my references throughout to 'Foundation' have extended as a matter of drafting convenience to either or both respondents, according to the context, though for the most part it has been the first Foundation respondent involved at least more directly in the relevant transactions and conduct otherwise, the second Foundation respondent being a guarantor relevantly of the first Foundation respondent's contractual obligations. As I have also indicated at the outset, and consistently with the submissions and the pleadings, I have maintained reference to the Foundation designation of the respondents in these reasons, despite their recent changes of name involving the omission of reference to 'Foundation'. 152 The persons who provided testimony at the hearing on behalf of Idoshore were Mr O'Shanassy and Idoshore's expert accountancy witness Mr Phillips of Deloitte, and the persons who provided testimony on behalf of Foundation were Ms Kennedy, being Foundation's chief financial officer, Mr Gower, being Foundation's expert accountancy witness, and Ms Salagiannis, being the business manager/director in the employ of the second Foundation respondent since mid 2000. The evident major decision-maker of Foundation at the material times, being Mr Meehan, did not testify in the proceedings. As I have earlier recorded, he ceased at least his managerial association with Foundation prior to the hearing of the proceedings. The principal witness in the proceedings for Idoshore, being Mr O'Shanassy, was the only witness whose testimony related to the entire scope of the circumstances addressed by the evidence tendered in the proceedings. Although Ms Salagiannis of Foundation had assumed the apparent role of supervision of the operations of the OSMC at least by February 2001, that was only a 'part-time role'. She testified unspecifically as to the absence of '... change in the staffing levels' at the OSMC 'over the period from 2001 to 2002', and the detail and implications otherwise of her description of 'staffing levels' were not detailed. There was a discernible absence of comprehensive documentary material placed in evidence sourced or otherwise emanating from Foundation and relating to what I have recorded in these reasons under the heading 'Events subsequent to completion of the Business Sale & Purchase Agreement --- adjustments to EBITDA circumstances and calculations made post-acquisition at the instance of Foundation --- submissions of Idoshore concerning significance as to fall in revenues subsequent to Foundation's takeover of operation of the OSMC'. That was particularly the case in relation to the nature, scope and commercial significance of the apparently non-arm's length transactions internally to the Foundation corporate group, which Idoshore has identified as causative of Foundation's purported absence of at least an increase in performance since 'Completion' of the Business Sale & Purchase Agreement. 153 The hearing of the testimonial evidence in the proceedings commenced on 12 March 2007 and concluded on 15 March 2007. On 16 March 2007 there took place a brief hearing in Court for the purpose of setting the agenda for the provision of the written submissions of the parties. As foreshadowed, those written submissions subsequently provided were comprehensively articulated by counsel for both parties, except in the case of Foundation to the extent I have already indicated, and were not supplemented by oral submissions. I have found it necessary or appropriate to reproduce much of the text or the effect of the text of the respective submissions of the parties because of the complexity of the issues arising as well as the wide ranging evidentiary material placed before the Court, and also the implications of the submissions of the parties. I have frequently used the actual words and expressions used by counsel in the course of submissions and thus place the same in order to reflect contextual nuances and matters of emphasis. Similarly, given the central importance of the complex Business Sale & Purchase Agreement, I have found to be appropriate the repeated use of the actual words and expressions of the Agreement, and I have often extracted the full text thereof for identification as well as precision. A number of volumes of documentary material were provided to the Court, though the major proportion of that documentary material placed in evidence was not specifically addressed by either party in the course of the evidence or in concluding submissions. 154 The lengthy and comprehensive affidavit testimony of Mr O'Shanassy addressed extensively the context, as well as certain implications, of relevant aspects of the documentary materials and of events which took place before and subsequently thereto. His testimonial affidavit material alone extended over 54 pages. As I have foreshadowed, I thought that Mr O'Shanassy's oral testimony, in the course of careful and precise cross-examination by counsel for Foundation, reflected a sound, as well as truthful, recall of empirical and otherwise relevant detail of the transactions and their controversial implementation. Generally speaking, Mr O'Shanassy refrained from uninvited embellishment of Idoshore's case, though given the adverse view I have reached as to Idoshore's case based on oral collateral covenants and warranties said to have been made by Foundation antecedently to and by way of inducement of the principal transactions the subject of the Agreement, I have not reproduced much of his testimonial material. Understandably there was reflected in aspects of his oral evidence, which was largely by way of responses in cross-examination, that degree of subjectivity which tends to be inevitable in the testimony of a litigant witness having a pecuniary interest directly and indirectly in the outcome of commercial litigation. I have reached the view nevertheless that his recall of evidentiary detail should be acknowledged and accepted by the Court as at least substantially accurate and credible. As I have already mentioned, his executive counterpart in office at Foundation at the time of material events, being Mr Meehan, did not testify by affidavit or orally in the proceedings. 155 For reasons I have already foreshadowed, I would not assign ultimate significance to Idoshore's evidence, to the extent that it would purport to establish oral warranties and representations asserted to have been made explicitly or implicitly by or on behalf of Foundation antecedently or collaterally to the formation of the Business Sale & Purchase Agreement, and consequently to breaches of any such collateral warranties and representations, whether in terms of provisions of the Trade Practices Act , as has been pleaded, or otherwise. The contents of the complex contractual instrument were settled by and between the respective legal representatives of the respective parties, and addressed by reasonable and necessary implication the entirety of the commercial arrangements objectively put in place between the parties for the purpose of giving effect thereto. As I have already emphasised, although it would have been open to the parties to have stipulated in the Agreement explicitly to the effect that the operation of any collateral warranties and representations extrinsic to the Agreement was excluded, in the formation of the Agreement it did not do so explicitly, nevertheless, the comprehensive and detailed stipulations of the Agreement carried in my opinion an implicit operation to that effect. In other words, the Agreement by implication reasonably and necessarily to be imputed should be construed to have covered the field of the arrangements made relevantly between the parties and in relation to which contractual force and effect alone was mutually intended. Material to the basis for that finding is that each of the corporate parties to the proceedings was legally represented in relation to the preparation and execution of that very comprehensive Agreement. I prefer that approach primarily, although there is force also in Foundation's denial of the operation in any event of s 51A of the Trade Practices Act as to future matters and the contention that such representations did not go to the root of the contract. What therefore falls for principal determination in the proceedings are the causes of action asserted by Idoshore for breach on Foundation's part of that comprehensive Agreement and clause 3.9 thereof in particular, and the consequences of any such contractual breaches in terms of loss and damage allegedly sustained by Idoshore. 156 The operation of clause 3.9 of the Agreement, which must constitute the principal focus of Idoshore's case in terms of contractual breach, unconditionally enjoined Foundation from making 'any material changes to the organisational structure, operations and strategic direction of the Business or the Centre without consulting with and receiving consent' from Idoshore, and did so '... with [the] primary objective to ensure that [Foundation] achieves EBITDA... growth...'. The explicit 'primary objective' of clause 3.9 was 'to ensure that [Foundation] achieves EBITDA...', and in that context, it was mutually agreed in particular that Idoshore, of course as vendor of the assets of the 'Business' (as comprehensively defined by clause 1.1 of the Agreement), would obtain the benefit of the clause 3.3(a) 'earn-up' to the extent that there might crystallise any such entitlement in the events which might happen. Incidentally there is no suggestion in the evidence as to Foundation having consulted Idoshore as to the grant of any consent to Foundation for the 'mak[ing] of any material changes' within the scope of clause 3.9, and no such consultation and consequential consent of Idoshore has been pleaded in any event. I should add for completeness that the somewhat curiously structured clause 3.10 provided no independent cause of action relevantly in favour of Idoshore, though it sheds light upon the mutually intended operation of the Agreement. 157 The reason why no price increment or so-called 'earn-up' in favour of Idoshore within clause 3.3(a) was acknowledged by Foundation to Idoshore was due to what it asserted to be the shortfall in the EBITDA of the OSMC which, according to Foundation's case, crystallised in quantification in respect of the initial period of 'twelve (12) months from the Completion Date', during the whole of which period of time of course the 'Business' had become the subject of Foundation's ownership and control. Idoshore pointed to the five factors enumerated in its submissions (recorded earlier at [42] of these reasons) as having caused or contributed materially to that outcome, the fourth and fifth factors being the more tangible in terms of demonstration of breach of clause 3.9 of the Agreement. The evidentiary material as to the pre-takeover earnings and otherwise of the operations of the 'Business' bearing upon the contractual notion of EBITDA, and appearing at [27], [39] and [61] of these reasons, when compared to the lower earnings correspondingly of the 'Business' under Foundation's subsequent ownership and control, as so outlined at [60], were not explained or rationalised by Foundation, or at least adequately so, by reference to the operation of the Agreement subsequent to 'Completion', and in particular as here relevant, by reference to the initial year's operation of the Business under Foundation's control. In that regard the surprising absence of testimonial evidence of Foundation's former chief executive officer Mr Meehan, in the course of the conduct of Foundation's case, was not explained by Foundation. In making that observation concerning Mr Meehan, it was not sufficient that his business/ employment relationship with Foundation had ceased prior to the hearing of the proceedings. 158 Foundation's endeavours to account for the post-completion financial results concerning the operations of the OSMC 'Business' per medium of its expert witness Mr Gower, were of no assistance of significance to its case as will have been already appreciated from observations I have already made. Transactions inherent in relation to what I have recorded in [56] were not explained, much less rationalised by Foundation relevantly in terms of the operation of clause 3.9, and in particular by way of rebuttal of the occurrence of '... material changes to the organisational structure, operations and strategic direction of the Business or the Centre' within clause 3.9. Conversely, Foundation's case the subject of its cross-claim based upon the operation of sub-clauses 10.1(n) and (p) has therefore not been made out at least to the extent of those outgoings. Foundation cannot in principle invoke the operation of those latter contractual provisions in circumstances referable substantially to its own breaches of the Agreement. Given the circumstances I have earlier summarised in the course of my narrative of the case advanced by Idoshore in chief, the evidentiary onus effectively passed to Foundation to demonstrate reasons contrary to, or at least at variance with, the case which Idoshore prima facie established adversely to Foundation in those aspects, being an evidentiary onus in relation to which Foundation at least fell short in adequately addressing. 159 Idoshore and Foundation stood of course at arm's length in relation to the formation and subsequent performance of the terms and conditions of the Business Sale & Purchase Agreement, to the extent that performance duly took place. For EBITDA Benchmark adjustments to have been effectively put in place pursuant to the Agreement, either by way of increase in favour of Idoshore, or decrease in favour of Foundation, it was implicit that costs falling potentially for consideration be relevant from an objective standpoint in relation to the scope of the defined notion of 'Business' and of the clause 3.9 expression 'material changes'. No exercise by way of demonstration of arm's length cost equivalence of relevance to the 'Business' was undertaken by Foundation. 160 The non-arm's length cost factors particularised by Idoshore in [56] above were not of course Idoshore's only basis for its claim for clause 3.9 breaches on Foundation's part. Other factors identified by Idoshore, and outlined generally at [59] of my reasons, were also said to involve 'material changes to the organisational structure, operations and strategic direction of the Business or the Centre', having the significance, especially in estimated monetary terms, particularised in [60]-[67]. Enough has been estimated to demonstrate significant monetary cost to the Business in Foundation's hands, and hence further significance in terms of clause 3.9 and conversely sub-clauses 10.1(n) to (p). 161 It follows that Idoshore has established in principle an entitlement to an adjustment by way of increase to the 'Purchase Price' the subject of the Business Sale & Purchase Agreement based upon year one (1) EBITDA, pursuant to the operation of clause 3.3(a) thereof, described of course as the 'first earn-up'. There remains however to be addressed with precision the calculation of the so-called '1 st Adjustment to Purchase Price' pursuant to the operation of clause 3.3(a) of the Business Sale & Purchase Agreement. 162 I am unable to identify any viable cause of action in law for the recovery of moneys by Idoshore from Foundation directly or indirectly referrable to any conduct relevantly of Foundation regarding the so-called 'Loss of Billings for Grech' and the 'Consequential loss', upon or referrable to the operation of the Business Sale & Purchase Agreement, or otherwise by reason of any facts and circumstances in evidence in the present proceedings. No viable cause of action for breach of contract according to law was formulated by Idoshore in that regard, much less particularised for instance in [93]-[103] above. Nor has any cause of action in contract or tort, or for equitable damages, been persuasively articulated by Idoshore. I am unable to identify any sound basis for imputing an obligation to Foundation to have sought any injunctive relief against him, and the task of calculation of loss to the 'Business' (as of course defined) of approximately 44 working days referred to in [99] and the cost involved in seeking curial relief were not subjects which could somehow be attributed to breach of clause 3.9 or of any other contractual duty on Foundation's part, or at least clearly or readily so. 163 I should record nevertheless in that regard that the amended statement of claim of Idoshore bearing date 21 March 2006 purportedly pleaded the failure of Foundation 'to manage the business of the OSMC with a view to maintaining or increasing a profit' by taking 'any action to enforce contractual rights held by OSMC against Dr Joseph Grech', upon the basis that such failure was said to be 'contrary to the First Representation and the collateral warranties', and whereby 'the OSMC lost billing revenue for approximately 44 days' and '[n]o doctor was recruited to replace the services of Dr Grech to OSMC'. More was required by way of demonstration of material facts and circumstances of significance in order for Idoshore to establish the juridical framework of a viable cause of action in relation to the Dr Grech controversy. 164 In regard to the issue of Idoshore's entitlement to 'earn-up' in respect of the period of twelve months following 'Completion', I think Deloitte's 'lower' assessment of quantum of damages, appearing at [105(iii)] of my reasons, was soundly conceived in principle, to the extent it conforms with my reasons. I therefore direct Idoshore to provide to the Court no later than 2 pm on Friday 10 August 2007 a revision of calculations as to general damages required to give effect to these reasons. The composition of the calculation should be provided. 165 The remaining principal issue falling for resolution concerns the subject of the controversial payment of $250,000 to Dr Fox. It will be recalled that clause 2 of the Business Sale & Purchase Agreement entered into of course on 14 December 2000, stipulated for its interdependency with the Facilities and Services Contract made between Idoshore and Dr Fox on 15 November 2000 for a term of three years (see generally in that regard [80] above). In the context of the circumstances recorded subsequently at [82]-[86] above, payment of that sum of $250,000 was made to Dr Fox pursuant to the terms of the Deed of Variation bearing date 28 May 2001 made between Idoshore and each of the Foundation companies, which is substantially extracted at [85] above, and which Deed took effect by way of supplement to the Business Sale & Purchase Agreement which had been completed four months earlier on 31 January 2001. As outlined in these reasons, part of that sum of $250,000 paid to Mr Fox, being $210,000, was drawn down from the retention fund comprising the 'Warranty Security Deposit' established by clause 10.5 of that Agreement. Of that amount of $210,000, the sum of $125,000 was constituted by a contribution made by Idoshore to Foundation said to be induced by a promise made by Foundation to relocate the OSMC to the CBA site, and the amount remaining of $85,000 was treated as a loan by Idoshore to Foundation, which Foundation expressly agreed to restore to the retention fund in accordance with the Deed of Variation. Repayment was stipulated by the Deed to be repaid by 1 February 2002 into or in favour of the 'Warranty Security Deposit' the subject of clause 10.5 of the Business Sale & Purchase Agreement earlier of course fully extracted, and thus not to Idoshore at least in the first place. That deposit formed part of the balance of purchase money payable by Foundation to Idoshore as indicated by that clause 10.5. The Warranty Security Deposit was constituted by '... an interest bearing deposit... operated by [Foundation's] solicitor' as a stakeholder pursuant to that clause 10.5 and paragraph (b) in particular. It appears that such sum of $85,000 has not since been paid by Foundation to Idoshore, either directly, or indirectly by relodgment into that 'Warranty Security Deposit'. 166 Given those circumstances and the events which subsequently happened, Idoshore became presently entitled to payment of each of those sums of $125,000 and $85,000 from Foundation, whether per medium of Foundation's operation of the Warranty Security Deposit or otherwise. As to the sum of $125,000, Idoshore advanced the same, as I have foreshadowed, upon the footing of the OSMC being relocated to the so-called CBA site, which has never subsequently occurred at the instance of Foundation, and as to the sum of $85,000, Foundation explicitly agreed to restore that amount to the Warranty Security Deposit, by way of repayment of what I have above referred to as Idoshore's loan to the first respondent Foundation company (see again [84(ii)] above). In both cases, the 'security' purposes for the establishment of the so-called Warranty Security Deposit have been fulfilled, no claim for compensation having crystallised for any payment thereof in favour of Foundation, whether by way of any entitlement of Foundation pursuant to clause 10.1(n) and (p) in light of principal findings of the Court the subject of these reasons or otherwise. 167 In relation to the issue of interest on the moneys that are or have been or ought to be in the Warranty Security Deposit, according to the provisions of clause 10.5 of the Agreement, and of the interest on the 'first earn-up' that ought to have been received by Idoshore in regard to the first year of operation of the OSMC by Foundation, I will direct that each of the parties provide to the Court submissions on that issue in writing by 2 pm on Friday 10 August 2007. As I have foreshadowed, it necessarily follows from the conclusions I have already reached in relation to the operation of the Agreement and of clause 3.9 in particular, and in the events which have happened relevantly to the principal issues arising for resolution in the proceedings, that Foundation's case for breach of the 'Covenants and Warranties' the subject of sub-clause (n) and (p) of clause 10.1 must be dismissed. I certify that the preceding one hundred and sixty-eight (168) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. | misleading and deceptive conduct representations and warranties collateral to written contract purportedly concerning future matters sale of business interpretation of complex written contractual arrangements settled between legal representatives of vendor and purchaser of business whether the contract by implication excluded oral representations and warranties made antecedently to or collaterally with formation of written contract meaning and operation of principal contract relating to disputed increase in price based on first year's financial results of business operation of subsequent written variation to contract of sale directions concerning assessment of damages trade practices contract |
Essentially they acted as go betweens advising prospective students about educational institutions in which they could enrol and arranging for their enrolment and the payment of their tuition fees at such institutions. For their services, the companies were paid commissions by the educational institutions in which the students were enrolled. In 2004 these companies and others were competing with each other in the Perth market for education consultancy services by offering discounted tuition fees. A company offering such a fee would still pay the full tuition fee to the relevant educational institution. It would, however, retain only a proportion of its commission so as to achieve, from the student's point of view, a discounted tuition fee. 2 From about July 2004 Kokos and IAE and other participants in the market made and gave effect to agreements under which they would desist from offering or accepting discounted tuition fees from students. The Australian Competition and Consumer Commission (the ACCC) commenced these proceedings on 1 November 2006 against Kokos and IAE and their officers and other respondents alleging that making and giving effect to the agreements constituted contraventions of s 45 of the Trade Practices Act 1974 (Cth) (the Act) and the Competition Code of Western Australia (the Code). The ACCC, Kokos, IAE and their respective officers, Messrs Chul Woo Kim (Chad Kim) and Young Gil Pae, have reached agreement that a number of the contraventions asserted by the ACCC did occur. They have also reached agreement in relation to injunctive and declaratory relief. They differ as to the quantum of pecuniary penalties that should be applied. On 18 December 2007 I made the injunctive orders sought, subject to a time limitation of three years. The question of declaratory relief and the quantum of pecuniary penalties were reserved for decision until today. 3 Because the declaratory orders named certain other respondents against whom these proceedings have not yet been resolved, I will not make them at this time but will allow the ACCC liberty to apply for such orders later in these proceedings. I will impose pecuniary penalties on the first to fourth respondents in respect of all but one matter alleged against the second respondent. A total of $60,000 in the case of Kokos, $12,500 in the case of Mr Chad Kim, $34,000 in the case of IAE and $8,000 in the case of Mr Pae. The respondents will also be required to pay the ACCC's costs of these proceedings. The alleged contraventions involved price fixing in the provision of educational consultancy services to overseas students of Korean origin. The proceedings were commenced against Kokos, Chad Kim, IAE, Young Gil Pae, Sang-Hong Jung and Rebekah Cabalt. Study Overseas Now Pty Ltd (Study Overseas Now) was joined as a respondent to the proceedings subsequently. On 17 August 2007 the ACCC was given leave to serve on Mr Seow Bing Yeo, a director of that company, a notice of motion seeking his joinder, such service to be effected out of the jurisdiction in Japan through a diplomatic channel. For the reasons set out in Australian Competition & Consumer Commission v Kokos International Pty Ltd [2007] FCA 2035 , that latter requirement was dispensed with and an order for substituted service made. 5 The corporate respondents and Sang-Hong Jung are each said to have been in the business of providing educational consultancy services to students of Korean origin. The services allegedly involved providing information to students about courses in secondary and tertiary education institutions in Western Australia and arranging for their enrolment at institutions of their choice. The corporate respondents and Ms Jung are said to have been remunerated by commissions paid by the institutions. 6 The corporate respondents and Ms Jung are said to have made oral and written agreements in 2004 and 2005 under which they agreed not to offer or accept discounted tuition fees. Any party to the agreements that offered or agreed to accept a discounted tuition fee would be referred to a 'Council of Korean Agency' comprising representatives of each of the parties to the agreement. Such parties would be banned from enrolling students in the relevant institutions for a period of three months. It was alleged that copies of the written agreement were sent to a number of educational institutions. The ACCC alleged that the conduct of the corporate respondents and Ms Jung was in contravention of s 45 of the Act and of the Code. The other natural person respondents were said to have been involved in the contraventions. 7 The first to fourth respondents have reached agreement with the ACCC as to the disposition of the proceedings save for the quantum of pecuniary penalties that should be imposed. Statements of agreed facts and joint submissions have been filed along with proposed consent orders. 8 On 18 December 2007 I made orders against the first to fourth respondents in terms of the injunctive relief agreed save for the imposition of a time limit of three years on the operation of each injunction. The quantum of pecuniary penalties to be imposed and the question whether any, and if so what, declaratory relief should be awarded was reserved until today. My findings of fact in relation to Kokos and Mr Chad Kim are based upon that statement. 10 Kokos is and was at all material times a trading corporation within the meaning of the Act and carrying on business in trade or commerce in Western Australia as a supplier of education consultancy services to students and prospective students of Korean origin intending to study at secondary and tertiary educational institutions (Schools). (b) Providing advice as to which of the available courses might be suitable for a prospective student's requirements. (c) Providing informal translation of promotional materials and course information published in English by the Schools. In 2004/2005 its net profit was $15,000 and in 2005/2006 it was $18,000. The company has two offices in Australia. It has no office overseas. It employs four full-time staff. 11 Mr Chad Kim is a director, servant or agent of Kokos and is authorised by it to conduct business in its name and on its behalf. He was at all material times responsible for the day to day management of the company. He was paid a salary of $45,000 per annum during the relevant period and has net assets worth approximately $113,000. Where a student enrolled in a course at a School through Kokos the student would pay the tuition fee to Kokos. Kokos would remit all or part of the tuition fee to the School and the School would pay a commission to Kokos for enrolling the student in the course. Kokos did not directly charge fees to students in respect of its education consulting services. 14 From time to time Kokos would offer discounted tuition fees for courses of study offered by Schools. In such cases it might accept from the student a tuition fee less than the full tuition fee published by the School. It would pay the School an amount equal to the full tuition fee and then receive from the School the commission for enrolling the student. The net amount gained by Kokos in such case was the commission less the discount offered on the full tuition fee. In other cases where the relevant School permitted Kokos to deduct commission from the tuition fee before the balance was remitted, Kokos would deduct the commission less the discount so that the School would still receive the full tuition fee less its commission. The practice of agreeing to accept discounted tuition fees was commonly engaged in by competitors in the Perth market for the supply of education consulting services. These competitors comprised Kokos, Nanuri, Jobbok and Study Overseas Now. Other actors in the market were the Schools themselves and an unknown number of smaller service providers. 15 In early to mid July 2004, IAE entered the Perth market. After its entry Kokos became aware that IAE was engaging in tactics intended to damage its competitors. One of Jobbok's contracts was terminated after a School was informed that Jobbok had offered and accepted discounted tuition fees from students. Mr Jacob Kim of Jobbok subsequently informed Mr Chad Kim of Kokos that he did not intend offering or accepting discounted tuition fees in the future. The respondents generally experienced an overall reduction in business. 16 Sometime after IAE's entry into the market, Mr Chad Kim on behalf of Kokos attended a number of meetings with education consultants including Young Gil Pae on behalf of IAE, Rebekah Cabalt on behalf of Nanuri and Jacob Kim on behalf of Jobbok. Mr Chad Kim was one of the principal organisers of these meetings. At those meetings an oral agreement (the Oral Agreement) was made by the parties to the effect that, in the supply of education consulting services to students or prospective students, they would refrain from engaging in the practice of offering or accepting or agreeing to accept a discounted tuition fee. 17 Following a further meeting or meetings Mr Chad Kim instructed an employee of Kokos to prepare a written agreement (the Written Agreement). 18 Between 22 July 2004 and 1 November 2004 Kokos gave effect to the agreements for limited periods of time totalling approximately four weeks. For those periods it ceased offering or agreeing to accept a discounted tuition fee from students. During this period Kokos charged students approximately $13,000 more than the amount it would have charged them had it not put the agreements into effect. 19 Kokos was aware that one Joseph Woo was at all material times preparing to carry on business in Perth as, among other things, a supplier of education consulting services. On or about 24 September 2004 Mr Chad Kim sent an email to Joseph Woo. 21 Neither Kokos nor Mr Chad Kim have contravened the Act or the Code in the past. Kokos did not have in place a corporate trade practices compliance program at the time the conduct took place. It is common ground that Kokos and Mr Chad Kim have cooperated with the ACCC both prior to and following the commencement of proceedings. The consultancy services offered by IAE were the same as those offered by Kokos. 23 IAE had an annual turnover of $942,319.65 for the 2004/2005 financial year and $1,795,622.22 for the 2005/2006 financial year. It had a net profit of $112.64 for the 2004/2005 financial year and $14,281.21 for the 2005/2006 financial year. The company is a franchisee of Eduhouse Inc and is one of a number of at least 27 franchised businesses located in Australia and overseas. It operates independently and employs three full-time staff. Mr Pae was at all material times a director, servant or agent of IAE and authorised by it to conduct business in its name and on its behalf. He was responsible for the day to day management of the company. He was paid a gross salary of $40,000 for the 2005/2006 financial year. He did not receive a salary for the 2004/2005 financial year. 24 IAE was competitive with Kokos and the other actors mentioned in the agreed facts relating to Kokos. Its business operation, like that of Kokos, involved the collection from students of tuition fees and the transmission to the relevant Schools of such tuition fees subject to prior deduction or later payment of a commission. Like Kokos, IAE from time to time offered or agreed to accept discounted tuition fees for courses of study offered by Schools and, in the same way as Kokos, recovered a commission less the discount which it offered. 25 IAE entered the Perth market for education consulting services in early or mid July 2004 and through Mr Pae participated in the meetings which led to the formation of the Oral Agreement and the Written Agreement. It was a party to each of those agreements. It put the agreements into effect between July 2004 and November 2004 by refraining from offering or agreeing to accept a discounted tuition fee. The agreed statement of facts qualifies that statement by the statement that between July 2004 and November 2004 IAE gave effect to the agreements for limited periods of time and for those periods ceased the practice of offering or agreeing to accept a discounted tuition fee. It was accepted that during that period IAE charged students more than it would have charged had it not put the agreements into effect. The total amount by which it so overcharged students during that period could not be stated precisely. 26 Neither IAE nor Mr Pae have been found to have engaged in a contravention of the Act in the past. IAE did not have in place a corporate trade practices compliance program at the time the conduct took place. It was accepted that IAE and Mr Pae have cooperated with the ACCC both prior to and following the commencement of these proceedings. Where the value of that benefit cannot be determined, then the maximum penalty will be the greater of $10 million or 10% of the annual turnover of the body corporate during the period of 12 months ending at the end of the month at which the relevant act or omission occurred. The substituted s 76(1A) and the substituted s 76(1B) do not apply to this case as they only came into effect on 1 January 2007. 32 Section 80 of the Act provides for the grant of injunctive relief. It is unnecessary further to refer to that here as the relevant injunctive relief has already been granted. It applies to persons carrying on business within Western Australia, bodies corporate which are incorporated or registered under the laws of Western Australia, persons ordinarily resident in Western Australia and persons otherwise connected with the State (s 8(1)). 35 Part 5 of the Competition Policy Reform Act provides for national administration and enforcement of the Competition Codes and confers functions under the State law upon the ACCC, the Australian Competition Tribunal and the National Competition Council. Its object is to ensure that the Competition Codes of participating jurisdictions throughout Australia are administered on a uniform basis in the same way as if those Codes constituted a single law of the Commonwealth (s 18). 36 Offences against the Code are to be dealt with by Courts of summary jurisdiction (s 55(1)). The present proceedings, which assert a contravention of the Code, are not brought in respect of an offence against it. That is not to say however, that claims for relief for contraventions of the Code cannot be brought in proceedings in which claims are sought for relief under the Commonwealth Act arising out of the same factual substratum. They can be dealt with in the exercise of federal jurisdiction as part of the one 'matter' arising under the Act even though they are brought under the Code. In my opinion, in this case, the Court has accrued jurisdiction to deal with the claim for relief against Mr Chad Kim for an attempt to contravene the Code. For reasons that appear below, however, I am not satisfied that the agreed facts will support a finding of such an attempt by him. A contravention of s 45(2)(a)(ii) of the Act by making the Oral Agreement. 2. A contravention of s 45(2)(a)(ii) of the Act by making the Written Agreement. A contravention of s 45(2)(b)(ii) of the Act by causing a copy of the Written Agreement to be sent to Schools and thereby giving effect to the Oral Agreement and the Written Agreement. 4. A contravention of s 45(2)(b)(ii) of the Act by refraining from engaging in the practice of offering or agreeing to accept a discounted tuition fee for a total period of approximately four weeks and thereby giving effect to the Oral Agreement and the Written Agreement. 5. A contravention of s 45(2)(b)(ii) of the Act by sending to Jobbok a table containing information in relation to the terms and conditions, including incentives and benefits agreed between Kokos and a number of Schools pursuant to the provisions of the Oral Agreement or the Written Agreement or both and for the purpose of assisting Jobbok to determine whether Kokos was adhering to the provisions of the Oral Agreement, or the Written Agreement, or both and thereby giving effect to the Oral Agreement and the Written Agreement. These contentions were not in dispute. 39 In addition, the ACCC alleged that by their conduct in sending an email to Mr Joseph Woo and attempting thereby to make an arrangement or arrive at an understanding with Mr Woo containing a provision to the effect that Kokos and/or Mr Woo would refrain from engaging in the practice of offering or agreeing to accept a discounted tuition fee, Kokos contravened s 76(1)(b) and 80(1)(b) of the Act and that Mr Chad Kim contravened the same provisions of the Code. 40 Section 76(1)(b) of the Act provides for imposition of a penalty where a person has attempted to contravene a provision of Pt IV. It does not itself impose a prohibition capable of contravention. It may be accepted for present purposes, however, that it is not disputed that Kokos attempted to contravene a provision of the Act as alleged. This is made clear from the terms of the declaratory relief sought by the ACCC which is accepted by Kokos and Mr Chad Kim in their written submissions. The acceptance by Mr Chad Kim of that aspect of the declaratory relief is however questionable having regard to the agreed facts. 41 The Code text applies, as a law of Western Australia, s 45 of the Act and applies it to natural persons. Natural persons are prohibited from making a contract or arrangement or arriving at an understanding a provision of which would have the purpose or be likely to have the effect of substantially lessening competition. Nor can they give effect to such a provision. Section 76 of the Act which is applied as a law of the State of Western Australia, allows for the imposition of pecuniary penalties on persons who attempt to contravene s 45. For such an attempt to be made out it would be necessary to establish that if successful, he would have contravened the Code himself. It seems to me that a person cannot be said to attempt to contravene a provision of the Act or of the Code where the prospective contravention is that of another person. Such a case arises, under the Act, where a person endeavours to procure, on behalf of a corporation, the making of a contract, arrangement or understanding to which that person himself or herself is not a party. In this case the prospective contravention was the making of an arrangement or understanding by Kokos through Mr Chad Kim as its agents. This matter was not raised in the submissions of the parties nor raised with them by the Court. I will therefore give the parties liberty to file short supplementary submissions if they contend for a different conclusion. 43 The ACCC has identified, and Kokos has accepted, five contraventions of s 45 in each of which Mr Chad Kim accepted that he was directly or indirectly knowingly concerned in or a party for the purposes of s 76(1)(e). Kokos has also accepted for its part an attempt to contravene the Act arising out of the email to Mr Woo. A contravention of s 45(2)(a)(ii) by making the Oral Agreement. 2. A contravention of s 45(2)(a)(ii) by making the Written Agreement. A contravention of s 45(2)(b)(ii) by IAE refraining from engaging in the practice of offering or agreeing to accept a discounted tuition fee from approximately July 2004 to November 2004 and thereby giving effect to the Oral Agreement and the Written Agreement. 4. A contravention of s 45(2)(b)(ii) by IAE's conduct in sending to Jobbok a table containing information in relation to the terms and conditions, including incentives and benefits agreed between IAE and a number of Schools pursuant to the provisions of the Oral Agreement or the Written Agreement or both and for the purpose of assisting Jobbok to determine whether IAE was adhering to the provisions of the Oral Agreement or the Written Agreement, or both, and thereby giving effect to the Oral Agreement and the Written Agreement. In each case Mr Pae accepts that he was, within the meaning of s 76(1)(e) and s 80(1)(e) of the Act, directly or indirectly knowingly concerned in, or party to, each of the contraventions. (2) A suit is not open to objection on the ground that a declaratory order only is sought. Declarations are also sought that Mr Chad Kim and Mr Pae were directly or indirectly knowingly concerned in, or party to, the contraventions by Kokos and IAE respectively. In addition, a declaration is sought that Mr Chad Kim by sending the email to Mr Joseph Woo on or about 24 September 2004 attempted, within the meaning of ss 76(1)(b) and 80(1)(b) of the Code, to make an arrangement or arrive at an understanding with Mr Woo that contained a provision or provisions which, by virtue of s 45A(1) of the Code, would have constituted a contravention of s 45(2)(a)(ii) of the Code. For the reasons I have already given, I am not satisfied that Mr Chad Kim did attempt to contravene the Code. 48 Save for the orders sought against Mr Chad Kim in relation to the alleged attempted contravention of the Code, the declaratory orders sought are within the power of the Court to make. There may be a question about their utility given that these reasons set out the findings of fact and the contraventions which underpin the injunctive relief which has been granted and the pecuniary penalties which are to be imposed. Are an appropriate vehicle to record the Court's disapproval of the contravening conduct: Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1993) 41 FCR 89 at 100; Australian Competition and Consumer Commission v Chen [2003] FCA 897 ; (2003) 132 FCR 309 at [36] . 2. Serve to vindicate the ACCC's claim that the respondents contravened the Act: Australian Competition and Consumer Commission v Goldy Motors (2000) 23 ATPR 41-801 at [34]. 3. May be of assistance to the ACCC in the future in carrying out the duties conferred upon it by the Act: Goldy Motors 23 ATPR at [34]. 4. Are of assistance in clarifying the law: Goldy Motors 23 ATPR at [34]; Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212 at [146] . 5. May deter corporations from contravening the Act: Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [22]. The matters in issue had been identified, particularised and admitted by the respondents. The ACCC as a public body charged with enforcing the Act had a real interest in seeking the relief and the respondents were in the position of a proper contradictor in that they had a true interest in opposing the declarations sought. So much is true in this case. 49 In the circumstances of this case however, there is a question affecting the appropriateness of making the declarations sought at this time. There are other parties to these proceedings who are named in the declarations and against whom these proceedings are still pending. Although the declaratory orders are sought only against the first to fourth respondents, they involve formal declarations of the involvement of other respondents. True it is that the declarations are in personam as between the ACCC and the first to fourth respondents severally. They would not give rise to any issue estoppel against other parties any more than would the findings of fact based upon admissions made by the first to fourth respondents. Those findings of fact have been made only as against the first to fourth respondents. 50 In my opinion it is undesirable that the Court should, at this time, make formal declarations naming other respondents as parties to the contravening conduct. The question of declaratory relief will be stood over with liberty to the ACCC to apply for orders at an appropriate time in the terms sought. Apart from the declaration sought against Mr Chad Kim in relation to the alleged attempt to contravene the Code, the declaratory orders proposed are otherwise appropriate. (b) The amount of loss or damage caused. (c) The circumstances in which the conduct took place. (d) The size of the contravening company. (f) The deliberateness of the contravention and the period over which it extended. (g) Whether the contravention arose out of the conduct of senior management or at a lower level. (h) Whether the company has a corporate culture conducive to compliance with the Act as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention. (i) Whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention. (j) Whether the respondents have engaged in similar conduct in the past. (k) The financial position of the respondents. (l) The deterrent effect of the proposed penalty. Although there has been repeated discussion in later cases of the factors relevant to the quantum of pecuniary penalties, I am satisfied that the above list is sufficiently comprehensive. It is to be applied by reference to the general principle that the purpose of pecuniary penalties is to deter the contravenor and others from future contraventions of the Act. 53 The nature and extent of the conduct of each of the first and second respondents has already been outlined. The ACCC acknowledged the difficulty of determining the exact amount of loss or damage caused to consumers by their conduct. It undermined the competitive process that had occurred in the period prior to the making of the agreements. It could properly be said, as the ACCC submitted, that both agreements caused Korean students to pay higher amounts to gain entry into the Schools to which they applied than they would have done were it not for the making and giving effect to the agreements. In the period 22 July 2004 to 1 November 2004 it appears that Kokos charged students at least approximately $13,000 more than the amount it would have charged if the agreements were not put into effect. 54 The conduct occurred in the context of the recent entry into the Perth market of a new supplier of education consulting services, namely IAE. 55 The ACCC submitted that Kokos' turnover is substantial, being $2.3 million for the year ended 30 June 2006 and $1.79 million for the year ended 30 June 2005. It was common ground on the written submissions of the ACCC and those of Kokos and Mr Chad Kim that in 2005 Kokos had approximately 31% of the market share in Perth for the supply of education consulting services to Korean students. Its market share in 2004 was approximately 28%. 56 As to the deliberateness of the conduct, it was common ground that both Kokos and Mr Chad Kim were ignorant of the fact that their conduct was unlawful. The ACCC acknowledged that there was no evidence that they concealed or attempted to conceal their conduct. They engaged in the conduct deliberately in response to concerns about the commercial viability of their business due to the entry into the market of IAE. They did not intend to contravene the Act or the Code. It was common ground on the written submissions that it was clear from the face of the Written Agreement that Kokos and Mr Chad Kim were aware of the effect their conduct would have on competition in the market. The question of deliberateness of conduct is particularly relevant to deterrence where the contravening party is aware that the proposed conduct is in contravention of the Act and, alternatively, is aware that there is a risk, which the parties are prepared to take, that the conduct will contravene. Conduct in the knowledge of the certainty or risk that the law will be breached indicates that absent sufficient deterrence the contravening party may reoffend in the belief that its conduct will not be detected. A contravenor which is ignorant of the law may also present a risk of reoffending where the ignorance flows from a careless or reckless failure to inquire or to obtain proper advice. In the present case, in my opinion, the deliberateness of the conduct and associated ignorance of the law is not indicative of a significant risk of reoffending. It appears to have been an immediate protective response to a competitive threat albeit blatantly anti-competitive. The evidence of early cooperation with the ACCC and the agreement that has been made are indicative of the low level of risk of reoffending in this case. 57 The conduct in which Kokos engaged was, in effect, that of its senior manager, Mr Chad Kim. There could not be said to have been any culture of compliance in existence given Mr Chad Kim's unawareness of the law and the attributed ignorance of Kokos. However, the company and Mr Chad Kim admitted the contraventions instead of putting the ACCC to long and expensive litigation. Moreover they cooperated with the ACCC before and following the commencement of the proceedings. Neither has contravened the Act or the Code in the past. 58 The financial position of each could only be described as modest having regard to the net profit of Kokos for the relevant years and Mr Chad Kim's salary and asset position. 59 The ACCC submitted that Kokos is arguably in a position of considerable responsibility and power relative to students. On that basis there is a strong need to deter the kind of conduct found to have occurred in this case from continuing in the future. There is also a requirement of general deterrence to demonstrate to the public and the business community that such conduct by corporations and individuals is unacceptable and should not be tolerated. 60 In response, Kokos and Mr Chad Kim submit that the penalties sought by the ACCC are excessive. They submit that any penalty should be commensurate with the amount of loss or damage caused by the contravening conduct, in this case about $13,000 in terms of fees overcharged. Kokos submitted that a moderate penalty would be likely to have a significant deterrent effect against it engaging in similar conduct in the future and proposed the sum of $20,000. The Court was also asked to have regard to its significant legal costs as well as its obligation, by way of agreement, to pay the ACCC's legal costs to be taxed if not agreed. 61 As for Mr Chad Kim he was said to be remorseful. Given his modest income of $45,000 a penalty of $5,000 was said to be a significant imposition and a weighty deterrent. 62 Each contravention in this case and each instance of involvement on the part of Mr Chad Kim attracts its own penalty. The Act does not in terms authorise the imposition of a single global penalty for related contraventions. There is, however, a 'totality principle' which is appropriate where each of the contraventions arise out of effectively the same course of conduct temporally limited. In imposing a penalty in respect of each contravention regard may be had to the total figure thus arrived at. 63 The conduct in this case amounted to a blatant price fixing in which Kokos was the prime mover. Nevertheless I regard the overall amount proposed by the ACCC in respect of Kokos as excessive having regard to the limited effect of the contraventions, the absence of any intention to break the law, the low risk of reoffending, Kokos' cooperation with the ACCC and its modest financial position. In my opinion a penalty of $10,000 should be imposed in respect of each of the five contraventions alleged along with a figure of $10,000 in respect of the attempted contravention involving the email to Mr Woo. This results in a total penalty of $60,000 as against Kokos. 64 In respect of Mr Chad Kim, I would impose a penalty of $2,500 on each of the five instances of his involvement in the contraventions by Kokos. This will result in a total penalty applied to him of $12,500. I will impose no penalty in respect of the alleged attempted contravention of the Code because I am not satisfied, on the pleadings and on the agreed facts, that any such attempt has been made out. The ACCC had been unable to determine any amount by which IAE overcharged students during the period July 2004 to November 2004. The total period during which IAE refrained from offering discounts was said to be about four months. 66 The ACCC described IAE's turnover as substantial, being $1,795,622.22 for the year ended 30 June 2006 and $942,319.65 for the year ended 30 June 2005. In 2005 it had approximately 27% of the market share in Perth for the supply of education consulting services to Korean students. In 2004 its market share had been 13%. It employed three full-time staff and was said to be regarded as one of the leading businesses of its kind in Perth. 67 As with Kokos and Mr Chad Kim, IAE and Mr Pae were ignorant of the fact that their conduct was unlawful. There was no evidence that they concealed or attempted to conceal that conduct. The ACCC submitted that they engaged in the admitted conduct deliberately in response to concerns about their commercial viability but not with any intention of contravening the Act. It was clear, however, from the face of the Written Agreement that they, like Kokos and Mr Chad Kim, were aware of the effect their conduct would have on competition in the market. 68 It was accepted that the contravention arose out of the conduct of the company's most senior person, Mr Pae. There was no compliance program in place and no evidence of any culture of compliance. The ACCC acknowledged that the company and Mr Pae had cooperated with it both prior to and following the commencement of the proceedings. There was no suggestion that either had engaged in a contravention of the Act in the past. 69 The financial position of the company and Mr Pae appeared to be modest so far as reflected in the net profit of the company for the years ended 30 June 2005 and 30 June 2006, namely $112.64 and $14,281.21 respectively. 70 The ACCC submitted to the Court that IAE should pay a pecuniary penalty of $55,000 including a cooperation discount and that Mr Pae pay a pecuniary penalty of $10,000 including a cooperation discount. 71 There is a point of discrimination between IAE and Kokos in that Kokos appears to have been a prime mover in the formation of the Oral and Written Agreements. 72 The submissions made on behalf of IAE and Mr Pae were otherwise similar in general effect to those made on behalf of Kokos and Mr Chad Kim. It was pointed out that IAE is a small family company with no significant degree of power in any relevant market. 73 In my opinion in relation to each of the four contraventions alleged against it, IAE should be subject to a penalty of $8,500 making a total of $34,000. Mr Pae, in respect of his involvement in each of those contraventions, should be subject to a penalty of $2,000, making a total of $8,000. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | price fixing companies providing education consultancy services to overseas students agreement between companies not to offer or accept discounted tuition fees admission of contraventions consent orders agreed statements of fact no agreement as to pecuniary penalties appropriateness of declaratory relief naming parties against whom proceedings still pending declaratory relief deferred allegation on agreed facts that natural person attempted to contravene competition code (wa) contravention attempted not a contravention to which person would be a party person acting on behalf of company pecuniary penalties relevant factors. trade practices |
The first seeks either summary judgment under s 31A of the Federal Court of Australia Act 1976 (Cth) against Peter Wilkshire on his application to have a trade mark of the Bombala Council cancelled, or else that that proceeding be dismissed under O 20 r 5 of the Federal Court Rules . The second motion, which is contingent upon the lack of success of the first, seeks security for costs in the principal proceeding. 2 The first motion has multilayered grounds. Suffice it to say for present purposes that, for several distinct reasons, I am satisfied that Mr Wilkshire has no reasonable prospects of successfully prosecuting his application and that there should be summary judgment given against him. His application is for an order under s 88(1) of the Trade Marks Act 1995 (Cth) that the Register of Trade Marks be rectified by cancelling the registration of the Council's trade mark no 942740. The stated ground, which as I will later indicate is quite inappropriate, is that registration was obtained "as a result of fraud, false suggestion and misrepresentation". Mr Wilkinson opposed the application by Notice of opposition dated 18 July 2003. He made a declaration for the purposes of the opposition in which he alleged that a number of the people who had given evidence for the Council had colluded and fabricated evidence for the purposes of the application. 6 Copies of both registered marks are an attachment to these reasons. Both had been used for some years prior to their respective registrations. Emerging from the arch is a platypus with its tail swept up to the right. The arch sits on a rectangular panel about twice the length of the diameter of the arch. In this panel in Mr Wilkshire's mark, are enscribed the words "Gold Fossicking"; in the Council's, "Bombala Council". 8 I should add by way of background that the evidence of the provenance of the Council's mark as it is recounted in the above opposition decision, as well as in a subsequent opposition, was that in 1995 a similar mark, though with a differently configured platypus, was sought to be registered. Registration of it was opposed by Australian Geographic Pty Ltd which had its own "platypus" trade mark. That dispute was settled, and the evidence before me is that Australian Geographic redesigned the Council's logo which it assigned to the Council on 28 April 1997. Mr Wilkshire disputes this provenance. 9 On 27 February 2006 the Delegate dismissed Mr Wilkshire's opposition and ordered costs against him. The Delegate considered that the grounds of opposition related to sections 41 , 43 , 44 , 58 and 60 of the Trade Marks Act . He rejected all of the grounds on the material that was before him. The one matter I would note is that, in relation to the s 58 ground of opposition (ie that "the applicant is not the owner of the trade mark"), the Delegate found that the services performed by the opponent were not "the same kind of thing" as those for which the Council sought registration. 10 It is important to notice that when this decision was given, the Act had not then been amended to include s 62A. 11 Mr Wilkshire appealed to the Federal Court against the Delegate's decision on 17 March 2006. In his notice of appeal Mr Wilkshire impugned the impartiality of the Delegate and again made allegations that the declarants in the Council's case colluded to provide false evidence. He then engaged solicitors and an amended notice of appeal was filed on 30 May 2006. It only challenged the decision on the grounds specified in sections 43 , 44 and 58 of the Act. I would again note that both the notice and amended notice of appeal were filed prior to the enactment of s 62A. 12 There were negotiations between the then parties' legal representatives seeking to settle the appeal. Importantly for present purposes, the Council's solicitors made an offer of settlement to Mr Wilkshire (via his solicitors) on 27 February 2007. That clause is not presently relevant. The hearing of the appeal was scheduled for the following week and, according to a note from Mr Wilkshire's solicitor, counsel had advised the appeal was unlikely to succeed. By that time s 62A had been enacted and was a ground able to be raised in the Federal Court proceeding: see s 197 of the Act. This undertaking applies to existing and future use of the Respondent's mark in relation to all goods and services. For the avoidance of doubt, nothing in this undertaking restricts the Applicant's right to use trade mark no. 847,229 in relation to the services for which he is registered. The second of them is relied upon by the Council by way of prospective defence to the present proceeding. 16 Two days before the consent orders, Mr Wilkshire filed five new trade mark applications. All that differentiated four of these from his original marks were the words inserted in the rectangular panel below the arch and platypus. In the fifth, no words were inserted in the panel. 17 The Council became aware of these applications on 21 March 2007. On 25 September 2007 it opposed registration of the applications. A hearing date for the opposition was set for 26 February 2009. 18 On 4 February 2009 Mr Wilkshire commenced the present proceeding. The Council only became aware of it when joined as a party on 23 February 2009. 19 The opposition was heard on the day scheduled. A Delegate gave his decision on 26 May 2009 refusing to register the applications and in so doing accepted that, for the purposes of s 62A of the Trade Marks Act , the application was made in bad faith. In so doing he observed that Mr Wilkshire clearly had applied to register a mark which he had previously recognised as "the property of another with which he had had a course of dealing". 20 Mr Wilkshire has filed two substantial affidavits in this proceeding, one of which related directly to the summary judgment motion. 21 A striking feature of the first (which relates to the substantive proceeding) is that, in relation to the particular matters it narrates, it regularly moves from surmise about a matter, to an allegation concerning it (invariably involving impropriety by a person or persons considered to be acting adversely to his interests and then, on occasion, to a statement of fact about the allegation. The major portion of this affidavit is directed at what is said to be collusion and fabrication of evidence by witnesses of the Council relating to its alleged use of its mark from April 1997 when other evidence showed use from June or July 1997. This matter was, in fact, ventilated at some length at the second opposition hearing. It seems not at all to have been considered by Mr Wilkshire that such differences may have had innocent explanations, the more so as the evidence related to events occurring almost a decade before the various impugned declarations were made. Consistent with its tenor, this affidavit, having asserted the Delegate's lack of impartiality raised the scandalous suggestion of the potential for corruption of the Delegate in the first opposition hearing (either by extortion or bribery), though he acknowledged "I cannot say that this occurred". The first is the assertion that he never agreed to the undertakings noted by Bennett J. The second is that his then solicitor acted "in the full knowledge that he did not agree to any undertakings whatsoever", but together with the Council's solicitors (who also had that knowledge) allowed the orders to be made. In consequence, it is said, it sprung "to his mind that possibly [his solicitor] was assisting the respondent to present a fraudulent agreement in proceedings". (Emphasis added. While it seeks cancellation of the registration of the Council's trade marks it does so on grounds unsuited to that purpose. There is no question of any amendment of the registration having been obtained: cf s 88(2)(b); nor is the application one to remove or amend an entry made or amended: cf s 88(2)(e). The principle upon which the section is based is that it is for the jury to decide all questions of fact, and therefore to determine which witnesses should be believed in case of a conflict of testimony. But there must be a real issue of fact to be decided, and if the evidence is all one way, so that only one conclusion can be said to be reasonable, there is no function left for the jury to perform, so that the court may properly take the matter into its own hands as being a matter of law, and direct a verdict to be entered in accordance with the only evidence which is really presented in the case. As soon as the evidence may have such an ambivalent character prior to a final determination, I am of opinion that then, as a matter of law, at that point there are reasonable prospects of success within the meaning of s 31A. The first two grounds relate to the competence of the purported s 88 application. The first ground is that Mr Wilkshire is not a "person aggrieved"; the second, that his application has not enlivened any of the grounds specified in s 88(2) which are the only grounds available for making an order under s 88(1). It is required by s 88. 34 The concept of "an aggrieved person" in this context has been considered in many cases: see the discussion by Sackville J in Kraft Foods Inc v Gaines Pet Food Corporation (1996) 65 FCR 104 at 111-114. 36 The opacity of Mr Wilkshire's claim and the lack of relevant focus in his affidavit material make it particularly difficult to ascertain whether there is a reasonable possibility of his being appreciably disadvantaged in a legal or practical sense by the Register being left unrectified. He has an obvious sense of proprietorship of the mark --- but could not establish, for the purposes of s 58 , that the Council was not the owner of the trade mark it sought to have registered. By consenting to the dismissal of its appeal from the Delegate's decision he forsook the opportunity to revisit that question. His sense of grievance and hostility in the manner, which are palpable, does not of itself satisfy s 88 's standing requirement. He has not pointed to possible disadvantage other than to suggest in submissions before me (without substantiation) that licensing of its mark by the Council to tour operators "was open to abuse". 37 While the standing requirement is to be interpreted liberally, Mr Wilkshire simply has not attempted to demonstrate, and it is not otherwise apparent, how he satisfies it. The proceeding could be dismissed summarily for this reason. However lack of demonstrated standing is not my principal reason for taking that course. In that I agree with the Council's submission. 39 I have on a number of occasions indicated that at the time both of Mr Wilkshire's opposition to the Council's application to register and of the appeal which was dismissed by consent, the now s 62A ground of opposition was not then available. To reiterate, the section permits opposition to the registration of a trade mark on the ground that "the application was made in bad faith". 40 While it may seem a short step to permit the application to be amended so transmuting it from one alleging "fraud, false suggestion and misrepresentation" to one alleging "bad faith" --- the more so because the applicant lacks legal representation --- this is not a course I am prepared to take. My reason for this relates to the substance of the present application. 41 Mr Wilkshire's affidavits are replete with speculations about, and assertions and allegations of, impropriety, be it of the Delegate, the Council's witnesses, or both parties' lawyers. While accepting he may be able to point to inconsistencies in evidence relating to events long prior to the preparation of the declarations of witnesses for the Council, or to the non-production of documents created over a decade earlier, he has provided no plausible justification at all for the regularly made and, at first flush, seemingly preposterous consequential allegations of impropriety. I note in passing the standard of proof s 140 of the Evidence Act 1995 (Cth) provides for such allegations: see Qantas Airways Ltd v Gama [2008] FCAFC 69 at [123] - [139] . 42 Importantly there is nothing at all to suggest that the very specific matters which were central to his case --- and in particular the discrepancies in the evidence on the Council's use of its mark as between April and June 1997 --- were themselves material, or of any causative significance, in the Council obtaining registration of that mark. The supposedly tainted evidence had no bearing on the Delegate's decision. 43 I refer to these matters because what would be involved in allowing Mr Wilkshire to amend his application would be the articulation of an, as yet, indiscernible claim (possibly under s 62A) and a claim, moreover, which there is no reason to believe on the material before me will have any substance, legal or factual. 44 As I have indicated, I am not prepared to take that course. I will give summary judgment on the basis that the application has not invoked a ground upon which the Court can order rectification by cancellation under s 88(1)(a) of the Trade Marks Act. It is that even if there was dishonesty in the evidence (which is strenuously denied), it is apparent from the Delegate's decision that it had no bearing on the decision to allow the mark to proceed to registration. It was neither material in, nor causative of, the decision. 46 It is apparent from what I have said that this contention accords with my own view of the material before me. As I am not ordering summary dismissal on this basis, I need not enlarge upon it. 47 The fourth ground is that the dismissal of Mr Wilkshire's appeal from the decision of the Delegate precludes him from agitating the question of the validity of the registration of the Council's mark by reason of any alleged collusion or perjury on the part of the Council's witnesses or any alleged bias on the part of the Delegate. This raises a number of potentially controversial issues especially in relation to the Anshun doctrine and abuse of process. This said, there is real controversy as to the extent to which decisions on appeal in opposition proceedings (whether by consent or otherwise) can found an issue estoppel or attract the Anshun doctrine in s 88 applications given the view of the Full Court in Lomas v Winton Shire Council [2002] FCAFC 413 at [18] that an opposition proceeding had a "quasi summary nature". In an expungement proceeding, the validity of a trade mark can be fully explored. That is a reason for concluding that there should not be a full exploration of the prospective validity of a trade mark on an appeal in an opposition proceeding. 49 The Council has sought to outflank these decisions by contending that Mr Wilkshire's proceeding can, in the circumstances, properly be characterised as an abuse of process. The power of the Court to prevent such abuses extends beyond "the strict limits" of res judicata , issue estoppel and the Anshun doctrine: SZAJB v Minister for Immigration and Citizenship [2008] FCAFC 75 ; (2008) 168 FCR 410 at [37] - [38] . A considerable body of material was put on to support the contention that Mr Wilkshire was engaging in "unjust harassment of the Council ... with respect to the subject matter of this litigation". 50 Given the view I have already taken of the prospects of this application, I do not intend to enter upon the controversies raised above. It is founded on the consent undertakings noted with the consent orders. This undertaking applies to existing and future use of the Respondent's mark in relation to all goods and services. For the avoidance of doubt, nothing in this undertaking restricts the Applicant's right to use trade mark no. 847,229 in relation to the services for which he is registered. In construing the consent orders and the undertakings, like principles are applied and in particular, evidence of the surrounding circumstances, or context, is admissible: see Nokia Corporation v Liu [2008] FCAFC 138 at [29] - [31] . 53 I earlier noted that Mr Wilkshire's legal advisers accepted an offer of compromise made by the Council's solicitors on 9 March 2007. While there may be an outstanding question whether that compromise included a non-disclosure undertaking, there is no doubt that it included the above two undertakings. Whether or not Mr Wilkshire's advisers exceeded their authority in acting as they did is not presently relevant. There can be no doubt that, in the circumstances, they acted within their ostensible authority to compromise the action. Equally there is no doubt that Mr Wilkshire was prepared to accept the compromise in the form offered in the letter of 27 February 2007 from the Council's lawyers. It was, in substance, what is contained in the consent orders and undertakings. Both the evidence and legal principle point in one direction. Whatever grounds for complaint (if any) Mr Wilkshire has against his advisers, he was bound by the consent orders and he remains bound by his contractual undertaking. 54 The remaining question is whether, by the undertakings given, he contractually bound himself not to initiate the present proceedings. 55 On its face cl 4(b) only refers to threatening the Council "with any form of action ... in relation to the use of the Respondent's mark". Considered against the backdrop of s 129 of the Trade Marks Act , it might well be thought that the sub-clause was intended to be no more than a contractual adaptation of that provision. 57 It, doubtless is the case, that both s 88 and s 129 could be said to be part of the context in which the parties entered into their contractual arrangement. More important though are the circumstances of the action itself and of the orders agreed to and undertakings given. 58 The Council contends that cl 4(b) created an estoppel by convention which barred Mr Wilkshire for instituting the present proceeding. I have some difficulty in understanding how this species of estoppel (on which see generally Handley, Estoppel by Conduct and Election , Ch 8 (2006)) in this setting assists the Council beyond the assistance which it properly can derive from the construction of the undertakings themselves in their setting. The context does provide quite clear indications as to how the language of the undertakings should be interpreted but that conclusion is arrived at by well accepted processes of interpretation. It does not in this matter seem to suggest that the parties adopted some assumption as the "conventional basis" upon which they entered into their compromise and from which Mr Wilkshire should not now be allowed to depart: Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58 ; (1937) 59 CLR 641 at 657. Likewise the manifest intent of the consent orders, when considered in the context of the undertakings, was not simply to bring to an end a proceeding of "a quasi summary nature". Put shortly, the combined effect of the orders and undertaking was that their dispute over the mark was to be at an end then and thereafter. Order 1 and Undertaking 4(a) were to secure for the Council its registered mark vis-à-vis Mr Wilkshire; Undertaking 4(b) was to secure the use and enjoyment of that registered mark undisturbed by actions, threatened or initiated, by Mr Wilkshire. In aggregate the parties' compromise agreement was more than the bare compromise on an opposition appeal. In this setting "not to threaten ... with any form of action" manifestly was intended to comprehend "the initiation" of an action. Similarly any action in relation "to the use of" the registered mark encompassed an action in relation to its use as a registered mark. 61 In its setting cl 4(b) is not in my view to be construed as some adaptation of the s 129 "threat action". Rather, it can, and should be, interpreted as I have indicated above. As such, it could be relied upon as a complete defence to the prosecution of the present application. It provides yet another basis for summary judgment against him under s 31A of the Federal Court of Australia Act . 63 In these circumstances it is unnecessary for me to consider the Council's later motion for security for costs. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Counsel for the First Respondent: The First Respondent did not appear. | applicant seeking rectification by cancellation of trade mark construction of s 88 of trade marks act 1995 (cth) grounds relied upon not enlivening s 88 of the act quasi summary nature of trade mark opposition proceedings orders by consent dismissing appeal to federal court undertakings noted including undertaking "not to threaten the respondent ... with any form of action" construction of consent orders and undertakings threaten in the context intended to comprehend "the initiation" of an action trade marks practice and procedure |
The applicants allege that the respondents contravened s 45 of the Trade Practices Act 1974 (Cth) ('the Trade Practices Act '), and claim declarations pursuant to s 163A of that Act (and/or s 21 of the Federal Court Act), damages pursuant to s 82 of that Act, injunctions pursuant to s 80 of that Act, orders pursuant to s 87 of that Act and consequential relief. 2 Subject to approval by the court, the proceeding was settled by an agreement between the parties made in December 2005. By s 33V of the Federal Court Act, a representative proceeding may not be settled without the approval of the court. The question which now arises is whether the settlement of December 2005 should be approved by the court. Those vitamins, which have been referred to as 'class vitamins', are vitamins A, E, B1, B2, B5 and C, and Betacarotene and Canthaxanthin. The respondents produced and distributed those vitamins, in ways to which I shall refer in more detail presently, within the period to which the proceeding relates, 5 March 1992 to 31 December 1999 ('the relevant period'). The applicants and the group members whom they represent, purchased and used those vitamins, or product containing those vitamins. The applicants alleged that, during the relevant period, a cartel existed between various of the respondents which would otherwise have been in competition with each other which was calculated to maintain the prices of the relevant class vitamins at levels higher than would have obtained in the absence of the cartel. 4 Neither the applicants nor the group members which they represent were end consumers. The first applicant was a purchaser of premix containing certain of the class vitamins for animal nutrition or health purposes, and was a grower of chicken meat for human consumption with its own feed milling facilities. The second and third applicants were manufacturers, distributors and suppliers of premixes which contained class vitamins, and manufacturers and sellers of vitamins and mineral premixes for use in animal feed. It seems that vitamins used in the animal feed chain were almost always first incorporated into premixes of which there were, I was told, hundreds of different formulations. The appropriate premix was then selected for incorporation into stock feeds of various kinds. Those stock feeds were in turn selected by livestock producers of the kind referred to in par (c) of the description of the group members. In addition, appropriate premixes were selected by manufacturers of veterinary and performance enhancement preparations and supplements, and of pet food of various kinds. The first category are the 'Roche respondents', being four related companies ultimately owned by Roche Holding AG, a Swiss corporation. F Hoffman-La Roche Ltd is a Swiss company which carried on business as a manufacturer and supplier of class vitamins in Switzerland, and which, on the applicants' allegations, co-ordinated and supervised the manufacture and supply of class vitamins in Switzerland and elsewhere in the world through related companies. Roche Products Pty Ltd is an Australian company which imported class vitamins, and supplied them in Australia, save that, it alleges, between 1991 and 1998 it supplied class vitamins only to Roche Vitamins Australia Pty Ltd. That latter company is also a respondent and carried on business as a supplier of class vitamins (and, it alleges, premixes containing class vitamins) in Australia. Roche Vitamins Asia Pacific Pte Ltd is alleged by the applicants (but it does not itself admit) to have been, since 3 April 1997, a supplier of class vitamins in Singapore to have co-ordinated and supervised the supply of class vitamins in the Asia Pacific region, including Australia. 7 The next category of respondents is what the applicants call the Aventis respondents. Aventis SA is incorporated pursuant to the laws of France, and is the ultimate holding company of the other Aventis respondents. The applicants allege that Aventis SA co-ordinated and supervised the manufacture and supply of class vitamins in France and elsewhere in the world through related companies, an allegation which is not admitted. Aventis Animal Nutrition Pty Ltd is an Australian company which, according to the applicants' allegations, carried on business as an importer, packager and supplier of class vitamins in Australia and which, according to its own admissions, was an importer and supplier of class vitamins, and a manufacturer/packager and supplier of premix containing class vitamins. Aventis Animal Nutrition SA is a French company which carried on business as a manufacturer and supplier of class vitamins in France and, according to the applicants, co-ordinated and supervised the manufacture and supply of class vitamins in France and elsewhere in the world through related companies. Aventis Animal Nutrition Asia Pacific Pte Ltd is a Singaporean company which carried on business as a supplier of class vitamins in Singapore and, the applicants allege, which co-ordinated and supervised the supply of class vitamins in the Asia Pacific region, including Australia. 8 The third category is what the applicants called the BASF respondents. BASF AG is a German company which was the ultimate holding company of the other BASF respondents, which carried on business as a manufacture and supplier of class vitamins (not including, according to its own admissions, the manufacture of vitamin B1 in the relevant period) in Germany and elsewhere and, according to the applicants, which co-ordinated and supervised the manufacture and supply of class vitamins in Germany and elsewhere in the world through related companies. BASF Australia Ltd is an Australian company which carried on business as an importer and supplier (and, the applicants allege, packager) of class vitamins in Australia (excluding, according to its own admissions, Betacarotene) and, it alleges, was a packager of premix. BASF East Asia Regional Headquarters Ltd is a Hong Kong company which, according to the applicants, carried on business as a supplier of class vitamins in Hong Kong and co-ordinated and supervised the supply of class vitamins in the East Asia region, including Australia, but which, according to itself, was a service company only. 9 Although the applicants' case as to the structure and operation of the three categories of respondents, and of the respondents themselves, is not wholly admitted, and although aspects of that case are denied, there are certain common features which may be regarded as having been established on the pleadings. Within each corporate group, the ultimate holding company is incorporated in Europe and, by reason of that circumstance, may be assumed to exercise control over the other respondents in that group. In each case there is a company established in the South East Asia region, although the significance to Australia, and actual role, of each such company remains controversial. In each case there is at least one company operating in Australia, which, it is admitted, imported class vitamins and supplied them to the Australian market, and/or, in certain cases, incorporated them in premix which was, in turn, supplied to the Australian market. This last aspect is significant for one element of the settlement. As I have said above, Australian manufacturers of premixes containing class vitamins are group members in the proceeding. 10 The applicants allege that there were, during the relevant period, arrangements or understandings as between the European respondents, to maintain agreed market shares with respect to the class vitamins, to adhere to agreed prices and to supply the class vitamins in volumes that were agreed between them. It is alleged that these agreements were made as between the European respondents with a view to being implemented in global markets. The applicants allege that there was communication between the European respondents over the course of the relevant period in which they affirmed these arrangements or understandings, and in which they agreed to procure the implementation thereof by causing companies elsewhere in the world within the relevant corporate groups to observe them. It is alleged that the arrangements or understandings, as made, had the purpose, and would have, or have been likely to have had, the effect of substantially lessening competition and, as given effect to from time to time, in fact had that purpose and had, or would have been likely to have had, that effect in each case contrary to relevant provisions of s 45(2) of the Trade Practices Act . The applicants make a series of allegations, to which I need not refer further for present purposes, which would, if accepted, justify the conclusion that the conduct of which they complain occurred in Australia. 11 The applicants also alleged that the European respondents implemented the arrangements or understandings within the South East Asian region by causing the regional respondents, within their respect corporate groups, to observe them. According to the applicants' allegations, the regional respondents were not involved (and it is not clear whether they existed) over the whole of the relevant period, the allegation in other respects being that the European respondents caused the arrangements and understandings to be implemented directly in Australia. However, for part of the relevant period, the regional respondents were said to be involved in giving effect to the arrangements and understandings to which I have referred. 12 The applicants next allege that the Australian respondents reached their own arrangements and understandings for what was in effect a co-ordinated system of co-operation between them to confine themselves to agreed market shares, to observe prices for class vitamins which they had agreed between each other and to supply class vitamins only in agreed volumes. It is also alleged that the Australian respondents agreed with each other, and with others, to implement in Australia the arrangements and understandings to which I have referred above, that is to say, those originating at the level of the European respondents and, for at least part of the relevant period, passed down the line by way of the regional respondents. It is alleged that, in making and in subsequently giving effect to arrangements or understandings along these lines, the Australian respondents acted in contravention of s 45(2) of the Trade Practices Act . 13 The very brief survey of the applicants' allegations which I have just set out does less than complete justice to a lengthy and complex Statement of Claim. In a contested proceeding, much greater care would need to be paid to each allegation, and to its relationship with other allegations. It should not be assumed, from the survey I have given, that the applicants have treated the three groups of respondents identically as between each other. Throughout the Statement of Claim there are differences in point of detail as between the groups of respondents, as between the respondents in each group and as between the allegations which relate to particular vitamins. For present purposes, it is sufficient to note that systematic and co-ordinated global arrangements, implemented in Australia, by which the respondents agreed on market shares, prices and volumes have been alleged against them by the applicants. Subject only to a possible qualification as to the application of the Trade Practices Act in the case of the respondents' conduct occurring outside Australia, there can be little doubt but that the applicants' allegations, if accepted, would amount to a serious contravention of s 45(2) of that Act. 14 In their defences, the respondents have made a number of admissions. In no case is contravening conduct admitted with respect to the whole of the period for which the applicants sue. However, in many cases, the admissions relate to a very substantial portion of that period. The Roche respondents admit that there were arrangements of the kind alleged by the applicants at the global level in relation to all of the class vitamins, at the regional level in relation to five of the eight class vitamins, and at the Australian level in relation to vitamins A and E. The Aventis respondents admit that there were arrangements of that kind, for some of the relevant period, at all three levels but in relation to vitamins A and E only. The BASF respondents admit to the existence of such arrangements at the global level for all vitamins except B1, and at the Australian level for vitamins A and E only. 15 When looked at within a purely Australian frame, the applicant has secured admissions from one respondent in each of the three corporate groups that arrangements or understandings of the kind alleged existed in Australia for a substantial part of the relevant period, but in relation to vitamins A and E only. In other respects, there are no admissions as to arrangements and understandings occurring purely within Australia. 16 I should also mention at this stage that, on 28 February 2001, the court gave judgment in Australian Competition and Consumer Commission v Roche Vitamins Australia Pty Ltd (2001) 23 ATPR 42,806. The applicant Commission ('the ACCC') had commenced proceedings under s 77 for penalties under s 76 of the Trade Practices Act against each of the three Australian respondents concerned in the present proceeding. Each respondent admitted contraventions of s 45(2)(b) of that Act in relation to vitamins A and E, and joined with the ACCC in submitting that a penalty should be imposed. Acting on those submissions, the court imposed penalties totalling $26m, and each respondent was ordered to pay $65,000 towards the ACCC's costs. This event is relevant in the present proceeding because the applicants proposed to rely on s 83 of the Trade Practices Act , under which findings of fact made in those proceedings would be prima facie evidence in this proceeding. During the course of that mediation, the applicants accepted an offer from the respondents to settle the proceeding for the sum of $30.5m, plus costs of $10.5m. The settlement was governed by 'heads of agreement' signed by the parties' solicitors on 16 December 2005, and was subject to the approval of the court. The agreement, the operative provisions of which are set out in Schedule I to these reasons, provides for the establishment of an interest-bearing account, called the 'Vitamins Settlement Reserve Fund' ('the reserve fund'), into which the respondents would pay (and did pay) the total settlement of $41m by 13 January 2006. The agreement provides that, if and when the court approved the settlement, the $10.5m costs figure will be paid to the applicants' solicitors, and the $30.5m settlement figure will be paid into an account called the 'Vitamins Settlement Distribution Fund' ('the distribution fund'). The interest which has been earned on the reserve fund, and that which will, after approval, be earned on the distribution fund, are to the extent necessary to be applied to the payment of disbursements incurred in connection with obtaining court approval of the settlement and of the costs of administering the settlement scheme to which I next refer. 18 The agreement provides for a settlement scheme pursuant to which the settlement sum of $30.5m will be applied and administered to the benefit of the applicants and the group members. The settlement scheme is the responsibility of the applicants, but, under the agreement, the respondents were given the opportunity to comment on it. The settlement distribution scheme was eventually finalised by the applicants on 10 July 2006. It is reproduced in Schedule II to these reasons. What are described as 'reimbursement payments' are first to be paid from the settlement sum to group members nominated by name in the scheme. The purpose of these payments is to reimburse two of the group members for their out-of-pocket expenses incurred in connection with the prosecution of the proceeding, and to compensate seven of the group members for the time and effort which they have devoted to the proceeding on behalf of group members as a whole. The total of these reimbursement payments, as amended shortly before the hearing of the applicants' motion, is $418,360.00. b. What remains of the settlement sum is then to be divided into two parts. The first part, 7.0/30.5 of the fund, is to be allocated to a 'loss of market share fund' ('LMS fund'). The remaining part, 23.5/30.5 of the fund, is to be allocated to an 'overcharge fund'. This division reflects the two main categories of damages which the applicants sought in the proceedings, to which I have referred above. That is to say, the view was taken that, if the total settlement sum were notionally divided into 30.5 parts, 7.0 of those parts should be available as damages for those group members who lost market share as a result of the respondents' conduct, and 23.5 of those parts should be available as damages for those group members who were obliged to pay more for vitamins, and/or for products containing vitamins, as a result of the respondents' conduct. There is, of course, no reason why a particular group member might not, depending on its circumstances, have legitimate claims under both categories. c. A group member who manufactured premix containing class vitamins during the relevant period, and which makes a properly documented claim, is treated as a 'loss of market share' claimant (or 'LMS' claimant) and is entitled to participate in the LMS fund. That entitlement is based directly upon the member's purchases of class vitamins during the relevant period and the purchases of class vitamins during that period by all LMS claimants. In other words, the scheme in this respect is based upon an assumption that all manufacturers of premix will have lost some market share as a result of the respondents' conduct, and should share in the fund established for that purpose rateably according to their purchases of class vitamins. d. The overcharge fund is available for distribution to all group members which have properly documented claims. The distribution of the overcharge fund as between group members requires first the calculation, in respect of each group member, of a figure described as 'overcharge'. That having been done, the overcharge fund is to be allocated between group members rateably according to their established purchases of vitamins or of products containing vitamins. As will be seen from Table 1 in the settlement scheme, the ascertainment of the 'overcharge' involves the application to established purchases by each group member of a percentage factor which varies according to whether the group member was a premix manufacturer, a feed manufacturer, a livestock producer or an integrated livestock producer (or, in the case of the veterinary and pet food sectors: a manufacturer, distributor or supplier) and as to the particular industrial sector (or 'supply chain' as it is called) in which that group member operated. The scheme does not provide details as to the derivation of the percentage factors (set out in the column headed 'Vitamin Cost and Absorption Rate'), but this has been dealt with comprehensively in the evidence before me, and I shall refer to it below. e. The scheme will be administered by the applicants' solicitors. A group member seeking to participate will be required to lodge a proof of claim form in accordance with that set out in Schedule A to the scheme. The form is required to be accompanied by such invoices or other business records as are necessary to establish the claim. f. The applicants' solicitors, as administrators under the scheme, will issue an assessment notice for each group member who lodges a claim. If the group member wishes to dispute that assessment, there will be a review procedure involving recourse to a named 'independent counsel'. Questions of law can be referred to the court. g. The court is also given a role under the scheme if any issue arises in relation to the scheme, or the administration or the implementation of the scheme, and in connection with the possible extension of time limits set out in the scheme. I dealt with that motion in the orders made on 18 July 2006: see Darwalla Milling Co Pty Ltd v Hoffman-La Roche Ltd [2006] FCA 915. That notice gave the group members an opportunity to object to the settlement, if they so desired, by notice sent to the court. The court received no objections. 20 I am satisfied that the s 33X(4) notice to which I have referred was published in accordance with the orders made on 18 July 2006. On 19 July 2006, they sent to the group members registered with them (142 in total) a letter informing them of the fact of the settlement and attaching the s 33X notice and the proposed settlement scheme, including schedules. They caused the s 33X notice to be published in the Adelaide Advertiser, the Brisbane Courier Mail, the Canberra Times, the Hobart Mercury, the Melbourne Hearld-Sun, the Northern Territory News, the West Australian, the Sydney Daily Telegraph and the Australian on 20 July 2006. A copy of each of the s 33X notice and of the settlement scheme was attached to the letter. The name and address of each of these industry associations is set out in a table contained in an exhibit to an affidavit upon which the applicants rely. Although it is fair to say this document was promotional as well as informative, it was calculated to raise public awareness of the litigation and of the settlement. Although the announcer described the litigation as 'Australia's first ever class action against a price fixing cartel', it is, I find, unlikely that this news item would have gone further than merely to raise awareness, amongst members of the public, of the litigation in a general sense. It was not addressed to group members as such and there was nothing in it which is likely to have alerted a group member (otherwise only generally aware of the litigation) of the fact or purport of the s 33X notice. 22 By contrast, on 18 July 2006 at about 12:15 pm on the program 'SA Country Hour', the reporter said not only that Australia's first ever class action against a price fixing cartel had been settled, but also that many farmers could be eligible for compensation, that the respondents had agreed to pay $30.5m in damages, that, upon endorsement by the court, farmers, feed lotters and feed suppliers would be among those eligible to claim damages and that the lawyers were keen to hear from anyone who thought they were affected, it not being too late to join the claim. The applicants' solicitor was interviewed on this program, and made it clear that persons who thought they were part of the group and had a claim should contact the solicitors and submit a proof of claim form. 23 On a television news item on 'WIN News' at about 6:10 pm on 14 August 2006, it was said that primary producers and businesses who lost money to a 'pharmaceutical price fixing cartel' were being called on to join a class action. The announcer added that the court would decide whether to approve the settlement 'for those who purchased vitamins from the companies for stock feed and veterinary use'. The reporter referred to the applicants' solicitors, and to their statement that it was now time for any producer who had spent more than $2,000 on relevant products to come forward. The applicants' solicitor was also interviewed on this program, and she made it clear that qualifying group members could share in the settlement if it were approved. 24 In the period subsequent to 17 July 2006, the litigation, and the settlement, were frequently mentioned in the print media. However, of the items which were put in evidence before the court, only two contained any comment which might excite the interest of group members to the prospect that they had the opportunity to become involved in the litigation and to put their claims forward (an item in the Sydney Morning Herald on 18 July 2006 headed 'Pharmaceutical Companies Settle First Cartel Class Action' and an item in the Adelaide Advertiser on 22 July 2006 headed 'Vitamins Settlement Businesses Can Claim'). 25 Since the publication of the s 33X notice, the applicants' solicitors received about 30 inquiries from group members regarding the settlement. Of these, about 20 were from group members who were already registered with the solicitors, and the remaining ten were new inquiries. Various details were discussed and points of clarification dealt with. The solicitors also spoke with certain of the larger group members regarding the settlement and distribution scheme. The attitude of these group members towards the settlement was positive. No-one expressed an objection to the settlement or the distribution scheme. 26 In considering the probable efficacy of the steps taken to publish the s 33X notice, and of the applicants' solicitors other steps calculated to publicise the facts of the litigation and of the settlement, I consider it significant that the group members were confined to businesses who had, over the relevant period, spent $2,000 or more upon vitamins or products containing vitamins, and did not include any end consumers. I am prepared to assume that persons in business of a particular kind would be more likely, one way or another, to encounter the publications to which I have referred above, and to be, at least broadly, conscious of the significance of them to their own circumstances. I also take into account the fact that the litigation has been on foot since 1999, and that the Australian respondents were the subject of orders by Lindgren J in the proceedings instituted by the ACCC to which I have referred in 2001. 27 The intent of the s 33X notices was to maximise the prospect that group members who had not previously made contact with the applicants' solicitors and who were otherwise not directly involved in the proceedings, would become aware of the settlement, have the means of accessing the terms of the settlement scheme, and be conscious of the opportunity available to them to object to the settlement or to the scheme. I am satisfied that that objective has been substantially if not wholly achieved. As I have noted above, there have been no objections lodged to the settlement or the settlement scheme. In the circumstances, I infer that reasonable group members are at least broadly aware of the terms of the proposed settlement and are content with it. That provides a powerful reason why I should approve the settlement, not only to the extent that it relates to the actual views of these group members, but also to the extent that absence of objections after wide publication of the terms of the settlement might be regarded as providing objective confirmation of the proposition which lies at the core of the applicants' case, namely, that the settlement is fair, reasonable and adequate in the interests of group members as a whole. 28 The notice under s 33X(4) informed group members that the applicants would seek the court's approval of the settlement on 31 August 2006, the adjourned date of the applicants' Notice of Motion of 11 July 2006. On 31 August, the applicants moved the court to approve the settlement, and the orders which they sought in that regard were consented to by the respondents. 29 Mr Pagone QC, who appeared with Mr McArthur SC and Mr Armstrong for the applicants, submitted that the settlement was fair, reasonable and adequate in the interests of the group members as a whole and should, therefore, be approved. Her Honour's observation has been referred to on a number of occasions since by Judges of the court, but not, so far as I can find, for the purpose of identifying a criterion by reference to which approval should be given, or declined. Notwithstanding that circumstance, I consider, with respect, that Branson J accurately identified a consideration which must inform the exercise of the court's discretion under s 33V, namely, the need to protect the interests of group members as a whole, and to ensure that those interests are not subordinated to those of the actual parties in the proceeding. The group members are not protected in this way. Ordinarily in such circumstances the Court will take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement. See Girsh v Jepson 521 F 2d 153 at 157 (1975) (3d Cir). Those factors are: (1) the complexity and duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining a class action; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement in light of the best recovery; and (9) the range of reasonableness of the settlement in light of all the attendant risks of litigation. ) This nine-factor test is equally helpful in the Australian jurisdiction and I find it a useful guide in considering the present proposed settlement. They have similarly been adopted for the equivalent procedure in the Supreme Court of Victoria: see Tasfast Air Freight v. Mobil Oil Australia Ltd [2002] VSC 457 (Bongiorno J); Verschuur v. Vynotas Pty Ltd [2004] VSC 130 (Mandie J). It is firmly established that the central question is whether the proposed settlement is fair, reasonable and adequate in the interests of the group members. To the instances referred by the applicants as set out above may be added the judgment of Young J in Georgiou v Old England Hotel Pty Ltd [2006] FCA 705 , [18]. In none of these cases (including the two Victorian ones referred to), however, does one find a practical elaboration of what it is about a particular settlement, or about settlements in general, that make it, or them, 'fair and reasonable'. Further, although Goldberg J referred to a series of matters which the court would ordinarily take into account, subsequent judgments of the court under s 33V do not disclose any pattern of systematic consideration of such matters in the way, for example, of a check-list. In practice, every case is dealt with on its own merits, and by reference to specific factors which might raise serious doubts as to fairness and the like. 34 The present case provides an example of why a check-list approach will not always be appropriate. Goldberg J suggested that, 'ordinarily, the court would take into account the amount offered to each group member'. As is apparent from the settlement distribution scheme in the present case, the court does not know (and the applicants do not know) what will be the final entitlement of each group member under the settlement. Necessarily, no amount has been 'offered' to each group member. Likewise, for reasons explained elsewhere in these reasons, it is difficult to reach any measure of 'the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer'. The settlement here is based on formulae, rules of thumb and assumptions which the court may well consider to be fair and reasonable as a means of disposing of the issues which the group members as a whole confront in this litigation, but which defy any attempt to identify which particular group members, if any, would be likely to obtain judgment at trial in any particular amount. On the other hand, some of the matters to which Goldberg J referred are, with respect, very useful in the context of the present case. The advice which the applicants have received from counsel, solicitors and experts lies at the centre of their justification for the settlement. The terms and comprehensiveness of those advices have been critical to my consideration of the matters arising under s 33V. The likely duration and cost of this proceeding, were it to continue to judgment, is a factor of particular significance. The attitude of the group members to the settlement is also something which, as appears below, plays a useful role in the present case. 35 Save to the extent that they enunciate what would, with respect, be obvious, I have found myself less assisted by the nine factors which Goldberg J extracted from the judgment of the US Court of Appeals for the Third Circuit in re GM Corp Pick-Up Truck Fuel Tank Products Liability Litigation 55 F 3d 768, 785 (1995). Although the notion that a settlement should be 'fair and reasonable' seems unobjectionable as a matter of principle, if that consideration is to inform the process of approval under s 33V, it should, in my respectful opinion, be because of its harmony with the scheme of Pt IVA of the Act, and because it tends to achieve the implicit object of the section. I can, with respect, see no particular warrant for incorporating into Pt IVA the requirements of rules of court in an overseas jurisdiction. In that matter, the US Court of Appeals for the Third Circuit heard an appeal from the District Court, in which one group of appellants attacked the settlement of a class action 'on the ground that it is so small as to be grossly unfair on its face', and objected to the manner in which the District Court had approved the settlement, and a second group of appellants sought to overturn the award of fees for various attorneys. If it did, then there is no reason to hold an additional hearing on the settlement or to give appellants authority to renew discovery. There is no doubt that it did. The Court of Appeals said that the decision whether to approve a settlement was 'left to the sound discretion of the District Court' (at 156), and went on to say that 'some of the factors which are relevant to a determination of the fairness of settlement were listed' in Detroit (at 156-157). As it happens, the Court of Appeals held that the District Court, in Girsh , had referred to the nine factors in Detroit , but ought not, for other reasons, have approved the settlement in the case. It was from the Court of Appeals judgment in Girsh that the same court derived the nine factors in GM Corp , to which Goldberg J referred in Williams . 38 I consider that the nine factors derived from GM Corp have at least two limitations for purposes of the present case. First, these factors were never stated to be exhaustive of the things which the court should consider under s 33V (and Goldberg J did not propose otherwise). As will appear from what follows hereunder, the present case involves specific problems and issues which no predetermined list could ever hope to anticipate. Secondly, as is apparent from the provenance of those factors to which I have referred above, their original purpose was substantially concerned with a consideration of the adequacy of an overall settlement sum. The factors throw little light on the proper resolution of the rather difficult inter se issues that arise in a proceeding such as the present. 39 I have not found any discussion, either in the American or in the Australian authorities, as to the connotation that should be given to the words 'fair', 'reasonable' or (should it matter) 'adequate' in particular situations. In both jurisdictions the expression seems to have been used as composite one. The practical judicial approach has been, or so it appears to me, to identify any features of a settlement that are obviously unreasonable or unfair, a task which comes more easily to a court than the obverse one of assessing the reasonableness and fairness of a settlement in an environment generally devoid of negative indications. Where some group members object to a settlement and state their reasons therefor, their reasons will provide a convenient focus by reference to which the court will decide matters of fairness and reasonableness. They may, at the same time, distract the court from its task of critically evaluating the settlement in other respects. I am spared such distractions in the present case, but I am, as a result, left with only the broadest criteria against which to undertake that task. 40 As appears from para 27 above, the applicants submitted that it was 'firmly established that the central question is whether the proposed settlement is fair, reasonable and adequate in the interest of the group members'. I am minded to decide the present matter by reference to the question whether the proposed settlement is fair and reasonable in the interests of group members as a whole, but I must say that I approach the question of 'adequacy' with some caution. For reasons which I explain elsewhere, I doubt that the court is in the best position to assess the adequacy of the settlement in the present case, although I accept that manifest inadequacy would generally provide a strong reason to refuse approval under s 33V. 41 I propose to consider each of the two categories of loss which the applicants have identified --- overcharge loss and LMS loss --- discretely. In relation to each, I propose first to consider whether the overall settlement sum is reasonable, having regard to the manner of its calculation and its relationship to a best possible case outcome for the group as a whole, the prospect of achieving an outcome at or near the best possible case, the extent of the weaknesses, substantive or procedural, in the applicants' case, whether the settlement sum falls within a realistic range of likely outcomes, the forensic difficulties which would be involved in the conduct of the case to judgment, including the distractions, for an operating business, of being involved in such an undertaking, and the time and costs which have been saved by a settlement at this stage. I propose to turn then to the question whether the settlement, including the distribution scheme, involves any actual or potential unfairness to any group members, or categories of group members, having regard to all relevant matters, including whether the overall settlement sum, even if reasonable as such, involves unfair compromises by some members, or categories of members, for the benefit of others, and whether the distribution scheme fairly reflects the apparent or assumed relative losses suffered by particular members, or categories of members. Any consideration of the fairness and reasonableness of the settlement in the present case must take into account not only the overall settlement sum and its relationship with the amount that might be considered a best possible outcome after a successful trial, but also the structure and workings of the scheme by which that sum is proposed to be distributed amongst group members. The fairness and reasonableness of the settlement, from the point of view of any one group member, will necessarily depend on both of these factors. This was the amount that was paid into the reserve fund in January 2006. The interest subsequently earned on that fund was to be used to meet the disbursements involved in obtaining the court's approval and the costs of administering the settlement scheme. It was from the outset contemplated as a possibility that these disbursements and costs would not use up all the interest earned since January 2006. Further, the so-called reimbursement payments (which I shall consider further below) are to be taken from the fund before any distribution to the generality of group members. For these reasons, when that distribution comes to be made, it would be a sheer coincidence if the sum remaining was exactly $30.5m. However, since the possibility of there being some residue of interest remaining in the fund must be considered speculative, and since the fairness etc of the reimbursement arrangements should be considered separately, it is appropriate to treat $30.5m as the sum for which the proceeding was settled. This sum is to be regarded as covering the applicants' case for conventional loss and damage as well as their contingent claim for interest from the date when the cause of action arose under s 51A of the Federal Court Act. 43 The formula for dividing the settlement sum --- whatever it may precisely be at the time when the division comes to be made --- between overcharge damages and LMS damages requires, as mentioned earlier, that the total sum be divided into 30.5 parts, with 23.5 of those parts being allocated to the former category and 7.0 of those parts being allocated to the latter category. From this it is implicit that the underlying settlement is one in which the respondents should be regarded as paying $23.5m as settlement for the claim relating to overcharge, and $7.0m as settlement for the claim relating to LMS. The question is whether these sums are within the range of fair and reasonable outcomes by way of settlement of this proceeding. 44 Turning first to the overcharge damages, as I understand it, the applicants commence with the proposition that, prima facie at least, a trader who was affected by inflated prices the result of a cartel amongst its relevant suppliers was worse off by the amount of the additional expense to which it was put, in its purchases of vitamins or other affected product from those suppliers, as compared with the like expenses which would have been incurred in a non-cartel situation. A calculation of this detriment required the applicants to have two things: first, data showing the value of actual purchases of particular vitamins and product by group members over the relevant period; and secondly, a percentage figure representing the extent to which the price of each vitamin and product was higher than it would have been in a non-cartel situation. Purchase data was, of course, available to the applicants themselves, as they had made their own purchases. They had no reliable way of knowing, however, what was the actual value of the purchases across the whole group. This deficiency was supplied by the respondents in the negotiations leading to the settlement in December 2005. The respondents supplied the applicants, on a confidential basis, with details of their sales of each vitamin in Australia during the relevant period. 45 Calculating the percentage by which the prices of the various vitamins and products were higher than they would have been in a non-cartel situation was a much more difficult task for the applicants. The respondents took issue with the applicants' basic proposition in this respect, and could not be expected to be the source of any particular co-operation. The applicants' approach to this task was to engage the services of two expert economists (one of whom had provided an expert opinion in similar litigation in Canada) to provide their estimates of those percentages. This they did, but it is clear from their reports --- which are contained in confidential exhibits --- that their conclusions are, at several points, based upon assumptions rather than hard data and involve alternatives and ranges, largely dependent upon which of the assumptions one accepts, rather than a single, unique, outcome. By applying the percentage so calculated, with all its imponderables, to the value of purchases from the respondents, in the way I have suggested, the applicants were able to derive an estimate of the additional amount which the group members as a whole spent on purchases of each vitamin over the relevant period. 46 But the applicants were not entitled to assume that they would necessarily succeed for the whole of that amount. In this respect it is important to observe that, although the Australian respondents admitted the allegations of breach of s 45 of the Trade Practices Act in the proceedings brought by the ACCC to which I have referred, those proceedings related only to vitamins A and E, and they were not at all concerned with the matter of quantification of loss and damage. In the present proceeding too, the Australian respondents have admitted contraventions of the section in relation to those vitamins, but they have put in issue the very existence of the cartel in Australia in relation to the other vitamins, and the occurrence of loss and damage in relation to all vitamins. While the forensic realities which led the Australian respondents to make these admissions may have encouraged them likewise to participate in settlement negotiations, the really challenging task of quantification remained for the applicants, and in that they were provided with no admissions, and presumably could anticipate no particular assistance, from those or the other respondents. 47 An additional concern for the applicants was that the respondents had pleaded that, to the extent that the applicants' case concerned loss and damage that occurred more than three years before the commencement of the proceeding, it was time-barred by s 82(2) of the Trade Practices Act . In so far as the applicants claimed damages under s 82 , it is hard to see that they would have had any answer to this defence. The proceeding was commenced in July 1999, yet the applicants' allegations of loss and damage ran from March 1992. As against this, the applicants would have been able to point to their claim for injunctions under s 80 of the Trade Practices Act , and to their allied claim for damages under s 87. The established jurisprudence in the Full Court is that there is no limitation period in such a situation: Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd [2001] FCA 1620 ; (2001) 114 FCR 108. However, Mr Pagone stressed, and I accept, that, in a case of the size and importance of the present one, the prospect of an argument succeeding, at some level, that s 87 should not be construed so as to defeat the apparent policy of s 82(2) could not be disregarded. In the circumstances, it was well within the bounds of reasonable negotiation for the applicants to allow for some risk that the earlier parts of their damages claim might be defeated by a limitations defence. 48 The applicants were then obliged to confront the proposition, which the respondents took in their defences, that they did not in fact suffer any loss or damage at all, because the impact of higher vitamin prices (to the extent that there were any) was passed on down the line to their own customers, and ultimately to consumers. This point had two dimensions: first, the basic proposition itself, which had the potential, if accepted by the court, to make serious inroads into the case which the applicants might otherwise have been able to make in loss and damage; and secondly, the significance of the proposition, to the extent that it was valid, for the apportionment of group-wide loss and damage as between group members in different categories (ie in the sense that, to the extent that one group member passed on the price increase to a customer who was a group member in a different category, the former's gain would be the latter's loss), a matter to which I shall turn below when considering the architecture of the distribution scheme itself. 49 In addition to the matters I have mentioned, the applicants' advisers considered a number of matters which might be regarded as posing actual or potential difficulties for their clients in the prosecution of the litigation. These matters are canvassed in the confidential memoranda which have been made available to the court, and I am satisfied that each was and is a legitimate consideration influencing what should be regarded as a fair and reasonable settlement in the circumstances. 50 It is not, I consider, the court's function under s 33V of the Federal Court Act to second-guess the applicants' advisers as to the answer to the question whether the applicants ought to have accepted the respondents' offer: the court's function is, relevantly, confined to the question whether the settlement was fair and reasonable. There will rarely, if ever, be a case in which there is a unique outcome which should be regarded as the only fair and reasonable one. In settlement negotiations, some parties, and some advisers, tend to be more risk-averse than others. There is nothing unreasonable involved in either such position and, under s 33V, the court should, up to a point at least, take the applicants and their advisers as it finds them. Neither should the court consider that it knows more about the group members' businesses than the applicants, or more about the actual risks of the litigation than their advisers. So long as the agreed settlement falls within the range of fair and reasonable outcomes, taking everything into account, it should be regarded as qualifying for approval under s 33V. 51 Here the applicants commenced with a figure which could have been regarded as a 'best possible outcome' one. They were then obliged to take into account the difficulties which they would encounter in proving their case, and the defences which the respondents raised. There was also the overarching consideration that, whether considered as a representative proceeding in the technical sense or merely as a proceeding in which there were numerous applicants, the evidentiary task of establishing that each claimant or applicant had in fact suffered loss and damage even approximately fitting the conceptual template discussed above would have been very onerous and, it must be assumed, problematic in some instances at least. Finally, there was the strong prospect that whatever damages figure was in fact established at trial would attract interest pursuant to an order under s 51A of the Federal Court Act. I am satisfied that all these factors were taken into account by the applicants and their advisers. 52 There is another matter which in a practical sense, added to the applicants' justification for reaching a settlement at this stage of the proceeding. Although the proceeding had, in December 2005, been on foot for six and a half years, discovery had not yet been given by the parties. The potential size of the discovery process --- even if limited to specific categories --- in a proceeding such as the present needs only to be contemplated for the utility of avoiding it to be immediately apparent. The applicants' irrecoverable costs in that regard are likely to have been considerable. I am satisfied that the applicants considered the cost saving which would result from a settlement achieved before discovery to be a significant practical inducement to settlement regardless of their views as to the strengths and weaknesses of their own case. This was manifestly a reasonable approach to settlement. 53 In all the circumstances I am satisfied that the compromise settlement involving $23.5m for overcharge damages, including s 51A interest, is a fair and reasonable settlement in the circumstances facing the applicants and the group members. 54 On the matter of the LMS damages, the applicants' case is based on the circumstance that certain of the respondents, by themselves engaging in the business of manufacturing and selling premix in Australia, enjoyed an unfair competitive advantage as against the group members which manufactured and sold premix because of their (the respondents') access to vitamins at prices which were not affected by the cartel. Accordingly, as mentioned above, the damages claimed here relate only to those group members which manufactured and sold premix. 55 As a matter of calculation, the applicants were required to estimate the extent of the market share that was lost to the respondents as a result of their cartel pricing each year over the relevant period, the sales that were lost as a result, and the profit that was foregone on those sales. The figures for the various years, which may not, and probably would not, have been the same, had then to be added together to give a total for the profits lost over the relevant period for all premix manufacturers. More so even than in the case of the overcharge calculations considered above, these calculations required estimates and assumptions about states of affairs which would have, but which in fact did not, prevail. There were a number of important imponderables. The applicants had the advantage of what strikes me as a sophisticated analysis by one of their experts, Prof Philip Williams, but even he was obliged to make a number of assumptions, or to work to assumptions given to him by the applicants. In addition, the various issues mentioned above in connection with overcharge damages (pass-on pricing, limitations defences etc) were equally present in connection with LMS damages. I consider that the proof of the factual elements necessary to make good this head of damages would have been every bit as problematic as in the case of overcharge damages: probably more so. 56 It is apparent from a reading of the applicants' experts' reports, and of the opinions of their legal advisers, that all concerned made a conscientious attempt to produce a systematic estimate of the actual group-wide lost market share damages, based on various assumptions. For this purpose they made use of the applicants' own practical experience of the business and financial structures in the relevant market sectors, of the statistical tools available to the experts and of the professional experience and common sense of the legal advisers. For a number of reasons, they considered that this claim was likely to be more problematic than the overcharge claim --- an assessment which, on my reading of the confidential material which was placed before the court, is well within the range of the reasonable. Each of the considerations to which I have referred in paras 44 to 53 above in the context of overcharge damages applies equally to the case of LMS damages. Taking those considerations into account, I am satisfied that the compromise settlement involvement $7.0m for LMS damages, including s 51A interest, is a fair and reasonable settlement in the circumstances facing the applicants. All group members will be entitled, on presentation of the required documentary proof of purchases, to participate in the distribution of the overcharge fund. This simple formula is intended to entitle each claimant to the same proportion of the overcharge fund as is the proportion of its own 'overcharge' within the summed 'overcharge' of all claimants. Evidently, the concept of 'overcharge' is central to the formula and thus to the entitlement of each group member. Use of the value of purchases by each claimant is consistent with the basis of the applicants' estimate of total overcharge damages to which I have referred earlier in these reasons, and I need say nothing more about it. The real driver, as it were, of the distribution of the overcharge fund between group members is the concept of the 'vitamin cost and absorption rate'. As will be seen from Table 1, that rate is 6.692% for all premix manufacturers, but it is less for businesses further down each supply chain (poultry, pig, cattle, etc) and the rates in different supply chains, even at corresponding levels (eg feed manufacturers) are not the same. 59 As is apparent from the nomenclature --- 'vitamin cost and absorption rate' --- each such rate has been calculated by reference to two factors: the higher cost of vitamins (or products containing vitamins) as a result of the cartel, and the absorption of that cost by the class of business in question. As to the former, from the confidential reports and opinions which were disclosed to the court, and from the supplementary explanations which were provided by counsel for the applicants on 31 August 2006, I understand that the factor takes account of the estimated incremental price of each vitamin (or product containing vitamin), expressed as a percentage of the estimated price that would have prevailed in the absence of the cartel, and the contribution, relative to other costs, of that incremental vitamin (or product) price in the cost structure of the particular kind of business to which the relevant item in Table 1 refers. As to the latter, from those same materials and explanations, I understand that the factor takes account of the estimated extent to which businesses of the particular kind absorbed, rather than passed on, the incremental cost of particular vitamins (or of products containing vitamins). Here the applicants have recognised two things: first, that to the extent that a particular increase in cost is passed down the line by way of higher prices to customers, it should not be treated as giving rise to any legitimate claim; and secondly, that in such a case, if the customer itself was a group member, that member's higher costs arising from the first group member's pass-down should be treated as giving rise to a legitimate claim. 60 The design of the regime of distribution for which cl 6.3 and cl 6.4 of the scheme provide is such as to make for the distribution of a finite fund between an as yet unknown number of qualifying group members in a way which recognises, at the level of principle at least, the nature and extent of the loss and damage most likely to have been suffered by them. It operates according to broad rules of thumb, of course, such as the implicit rule that group members operating at a certain stage of a particular supply chain will all have felt the impact of the cartel in the same way relative to their purchases. That this may not reflect the actual experience of particular group members may be a reality, and it may, ultimately, lead to particular group members getting a better, or a worse, deal than they ought to have got in an ideal world in which this complex litigation was fought to the end and damages were awarded to each group member according to its actual loss and damage. But I am satisfied that the vitamin cost and absorption rates contained in Table 1 have been developed with great care and after making every possible use of the applicants' own knowledge of the industries involved and of the financial and statistical data which is available to the applicants, and will produce results which are as close as may reasonably be, within the practical constraints imposed by the overall size of the settlement and the resources of the applicants, to the true relative overcharge damages suffered as between the various categories of group members referred to in the table. Although it is correct to say, as I have, that rules of thumb are involved, they are rules which are likely to be closely aligned with reality. 61 Turning next to the distribution of the LMS fund, all independent premix manufacturers will be entitled, on presentation of the required documentary proof of purchases, to participate in that distribution. In other words, the LMS fund will be distributed pro-rata among qualifying claimants according to their expenditure on purchases of class vitamins during the relevant period. For example, it is assumed that a premix manufacturer whose purchases of class vitamins from the respondents during the relevant period were double those of a second premix manufacturer would have experienced a loss of profits twice the size of that experienced by the second premix manufacturer. In the confidential material made available to the court, the applicants' experts and advisers have discussed the limitations of this approach but, ultimately, they have expressed the view that, in practical terms, it provides a reasonable basis for distributing a finite sum amongst those who will become entitled to participate. I am satisfied that the rule of thumb which the applicants have adopted in this respect provides a fair and reasonable approach to the distribution of the LMS fund amongst qualifying premix manufacturers. 63 The applicants have also attempted to address the situation of a premix manufacturer who was so badly affected by the cartel, and by the loss of market share caused by it, that it ceased manufacturing premix altogether during the relevant period, with the result that it then ceased purchasing vitamins from the respondents. The applicants recognised that use of the value of vitamin purchases from the respondents over the relevant period would, in the case of such a business, understate the loss and damage suffered as a result of the cartel. To make some allowance for this, the applicants (in cl 5.4 of the settlement scheme) allowed for an additional amount to be notionally added to the vitamin purchases of such a premix manufacturer, being, as I understand it, for each month after the particular claimant ceased manufacturing premix, up to a maximum of 18 months, one twelfth of the average annual purchases of premix by that claimant over the 3 years before it ceased manufacturing premix. This would not apply in the case of a premix manufacturing business which was transmitted to a third party. This formula is based upon a rule of thumb which, in effect, gives to a claimant which ceased manufacturing premix during the relevant period the credit of a further period, up to a maximum of 18 months, during which it is assumed that it would, had it not ceased manufacturing, have continued to incur ongoing loss of profits as a result of cartel pricing; and, of course, it is based also on the assumption that such a claimant, having been affected so seriously by the cartel as to make the decision to cease manufacturing premix altogether, should be regarded as at least as seriously affected by the cartel pricing as was a premix manufacturer who continued to manufacture premix for such an 18---month period. 64 There really is no way of knowing how close to reality are the rules of thumb and assumptions to which I have referred in the previous paragraph. The applicants have persuaded me, however, that some allowance ought to be made in this regard, and I am in no position to second guess the actual details of the allowance which they have made. In point of principle, the allowance is manifestly fair and reasonable, and I am prepared to accept it as such within the overall terms of the settlement. As I have indicated, the settlement involves a compromise in the way of most settlements. The applicants have taken into account the risk that they may not succeed, or not wholly succeed, in deciding to what extent they would be prepared to accept a discount on the face value of their overall claims for the purposes of settlement. This is, of course, a reasonable and commonplace approach. However, as indicated above, it is self-evident that the applicants, acting reasonably, ought not to regard their case as equally strong, or even approximately so, in relation to all of the class vitamins. In the case of vitamins A and E, the Australian respondents have admitted the existence of the cartel in Australia. In that respect, the trial would have been concerned with an assessment of loss and damage only. There are no admissions, however, in relation to the other vitamins. Further, I am satisfied from a perusal of the expert advice, and legal opinions, provided to the applicants that there were no grounds upon which the applicants might have reasonably believed that the case in relation to each vitamin was equally as strong as the case in relation to each other vitamin. 66 What the applicants appear to have done is to have made a broad assessment, covering all vitamins, of the prospects of success of the case as a whole, taking due account of the particular vitamins in which the case would be a strong one, and of the vitamins in which the case was not self-evidently strong. On this 'swings and slides' approach, the applicants have derived an overall settlement figure which they considered to constitute a reasonable outcome. If taken by a single litigant, such an approach could not be criticised: in deciding whether to settle for a particular sum, he or she would inevitably tend to trade off strengths against weakness. Even in a case in which there are several applicants, it would be legitimate for them to reach terms amongst themselves in which those with a stronger case might agree to place those strengths on the scales in the interests of achieving a favourable overall settlement, to the advantage of those with a weaker case. However, different considerations apply in the case of a representative proceeding under Pt IVA of the Federal Court Act. In the present case, it must be assumed that, unbeknownst to themselves, group members with stronger cases would, by participating in the overall settlement, share the advantages of their stronger cases with their fellows who had weaker cases. Under s 33V(1) of the Federal Court Act, the role of the court is to protect the interests of those who have no voice at the bar table, and it must be said that there is no obvious reason why the court should not assume that those unheard group members whose cases are strong would regard it as unfair and unreasonable to make compromises in the interests of other group members whose cases are weak. Counsel for the applicants suggested that his instructions were that the problem existed in the abstract only. His Honour is not persuaded that it is satisfactory to leave the matter there, and is prepared to provide the applicants with an opportunity to file further evidence on the subject, on or before 29 September 2006. If the applicants decide to follow that course, they should, if possible, ensure that that evidence deals with the question whether, during the claim period, there was in fact any, and if so what, difference, as between any, and if so what, group members, or categories of group members, in the relative values of their purchases of different vitamins from the Australian respondents and/or in the relative contribution, to the price of premix or feed, of the different vitamins. The applicants may, if they choose, accompany any such evidence with appropriate supplementary written submissions. Over 27 years' experience, he has acquired extensive knowledge of various pre-mix specifications, including the volume and value of vitamin components in pre-mixes used throughout the livestock industry in Australia. Pre-mixes specifically for beef animals usually also contain vitamin B1. The remaining B vitamins are not routinely added to these products. • There are occasions when a particular vitamin is excluded from a pre-mix formulation; eg B1 is sometimes excluded from a pig finisher pre-mix, from a broiler finisher pre-mix or from a layer pre-mix. Vitamin A is sometimes not included in a particular pre-mix, generally when the pre-mix is obtained not as a complete pre-mix but as a performance enhancing supplement, and when vitamin A is thus not included, it will almost always be added back by the client by other means. • Vitamin C is usually used only for animals under stress, or during the initial stages of growth. Treating the other vitamins as those for which the applicants' case is not self-evidently strong, the pattern of the usage of those vitamins is not evidently skewed towards a particular livestock supply chain, or particular categories of group members. From the evidence recently filed, including the confidential material included in that evidence, I am satisfied that, in these livestock supply chains, vitamins other than A and E generally tend, in volume and value terms, to be the minor component of the vitamin ingredients in the pre-mix; although, as Mr Bruerton stated, those vitamins, albeit used in small proportions, are vital to the overall effectiveness of the pre-mix to which they are added. 70 An affidavit was also provided by Dean Twist, Commercial Manager of the Pet Foods Division of Mars Inc, which trades as 'Masterfoods'. He stated that, in the vast majority of cases, the pet foods manufactured by Masterfoods contain a range of added vitamins. The largest usage --- both in volume and in cost --- is of vitamins A and E, but a number of other vitamins are also used when appropriate. Almost all of the Masterfoods dry pet food products contain added vitamins A and E, and almost all of the wet pet food products contain added vitamin E. In each case, the vitamin concerned is added in much higher concentrations than the other vitamins with which this proceeding is concerned. In the circumstances, I am inclined to think that the conclusion I reached above with respect to the livestock supply chains is also apposite with respect to the pet food industry sector. 71 With respect to the veterinary and/or performance enhancing supplement industry supply chain, Alan John Mains provided an affidavit affirmed on 26 September 2006. He is the managing director and proprietor of Myca Animal Health Pty Ltd, a group member in the proceeding. He said that, during the 1990's, his company produced (and continues to produce) various supplements, including a standard vitamin B combination (containing a number of the B vitamins and vitamin C), a standard vitamin A and D combination, and a single vitamin product in respect of each of vitamin B1, vitamin E and vitamin C. I gather from the evidence of Mr Mains that, in the sector with which his company is concerned, there was nothing like the same emphasis upon the regular usage of vitamins A and E as in the other sectors to which I have referred. As against this, as submitted by counsel for the applicants, the number and value of the claims from this latter sector appear to constitute a very small percentage of the whole. 72 In their written submission on this aspect, counsel for the applicants contended that it was neither feasible nor appropriate for the applicants to have prepared the distribution scheme on a basis which required the vitamin usage of the different group members to be disaggregated by reference to the applicants' advisers' assessment of what were the stronger case vitamins, and the weaker case vitamins. I accept that submission, but only because I also accept their submission that the relative utilisation of stronger case vitamins is not obviously skewed towards particular group members, or categories of group members. The stronger case vitamins appear to be widely used by almost all group members, and, with one exception, there is no category of group members where the utilisation of weaker case vitamins is a typically large in relative terms. The one exception is, as I have mentioned, the veterinary and/or performance enhancing supplement industry supply chain, and it might perhaps be said, in a perfect world, that group members in that supply chain stand to benefit from a settlement which is somewhat more favourable than they might have had the prospect of achieving if left to their own devices. The relative disadvantage which might thereby be felt by the other group members is, however, spread very thinly across the ranks of the latter, because of the small numbers of former. Counsel for the applicants submitted, in effect, that group members as a whole would regard this as a very small price to pay for the benefit of achieving a settlement in the proceeding. 73 I think that the submissions of counsel in this respect are sound, and are justified in the light of the evidence which has been most recently filed. Although I am obliged to recognise that the relative utilisation of strong case, and of weak case, vitamins across all group members, and categories of group members is not uniform, the variation which exists appears to be relatively minor, and certainly not such as ought to preclude the court from considering the settlement as a whole to be fair and reasonable in the interests of all group members, if otherwise such a conclusion were appropriate. These payments are in fact by way of compensation for the time expended by the applicants and nominated group members ('the claimants') in the preparation of the evidence in the case in the interests of group members as a whole, and by way of reimbursement of the out-of-pocket expenses which two of the claimants have incurred in relation to that preparation. These allowances have nothing to do with any amount which a successful party in court proceedings might be able to recover from the unsuccessful party: they represent neither damages nor a recognised category of recoverable costs. They are payments which arise wholly on the applicants' side of the record, as it were, and conceptually reflect an arrangement by which multiple (directly participating) applicants in a proceeding might, as between themselves, compensate or reimburse those of their number who have made a particular contribution, in time or outlay, to getting the case up for presentation in court. 75 I was informed by the applicants that, if such payments are approved as part of the settlement scheme in this proceeding, it will be the first occasion when that approach has been taken in an Australian court. It is a matter, therefore, which I must approach with great care, notwithstanding that the sums involved appear to be fairly modest in the context of the settlement as whole. There are, in addition, other reasons why the court should pause before approving payments of this kind. First, although the claimants are not fiduciaries apropos the generality of group members, they have chosen to remunerate themselves, albeit modestly, ahead of the distribution to group members of a sum which has been calculated by reference to the estimated loss and damage suffered by the latter. The sensitivity of the position in which the claimants find themselves in these circumstances is obvious. Secondly, although courts have long-established procedures, and scales, by reference to which to assess the propriety and quantification of parties' claims to be compensated for the legal costs and expenses made necessary by successful litigation, the same cannot be said of the payments with which I am presently concerned. I am denied the advantage of court scales and taxation procedures. I have only the claimants' own evidence on the matter of the reasonableness of the payments, and of the necessity for the work and outlays to which they relate. Thirdly, the court is denied the benefit of the contribution of a contradictor in relation to these payments. Although the same may be said of the settlement distribution scheme as a whole, the problem is particularly acute where the court has only the say-so of those who claim these benefits with respect, for example, to the time occupied on the work to which their claims relate and the hourly rates by reference to which particular categories of personnel should be compensated. 76 Notwithstanding these reservations, I consider it prima facie reasonable that particular parties who have sacrificed valuable time and incurred expenses in the interests of prosecuting this proceeding on behalf of group members as a whole should be able to look to the corpus of the settlement sum for some degree of compensation and reimbursement. More importantly, perhaps, I would hold that group members who have benefited from the proceeding could not be heard to deny the reasonableness of such a proposition. As the applicants pointed out in their submission, payments of this kind occur frequently in class actions in the United States. There, both the philosophy behind, and the calculation of, the payments concerned are a little different from those relied upon by the applicants in this proceeding. The payments are commonly referred to as 'incentive payments', and take account not only of the time and expense involved getting up a case for trial, but also of the exposure and risks to which those who choose to be lead plaintiffs in class actions necessarily subject themselves. There is also on occasion, I detect, a suggestion that, as a matter of policy, there should be some encouragement for people to assume the role of lead plaintiffs, without whom the particular kind of generalised justice embodied in such proceedings could not be achieved. 77 The evidence discloses the means by which the claims for compensation have been calculated. The time spent on particular tasks, or attendances, was identified, and an hourly rate was then applied to that time. The hourly rate differed according, it appears, to the supposed value of the time of the person who performed the task, or gave the attendance. The applicants' solicitors suggested that persons who were company directors or senior managers might reckon their time to be worth $350 an hour, that persons in professional or senior technical positions, or the like, might reckon their time to be worth $200 an hour, and that persons performing clerical or similar functions might reckon their time to be worth $100 an hour. There was no explanation as to why these particular rates should be regarded as appropriate for the three identified levels of personal input. These hourly rates were not, however, utilised by all of the claimants: in some cases, the claimants used what they considered to be reasonable hourly rates for their own time. 78 I set out below a table which shows, for each claimant, the total sum calculated by means of the process described in the previous paragraph, and the sum actually claimed by way of compensation for time input. Apparently appreciating the sensitivity of the subject, and noting that, where incentive payments have been allowed in the United States, allowances of this order were not generally to be found, the claimants concerned reduced their claims very considerably. 80 Notwithstanding those reductions, there are two aspects of these claims that have given me concern. The first arises from what I would call a general cautionary feeling that one has about the basis of calculation of the claims. At the point of quantifying the amount of time spent by each of the claimants, the court has nothing but the say-so of the claimant concerned. There is no audit of the process or the result, and the applicants' solicitors are in no position to certify as to the extent or nature of the attendances upon which the claims are based. Likewise, at the point of placing a money value on each hour, I have no reason to suppose that the standard rates supplied by the applicants' solicitors are appropriate (apart, that is, from the claimants' own say-so). As I have mentioned, there are no scales or taxation procedures. At both of these points, although the calculations are supported by spreadsheet records which look detailed enough as far as they go, there is very considerable generality in the way that some of the items are identified. If there is a risk that the real value of fair and reasonable compensation claims might be something less than stated in the spreadsheets, I am inclined to think that the claimants themselves should wear that risk. In other words, given that those who maintained the records on which the claims are based and then made the claims are the same parties as would stand to benefit from the granting of the claims, I consider that the court should be astute to identify any possibility of over-estimation and to make an appropriate allowance therefor. 81 The second aspect of concern relates to a matter which I raised with the applicants by correspondence. After I reserved judgment, it appeared to me that the evidence upon which the applicants relied to have the court approve so much of the settlement distribution scheme as involved these compensation and reimbursement payments did not sufficiently discriminate between time and expenditure which related to the organisation and preparation of the claimants' own cases, on the one hand, and time and expenditure which had a truly representative purpose, on the other hand. I took then, and I still take, the view that it would only be time and expenditure of the latter category for which a reasonable case for compensation or reimbursement out of the corpus of the settlement sum might reasonably be made. Specifically, his Honour is not satisfied that the evidence sufficiently discriminates between work, or expenses, which were genuinely attributable to a representative purpose, on the one hand, and general attendance to the needs of the party's own interests in the litigation, on the other hand. There is a view, which his Honour provisionally considers to be sound, that no beneficiary of a section 7 payment should thereby derive any compensation or reimbursement in connection with any work, effort or expense required for the establishment of the beneficiary's own claim, such as would, in the case of ordinary group members, have to be dealt with under section 4 of the Scheme. That there might be a risk of section 7 having such an effect should, perhaps, be positively excluded by evidence which is much more specific, and more directed to this matter, than is presently the case. In this respect, it may be noted that many of the attendances for which Chotals have charged a fee are marked "Attendance at Board Meeting", and similar. His provisional view is that, unless those concerns are satisfactorily addressed, the applicants should not assume that the settlement will be approved. If you desire to file further affidavit evidence and/or written submissions, you should do so by 6 October 2006. If you wish to have the matter listed again in court, please telephone me for the purposes of fixing a suitable date. As a result of the settlement, the generality of group members will be entitled to participate in the distribution of the settlement sum upon proof of various details relating to their expenditure on class vitamins. In other words, according to counsel, it should only be in relation to work and attendances covered by category (c) that the claimants should be regarded as having derived an incidental benefit which will be of utility in the establishment of their own claims by reason of their involvement in getting up the case for the benefit of group members as a whole. The applicants' solicitors undertook an analysis of the time records upon which the claimants, relied, whereby they calculated the total time spent by each of them collecting vitamin expenditure data of the kind to which I have referred and which, counsel submitted, would come within category (c). They also calculated the money value of that time. They submitted, however, that no such discounting, alternatively that something less than full discounting, should be undertaken for the following reasons. First, although the collection of pricing data may have the incidental benefit of assisting a particular claimant to establish the extent of its own expenditure on class items, that was not the purpose for which the data was collected in the first place. The data was collected, they submitted, to establish a solid factual and theoretical basis upon which the applicants' cause of action under s 45 of the Trade Practices Act might be made good. Secondly, they submitted, in effect, that I should recognise the risks which the claimants took when they committed time and resources to the preparation of this proceeding, particularly in the early years when there was no indication that a settlement might be forthcoming. They effectively asked me to recognise, as a matter of policy, a distinction between applicants and group members who are prepared to make an early commitment of this kind, on the one hand, and the generality of group members who do not, so that payments of the kind presently under consideration should be seen as a kind of 'incentive' for litigants to adopt the former role. 85 The question is not whether it would be fair and reasonable, in some absolute sense, for the claimants to be compensated as now proposed: the question is whether it would be fair and reasonable in the interests of group members as a whole for those persons to be so compensated. In the context of the present discussion, that question should not, I consider, be answered by reference only to the purpose for which particular time was devoted to the case in the course of preparation. If the result of work done in that time was in fact to produce data which will assist a claimant to establish its own claim in the settlement, I consider that it should not be heard to say that it should be compensated therefor from the fund otherwise available for distribution to group members as a whole. Put differently, if particular work or attendances have a dual purpose --- one representative and one individual --- I do not consider that the court, acting on the submissions only of the persons who would stand to benefit, should hold it to be fair and reasonable to classify the work and attendances as representative only for the purpose of obliging group members who have not been heard to forego some part of the settlement sum which would otherwise be available to them. 86 As to the policy considerations urged by counsel, I hear, in their submissions, an echo of the policy underlying the allowance of incentive payments in the United States to which I have referred above. Counsel suggested that a similar policy objective should be perceived in the provisions of Pt IVA of the Federal Court Act. Although I cannot for my own part, perceive such a policy in those provisions, and although, sitting as a single Judge, I would be reluctant to introduce, for the first time, a policy principle that lead applicants should be able to carve-out some part of the settlement sum to compensate them for the risks and exposures to which they have been subject in the litigation, and to provide some kind of incentive for future litigants, I see no need to decide the present question by reference to either such consideration. The basis of the claim presently before me is that the claimants should be compensated for the time which they have devoted to getting up the case for trial. If a particular allowance, by way of carve-out from the settlement sum, is not to be regarded as fair or reasonable upon the basis which underlies its calculation, I do not consider it would be appropriate, in effect, to rationalise the approval of such an allowance upon some broader policy basis. If there comes a day when the court recognises, and is prepared to approve some kind of reward for, the risks and exposures to which lead applicants subject themselves in proceedings under Pt IVA, that step will be taken, I consider, consciously, and deliberately by reference to clearly identified criteria, and involving its own articulated basis of quantification. 87 If they stood alone, I would not be prepared to approve payments for work and attendances of the kind covered by counsel's category (c), where that would involve a reduction in the corpus of the settlement sum available to group members as a whole. In the present case, there are, however, other considerations, to which I shall presently turn. 88 Regarding the work and attendances referred to in counsel's categories (a) and (b), I am prepared to accept that, on the evidence filed, that work, and those attendances, have a purpose which is very substantially representative, and do not involve, as a incidental benefit, the establishment of the claim of a particular claimant of its own entitlement to a share of the settlement sum. Whether compensation from the settlement sum for this kind of input would be fair and reasonable might be tested by considering first a case which was not a representative proceeding, but which involved multiple, named, applicants. If some only of those applicants performed work, in the interests of all, of the kind covered by counsel's categories (a) and (b), is it likely that a meeting of all applicants, acting fairly and reasonably, would vote to compensate the applicants who had done the work? In my estimation, such a question could only be answered in the affirmative. It is, of course, conceivable that some applicants might take the opportunistic course of keeping their hands out of their wallets once the work had been done, and the benefits derived. There may, of course, also be questions as to the valuation of the time and work which had been devoted to the case (a matter to which I shall turn presently). However, granted that the compensation payments involved would have to be reasonable in all the circumstances, I do not believe that, in the hypothetical situation contemplated, any of the 'passive' applicants would be acting fairly or reasonably to deny some kind of compensation to those who had done the work. The present case is, of course, that hypothetical case writ large. I must ask myself, in effect, whether it would be fair and reasonable for one of the 'passive' group members in the present case to deny the claimants an appropriately but conservatively measured degree of compensation for their time input. I do not believe so. 89 Turning to the claims for out-of-pocket expenses, there are two claimants who make such claims. This was an invoice dated 22 June 2006 from their accountants, referred to in the penultimate paragraph of my associate's letter set out in par 81 above. Although rendered by way of an invoice from a third party supplier, many of the sums there referred to related to attendances by people in the preparation of the case. The generality of the terms in which the work there done is described --- eg. 'Attendance at Board Meeting' - necessitates a cautious approach on my part to the question whether this substantial disbursement should be allowed. As a result of my associate's letter, the applicants' solicitor, in her recent affidavit, provided more detail about these attendances, the result of which is that I am satisfied that they had a substantially representative purpose. The appropriateness of quantification, however, remains a concern, and I propose to approach that aspect as part of my overall application of the kind of cautionary factor to which I earlier referred. I realise, of course, that the gross value of the claims was not constructed to yield this outcome, but it seems to be the effect of it. It has been brought about, quite evidently, by the preparedness of three of the claimants to apply very substantial discounts to the nominal value of their claims. It might, perhaps, be said that the nominal value of the other claimants' claims remains unaffected either by the removal of category (c) items or by the application of a cautionary factor. So it does, but this is a matter as between the applicants and known, participating, group members. I do not perceive it to be any part of the court's role to protect the interests of any of them against claims made by the others. They must all be taken to have expressly agreed to the distribution as between themselves of the global sum which will be carved-out of the settlement sum for these purposes. The court's chief concern is with interests of the generality of the (non-participating) group members, and I am satisfied that they would be contributing less than half of the nominal value of the claimants' claims, net of category (c) amounts. 93 I consider that the implicit cautionary discount referred to above is, if anything, more than appropriate in the circumstances. I am prepared, therefore, to treat the compensation and reimbursement payments for which section 7 of the distribution scheme provides as fair and reasonable in the interests of group members as a whole and in the context of the settlement as a whole. Claims must be made in accordance with the proof of claim pro-forma set out in Schedule A to the scheme. The proof requirements imposed on group members by Schedule A are rigorous, and may be thought demanding. It is, however, reasonable that the applicants should impose those requirements. This is the settlement of what is essentially a commercial claim, and the group members are all trading enterprises. Were the applicants to permit the making of payments by reference to less rigorous proofs than are proposed, there would be an appreciable risk of the participation in the receipt of benefits by businesses which did not qualify under the settlement scheme. It is, of course, of the utmost importance that the workings of the settlement should be such as to maximise the opportunity for group members who have in fact suffered loss and damage falling within the parameters of the scheme to participate in the distribution of the settlement sum. I consider it no less important to ensure that the settlement sum is not dissipated to persons or businesses who do not so qualify. In the circumstances, I regard the provisions of section 4 of the settlement scheme as fair and reasonable. 95 The settlement scheme also provides for the review, by 'independent counsel', of the primary assessments made by the applicants' solicitors. The costs of any review are to be borne by the group member who seeks the review. These and other provisions of section 9 of the settlement scheme are, in my assessment, fair and reasonable. 96 The settlement scheme reserves a limited role to the court. This is consistent with the fact that the proceeding itself will remain on foot until the distribution of the settlement sum has been completed in accordance with the scheme. For the court to have the kind of role proposed (such as dealing with issues of law which arise out of assessment reviews), it is necessary that there be a juridical basis for the court's intervention. Merely to have approved the distribution of an agreed sum as between group members, according to the settlement scheme, would not, in my view, provide such a basis. The applicants propose that the court should, having approved the settlement, make orders that the settlement fund be distributed, and administered generally, in accordance with the settlement scheme. I consider that the limited role which is proposed for the court in the settlement scheme is appropriate in the context of the administration of the scheme as a whole. Although the distribution of moneys to group members under the settlement scheme will finally settle the claims of those members which were raised in the proceeding, the orders under s 33V(2) should, in my view, be regarded as interlocutory, since, as between the applicants and the respondents, they do not dispose of the proceeding. Within 7 days of the date of approval by the court of the settlement, that sum, together with any interest which has accrued thereon, will be paid to the applicants' solicitors. Those solicitors do not propose to charge any group member individual legal costs, whether for the past conduct of the proceeding or for the future administration of claims under the settlement scheme. As I have said, any disbursements required in connection with the settlement approval process itself will be met by the interest which has been earned on the settlement sum since 13 January 2006. The solicitors will not charge any further professional costs beyond the $10.5m, and the interest thereon, to which I have referred. 98 Joseph Anthony Mazzeo is a solicitor and legal costs consultant who has practised on his own account exclusively in the area of legal costs consultancy since 1992. He has prepared, or supervised the preparation of, more than 5,000 bills of costs and detailed assessments of costs under High Court, Federal Court, Supreme Court and County Court scales. He is regularly retained by plaintiff and defendant lawyers to advise and appear in relation to legal costs disputes. He claims an experience in the costing of large and complex litigation, including class action proceedings in this court. In late December 2005, he was engaged by the applicants' solicitors to undertake a detailed review of their file, to assess their costs and disbursements, and to provide his professional opinion as to whether the sum of $10.5m, plus any interest earned on that amount after 13 January 2006, was fair and reasonable. Mr Mazzeo carefully reviewed and considered the files and papers of the applicants' solicitors in relation to this proceeding. He carefully reviewed the printout and compared it to the solicitors' file. He reached his own opinion about the fees and disbursements which were reasonably chargeable. A significant feature of each such agreement is that legal fees would be paid only if the applicants' claim were successful. This is a success fee which we may add pursuant to the Legal Practice Act 1996 (Vic) for conducting this case on a No Win/No Charge basis. This success fee compensates us for the risk associated in pursuing the Class Action in this way. This is not 25% of the judgment or settlement of the Class Action. A success fee will not be added in the event that a bill is rendered pursuant to termination of this Agreement under Clause C7 or G1. The agreement provided that, in the event of a successful outcome, the applicants would not be required to pay costs from their own money. He mentioned a number of other matters in his affidavit, including various respects in which the solicitors had made 'concessions', in the sense of forgoing sums which, under the agreement with the applicants, they would have been entitled to claim as professional fees and disbursements. Such fees and disbursements, which are to be paid from interest on the Settlement Sum, will be the subject of later applications to the Court for approval for payment. Such a criticism cannot be directed at the present settlement. The amount to be paid to the applicants' solicitors by way of costs is both transparent and explicit. It has been announced in the notice of settlement published pursuant to s 33X of the Federal Court Act. Equally important is the circumstance that the applicants' proposition that the settlement sum is fair and reasonable in the interests of group members as a whole stands or falls by reference only to the settlement sum of $30.5m, and does not to any extent rely upon the prospect of any part of moneys to be paid by way of costs being available to group members. 102 As to the costs figure of $10.5m itself, as appears from what I have set out above, the applicants have sought to justify it in a thorough and professional way, and have done so through the affidavit of an independent and experienced costs consultant. Unlike the compensation and reimbursement payments to which I have referred above, I can be confident that Mr Mazzeo has undertaken his task according to long-established practices and parameters by which disputes as to solicitors' entitlements to their costs are routinely settled. Because the present sum will represent a payment by the applicants to their own solicitors, it is appropriate at Mr Mazzeo undertook his estimations as between solicitor and a client. In the circumstances, I have no reason to go behind his opinion that the costs figure claimed by the applicants is fair and reasonable. I shall order, pursuant to s 33V(2) and s 33ZF(1) of the Federal Court Act, that the settlement sum referred to in cl 1.1(a) of the heads of agreement be distributed to group members, and that the settlement costs referred to in cl 1.1(b) of the heads of agreement be dealt with, in accordance with the heads of agreement and the settlement distribution scheme. The Parties are the parties to Federal Court of Australia (the "Court" ) Proceedings No.V359 of 1999, a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth) (the "Act" ) in which the Applicants on their own behalf and on behalf of the group members (as defined in the Fifth Further Amended Statement of Claim, the "Group Members" ) claim damages and other relief from the Roche Respondents, the Aventis Respondents and the BASF Respondents (collectively, the "Respondents" ) on alleged causes of action as pleased in the Fifth Further Amended Statement of Claim filed (the "Proceedings" ). B. The Parties have agreed to seek approval of a resolution of the Proceedings from the Federal Court under s 33V of the Act on the terms and conditions set out in this Agreement. For the avoidance of doubt, and subject to any order of the Court, the Proceedings shall remain on foot to the extent necessary to implement the Settlement Scheme. 2.2 Upon the transfer of the Settlement Payment as provided for in clause 5.1, the Applicants release the Respondents from any and all claims arising in relation to the matters which are now or were at any time the subject of the Proceedings. The Respondents thereafter have no liability in the Proceedings or for costs. 3. The Settlement Reserve Fund shall be held in an interest-bearing account with the Commonwealth Bank of Australia and the solicitors for each Party shall be the signatories to the account. In support of that objective, each party will recommend approval of the settlement and will instruct its legal representatives to do all things consistent with the representatives' professional obligations to enable the Applicants to obtain the Court's approval of the settlement. 4.3 Subject to the Applicants providing an affidavit of an independent costs assessor verifying the Applicants' legal and administrative costs and disbursements, the Respondents will consent to the Applicants' application to the Court for the Settlement Costs to be paid in respect of legal and administrative costs and disbursements. 5. Such costs may arise as fees paid to an external administrator, or fees and disbursements of the Applicants' solicitors as approved by the Court. 5.3 In the event that the Court does not approve the settlement provided for in this Heads of Agreement by 31 December 2006, the moneys in the Settlement Reserve Fund shall be repaid to the Respondents together with all interest earned on the said fund. MBC shall do all things necessary to facilitate this payment. 5.4 Once the Settlement Payment and any interest is applied as set out in clauses 5.1 and 5.2 the Respondents will have no right, title or interest in or claim to any part of the Settlement Payment or interest (including any claims as Group Members). The Settlement Distribution Fund is non-reversionary to the Respondents. 6.2 The Applicants will provide the Respondents with information and a reasonable opportunity to comment to the Applicants' solicitors on the content of any proposed Settlement Scheme. 6.3 Except as provided for in clauses 3 and 5, no part of the Settlement Sum is to be paid to any person or entity other than an Applicant or Group Member. 6.4 The proposed Settlement Scheme will contain a dispute resolution mechanism. 7. 7.2 There will be no orders for relief except as are necessary to give effect to this Heads of Agreement and are otherwise agreed by all the Parties. 8. 8.2 The Respondents will have no liability in respect of the Australian documents, information or assistance provided. 9. The Respondents have agreed these respective amounts under common interest privilege. Each Respondent group's respective contribution to the Settlement Payment will remain subject to common interest privilege. 10. 11. Except to the extent necessary to give effect to this Agreement and in particular to enable the Applicants' solicitors to communicate with their clients in relation to the settlement, the agreed amounts of the Settlement Payment and the terms and conditions of the settlement will remain without prejudice and confidential until an application for approval is made to the Court. 12. 13. 13.2 The Parties will jointly request that the Court upon approval of the settlement also vacate all costs orders made in the Proceedings. No Party will take any step to enforce any such costs order. 14. 14.2 This Heads of Agreement is legally binding on the Parties. This settlement distribution scheme (" Settlement Scheme ") establishes a procedure for the distribution of funds received from the Respondents pursuant to a settlement of this proceeding approved by the Court (" Settlement "). 1.2. The Respondents have without admission paid the sum of $30.5m for distribution to the Group Members ( "Settlement Sum" ) and $10.5m representing the Applicants' legal costs and disbursements (" Settlement Costs "), into an interest bearing account (the " Settlement Reserve Fund "). Representatives from the solicitors for each party to this proceeding are the signatories to the account. 2.2. The Settlement Costs, together with any interest that accrues thereon while in the Settlement Reserve Fund, will be paid to MBC. Upon approval of the Settlement, all payments under Clause 7 will be deducted from the Settlement Distribution Fund. 3.2. MBC will administer claims made under Clauses 5 and 6 of the Settlement Scheme. In doing so, MBC will act as lawyers working as the claims administrator with an obligation to do so properly on behalf of the Group Members as a whole, and not as the lawyer for any individual Group Member. 4.2. Group Members to or for whom the Respondent or their Related Bodies Corporate have provided, other than under the Settlement Scheme, any payment, benefit or other advantage, including without limitation any discount, allowance, rebate, or credit in relation to goods acquired, on account of or in connection with any claim, or potential claim, arising out of the subject of this proceeding. Each Group Member making a claim under Clause 5 or 6 (" Claimant ") must submit a Proof of Claim to MBC in the form set out in Schedule A no later than 60 days following notification of the Settlement Scheme pursuant to an order of the Court approving Settlement. The Proof of Claim must be served on MBC in accordance with the notice provisions set out in Clause 12 . 4.4. A Group Member who does not submit a Proof of Claim within 60 days following notification pursuant to the order of the Court approving Settlement is not entitled to claim under the Settlement Scheme. 4.5. Such invoices, business, financial or other records, which will prove the claim made by the Claimant on the balance of probabilities. A statutory declaration made by an authorised representative of the Claimant verifying the accuracy of the Proof of Claim and the information provided under Clause 4.5(a). If the information provided by the Claimant is insufficient to enable MBC to complete the claims assessment, MBC may require the Claimant to provide and verify additional information to support any claim or part thereof upon 21 days' notice. If a Claimant does not provide sufficient information, the claim or part shall be disallowed, subject to any Review Assessment under Clause 9 . 4.7. In accordance with the methodology set out in Clauses 5 and 6 , MBC will assess the validity and amount of each claim based on the Claimant's Proof of Claim and any further information requested from the Claimants or any third party. 4.8. Following an assessment of the claim by MBC under Clause 4.7 , MBC will issue an assessment notice to the Claimant (" Assessment Notice "). 4.9. Except as between Related Bodies Corporate, MBC shall keep strictly confidential, including from other Claimants, any information regarding the claims of the Claimants obtained in the claims administration process. 5. A Group Member can only claim loss of profits arising from loss of market share under this Clause if it was a manufacturer of premix containing Class Vitamins (" Premix ") during the period 5 March 1992 to 28 February 1999 (" Claim Period ") or any part of the Claim Period. 5.2. The Group Members described in Clause 5.1 and who comply with Clause 4.3 , shall be referred to in the Settlement Scheme as " LMS Claimants ". 5.3. LMS Claimants are also entitled to make an Overcharge Claim under Clause 6 of the Settlement Scheme. 6. All Group Members are entitled to make a claim for Overcharge under this Clause 6 . 6.2. The Group Members that make a claim under Clause 6 , and who comply with Clause 4.3 , shall be referred to in the Settlement Scheme as " Overcharge Claimants ". 6.3. 6.5 If an Overcharge Claimant's operations fall within more than one of the categories referred to in Table 1 (" Category "), the Overcharge Claimant is entitled to receive compensation for overcharge for each Category. In such cases, a separate calculation of Overcharge will be performed for each Category and then added together to determine the Overcharge Claimant's individual Overcharge for the purpose of determining its entitlement under Clause 6.3 . 6.6 For the purpose of calculating Overcharge, expenditure on Class Vitamin Products shall not include expenditure on account of medication, enzyme, pigment, flavour, ionophore or animal growth promotant additives included in the Class Vitamin Products. 7. The payments under this Clause 7 are to be paid out of the Settlement Distribution Fund before division of the Fund under Clause 3 . 8. Costs of administering the Settlement Scheme including without limitation notices to Group Members, costs of assessing and distributing Group Members' share of the Settlement Sum and costs relating to any Review Assessment. Such costs may arise as fees and disbursements of the Applicants' solicitors, as approved by the Court. MBC will obtain Court approval of its professional fees and disbursements of administering the Settlement Scheme, prior to being paid the same from the Fund Interest. 8.3. Any Fund Interest not applied in accordance with Clause 8.1 , shall be allocated to the two funds referred to in Clause 3.2 pro rata according to the balance held in each fund, and will be available for distribution in accordance with Clauses 5 to 7 inclusive. If a Claimant disputes its Assessment Notice, it may within 28 days of the date of the Assessment Notice request that a review assessment be performed by the Independent Counsel (" Review Assessment "), failing which the Claimant shall be deemed to accept the Assessment Notice as binding and subject to paragraph 11.1 no appeal shall lie therefrom. Each Claimant shall be advised of the availability of a Review Assessment at the time the Assessment Notice is issued. 9.2. John Dixon of Counsel shall be Independent Counsel under the Settlement Scheme. In the event that Mr Dixon should become unavailable, David Bailey of Counsel shall be Independent Counsel. In the event that Mr Bailey should become unavailable, a commercial barrister of at least 15 years post-admission experience shall be nominated as Independent Counsel by the Chairman of the Victorian Bar Council. 9.3. Independent Counsel may by written notice require the Claimant to submit further documentation in support of the application for Review Assessment and such documentation shall be submitted within 21 days, failing which it shall be excluded from consideration. 9.4. In accordance with the methodology set out in Clauses 5 and 6, Independent Counsel shall determine the validity and amount of each claim made by the Claimant based on the Claimant's Proof of Claim and any further information requested from the Claimants or any third party. 9.5. The Review Assessment shall be in writing and shall be issued within 35 days of the date of the request for the Review Assessment or the date of any notice given by Independent Counsel under Clause 9.3 , whichever is later. 9.6. Any determination by the Independent Counsel of an amount of damages to which a Claimant is entitled is binding on the Claimant. A Claimant has liberty to apply to the Court on a question of law arising from a determination of Independent Counsel. 9.7. The Claimant requesting the Review Assessment under the Settlement Scheme shall pay the costs of the Review Assessment. 9.8. The cost of a Review Assessment will be $3,750.00 for a Review Assessment that takes up to 10 hours to complete. If the time taken to complete a Review Assessment is greater than 10 hours but less than 15 hours, Independent Counsel will waive any fees beyond the fixed amount of $3,750.00. If the Review Assessment takes in excess of 15 hours to complete, the Review Assessment will cost $3,750.00 plus $375.00 for every hour spent on the Review Assessment beyond the first 15-hour period. 9.9. Independent Counsel may require a Claimant to provide security for the costs of a Review Assessment in the sum of $3,750.00. If security is not provided as required within 30 days, Independent Counsel shall issue a Review Assessment in the amount of the Assessment Notice. 9.10. The amounts referred to in Clauses 9.8 and 9.9 are exclusive of GST. 9.11. If the costs of a Review Assessment have not been paid by the Claimant as at the allowable dates for distribution of the Overcharge Fund under Clause 10.1 and the Loss of Market Share Fund under Clause 10.2 , MBC shall deduct those costs from any sum otherwise due to be distributed to the Claimant under the Settlement Scheme. The Claimant shall remain liable for any costs not recovered by a deduction pursuant to this Clause and MBC, in administering the Settlement Scheme, may apply to the Court for an order requiring the Claimant to pay those costs. 9.12. The time for doing any act or thing under this clause of the Settlement Scheme may be extended by direction of the Independent Counsel. 10. The payments under Clause 7 will be paid within 14 days of the date of approval by the Court of the Settlement. 10.2. Subject to any further order or direction by the Court, the monies held in the Loss of Market Share Fund will be distributed within 28 days of the finalisation of assessments of all claims under Clause 5 , including any Review Assessments of those claims. 10.3. Subject to any further order or direction by the Court, the monies held in the Overcharge Fund will be distributed within 28 days of the finalisation of assessments of all claims under Clause 6 , including any Review Assessments of those claims. 11. MBC may refer any issues arising in relation to the Settlement Scheme or the administration and implementation of the Settlement Scheme to the Court for determination. Without limiting the foregoing, if MBC considers it necessary or desirable to establish a mechanism for estimating any thing for the purposes of this Scheme not already provided by this Scheme, MBC may refer the mechanism to the Court for its approval. 12. Sent by email to that person's email address and the machine from which it is sent produces a report that states that the email has been opened by the recipient. If it is sent by email, at the time a read receipt report states it has been opened by the recipient. " Claim Period " means the period 5 March 1992 to 28 February 1999. "Claims Administrator" means Maurice Blackburn Cashman Pty Ltd ( "MBC" ). " Class Vitamins " means vitamins A, E, B1, B2, B5, C, Beta-carotene or Canthaxanthin for animal nutrition or health purposes (together and individually). " Class Vitamin Products " means Class Vitamins and products containing Class Vitamins. "Proof of Claim" means a properly completed Claim Form, Statutory Declaration, Supporting Documents Inventory and all Supporting Documents. " Purchase Period " means a period less than or equal to the Claim Period as specified. " Purchase Value" means the actual price paid for purchases of Class Vitamins Products in Australian dollars excluding sales taxes, freight and delivery charges. " Supporting Documents " means documents including without limitation invoices, business, financial or other records, evidencing the purchase of Class Vitamins Products or where applicable, expenditure on additives such as medications, enzymes, pigments, flavours, ionophores or animal growth promotants. " Vitamins Class Action " means Federal Court of Australia Proceeding No. V359 of 1999, Darwalla Milling Company Pty Ltd & Ors v F. Hoffmann La-Roche Limited & Ors. These documents may be viewed at http://mbc.aus.net/vitamins or obtained by telephoning the Claims Administrator on 1800 810 812 to request a copy. 2.2 To be eligible to make a claim under the Settlement Scheme you must be a Group Member and submit a Proof of Claim by [insert date]. Excluded Group Members cannot make claims under this Settlement Scheme. If you are not sure whether you are a Group Member or an Excluded Group Member please call the Claims Administrator on 1800 810 812. 2.3 If you are a Group Member and have not opted out of the Vitamins Class Action then you are already bound by the Vitamins Class Action Settlement. That is, you have no further legal recourse to the Respondents in respect of the subject of the Vitamins Class Action except under the Settlement Scheme. 2.4 Any Group Member that fails to submit a Proof of Claim by [insert date] is not entitled to make a claim under the Settlement Scheme. 2.5 It is impossible to determine the value of any individual entitlement of an Overcharge Claimant until all Overcharge Claims have been assessed and any Review Assessments have been completed. It is impossible to determine the value of loss of market share. The value of each individual entitlement depends upon, among other factors, the total number of valid claims submitted for each claim type and the assessed value of those claims. 3. The Claim Form must be filled out completely and must be typed or printed. You must complete the Claim Form accurately as you will be required to sign a Statutory Declaration and provide Supporting Documents to verify the information provided in your Claim Form. 3.2 Complete a separate Claim Form for each Claimant which is a separate legal entity (for example where you operate a corporate group comprising more than one corporation). 3.3 Provide a Historical Company Extract or Business Name Extract or equivalent for each Claimant. 3.4 Arrange an authorised representative of each claimant to sign the Statutory Declaration before a person who is authorised to witness the signing of a Statutory Declaration and submit it with the Proof of Claim. A Proof of Claim submitted without a signed Statutory Declaration will be invalid and the claimant will not be entitled to make a claim under the Settlement Scheme. 3.5 Provide such Supporting Documents as will prove your purchases of Class Vitamins Products on the balance of probabilities. That is, the Supporting Documents must establish that it is more likely than not that the Claimant made the purchases of Class Vitamins Products that you claim were made. 3.6 Complete Schedule 1 to the Statutory Declaration (listing the Supporting Documents you are providing). Where any Supporting Documents do not exist or are no longer in your possession you must provide an explanation as to why they do not exist or are no longer in your possession. 3.7 Send by registered post or deliver your completed Proof of Claim so that the Claims Administrator receives it no later than [insert date]. 3.8 Retain a photocopy of your completed Proof of Claim (including all Supporting Documents and other attachments). 3.9 Contact the Claims Administrator if you have any questions. DO NOT CONTACT THE COURT. 3.10 Do not mail or deliver your Proof of Claim to the Court or to anyone other than the Claims Administrator. 4. 4.2 The Claims Administrator may require you to provide additional information upon 21 days' notice to you. 4.3 If you do not provide sufficient information to prove your claim or any part of your claim, your claim or the relevant part shall be disallowed, subject to any Review Assessment. 4.4 The Claims Administrator has the right to adjust any claim based upon the information provided by you or from a third party. 4.5 The Claims Administrator will assess the individual overcharge for each Overcharge Claimant (Clause 5 of the Settlement Scheme) and the individual Class Vitamins Purchases for each Loss of Market Share Claimant (Clause 6 of the Settlement Scheme) and issue an Assessment Notice to each claimant. 4.6 Any Review Assessments will be completed. 4.7 Once all Review Assessments (if any) for the Overcharge Claims are complete, the entitlement of each Overcharge Claimant to the Overcharge Fund will be calculated and a distribution made to the Overcharge Claimant equal to that entitlement. 4.8 Once all Review Assessments (if any) for the Loss of Market Share are complete, the entitlement of each Loss of Market Share Claimant to the Loss of Market Share Fund will be calculated and a distribution made to the Loss of Market Share equal to that entitlement. 4.9 The Claims Administrator will act as lawyers to administer the claims on behalf of the Group Members as a whole, and not as the lawyer for any individual Group Member. The Claims Administrator can assist you with administrative questions regarding the preparation and submission of your Proof of Claim. However, if you require individual legal advice regarding the preparation and submission of your Proof of Claim, you should retain solicitors other than MBC. 5. 5.2 You will be provided with further information about the Review Assessment when your Assessment Notice is issued. MBC will keep the contents of any information you provide to MBC for this purpose confidential and in particular will not reveal the contents of any information you provide to MBC to other Group Members. Upon completion of your Claim MBC will return your information at your request. Otherwise, the information will remain stored in MBC's possession for a period of seven years after completion of your Claim, following which MBC is authorised to destroy the information. MBC has a Privacy Policy that explains how MBC collects, uses, discloses and protects personal and sensitive information. You may view MBC's Privacy Policy at its website at http://mbc.aus.net or by telephoning 1800 810 812 to request a copy. IS THIS CLAIM RELATED TO ANY OTHER CLAIM? If your address changes after you submit this Proof of Claim, you must immediately notify MBC in writing. The historical company extract must be dated within 56 days of the date of your Proof of Claim. Company extracts are produced by the Australian Securities and Investment Commission ( "ASIC" ). An Information Broker may include additional service delivery fees. You can search for an Information Broker on the ASIC website at http://www.asic.gov.au . If none of those categories apply to your business operations please attach a separate page describing in detail those operations. I make this Statutory Declaration from my own personal knowledge except where otherwise stated. 2. I have the appropriate authority to submit this Proof of Claim on behalf of the Claimant. 3. I have read and understood the Notice of Settlement dated [insert date], the Settlement Scheme and the Proof of Claim. The terms used in this Statutory Declaration have the same meaning as defined in paragraph 1 of the Proof of Claim. 4. The Claimant is a Group Member. 5. The Claimant is not an Excluded Group Member. 6. The Claimant did not opt out of the Vitamins Class Action by filing a Notice of Opt Out with the Court. 7. No other claim under the Settlement Scheme has been or will be submitted by the Claimant, its directors, shareholders, officers or employees on behalf of the Claimant. 8. The Claimant has disclosed any and all transfers and/or assignments of rights to compensation regarding the vitamins price fixing cartel the subject of the Vitamins Class Action. 9. The Claimant has included information and documents in relation to only Class Vitamins Products purchased in Australia during the relevant Purchase Periods referred to in paragraph 10 of the Claim Form. 10. I acknowledge and agree that the Claims Administrator may disclose any and all information pertaining to this claim to the Federal Court of Australia. 11. All information provided by me in the Proof of Claim is true and correct and specifically, accurately reflects the Claimant's purchases of Class Vitamins Products during the relevant periods. 12. The Settlement Documents provided by me and set out in Schedule 1 to this Statutory Declaration are true and correct copies of those documents and accurately reflect the Claimant's purchases of Class Vitamins Products during the relevant periods. Signature: ............................................... | settlement agreement approval of settlement by court whether proposed settlement scheme is fair and reasonable representative proceeding |
I have decided a stay order should issue. My reasons may be briefly stated. Firstly, it appears not to be an issue that, if a stay order is not made, then the subject matter of the litigation will be destroyed. Self-evidently that is so. The effect of the Full Court's judgment is to remove the protection afforded by an order under s 50 of the Federal Court of Australia Act 1976 (Cth) which had earlier applied to documents the appellant says should remain confidential. The most significant area of debate between the parties concerns the prospects of any special leave application succeeding. I think Mr Kunc has fairly stated the principle as involving consideration of whether the prospects are not insubstantial: cf Jennings Construction Limited v Burgundy Royale Investments Pty Ltd [1986] HCA 84 ; (1986) 161 CLR 681 ; Joye v Sheahan (1996) 21 ACSR 71 ; Re New Tel Ltd (2005) 54 ACSR 554. Whilst there is always difficulty in a judge of this court, or any other intermediate appeal court, anticipating how any application for special leave might be determined, I accept that, in this case, there may be perceived to be an issue enlivening s 35A(b) of the Judiciary Act 1903 (Cth), namely that the application concerns an issue involving the interests of the administration of justice in this particular case. It is true that the Full Court, by majority, has determined that there was no miscarriage of the discretionary power of the primary judge to set aside the order under s 50. There is, however, a lengthy and reasoned judgment of a member of the Full Court reaching the opposite conclusion and, in those circumstances, there must be some prospect that the application for special leave will attract the grant of leave. At least I cannot conclude that there are not insubstantial prospects of the grant of special leave. The other area addressed by counsel for the interveners (media interests) concerns the nature of the loss the appellant might suffer if, effectively, the orders of Emmett J are not stayed. It is true that the matter identified by counsel, namely embarrassment to the appellant, cannot be put as highly as a loss in the orthodox sense. But that is not, in my opinion, sufficient reason to refuse the stay in the circumstances of this case. The balance of convenience, as often is the case, is finely balanced and points in competing directions. I accept that there is a public interest attending the question of whether the information in the documents should remain confidential and the broader public interest in the publication of the information, if it should not remain confidential, but, in the circumstances, I propose for these reasons to grant a stay. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | stay of orders of full court of federal court of australia special leave to appeal to high court of australia whether the prospects are not insubstantial s35a(b) judiciary act 1903 (cth) dissenting judgment nature of loss if proceedings not stayed balance of convenience practice and procedure |
It was served that day on the Applicant in the substantive proceeding, Olivaylle Pty Ltd ("Olivaylle"). The application may or may not carry necessarily with it an application for an adjournment of the proceeding. It is possible, but not certain, that, but for the time spent on the hearing and determination of the application, the case may have finished this week in terms of reception of evidence. There is, though, the possibility that an adjournment may have been required in any event for the completion over a short time, short relative to the time this case has taken, of evidence. On any view, the application certainly carries with it a request that time beyond that which would ordinarily have been required to complete the case be allocated for its hearing. It is a matter of common knowledge that the practice of this Court is "otherwise to order", in the ordinary course of events in relation to trials, in the sense that it is usual for directions to be made at a directions hearing for the filing of evidence-in-chief by affidavit. Such directions were made by the then docket Judge, Finn J, last year. Affidavits in-chief were filed in response to those directions by each of the parties. 3 Having regard to the usual practice of the court, which is to vary O 33 r 1's prima facie position and the particular directions that were made pre-trial in this case, it can be seen that in a sense each party's case in-chief was intended to be disclosed pre-trial and by affidavit. That is relevant, in my opinion, in terms of the characterisation of the present application in relation to the leading of evidence from Mr Lorenz. By that I mean that, in a sense, both the Applicant's and Respondent's cases in-chief were, subject to grant of leave, closed pre-trial, although not closed in the formal sense of forswearing an application for leave until an announcement by counsel at the end of a case that the evidence for a particular party was indeed closed. By reference to the pleadings and these other documents, the issues in the case can be seen to arise out of the sale of an olive oil processing line by Flottweg to Olivaylle pursuant to a contract dated 8 February 2005. There is an allegation in the proceeding that warranties in respect of that line were breached, breached in the sense that it was defective in that it failed to comply with contractual specifications. 5 There is also separately a cause of action pleaded under the Trade Practices Act 1974 (Cth) in respect of which the allegation is made that representations were made by Flottweg in relation to the line in the course of negotiations between Flottweg and Olivaylle between March 2004 and February 2005. In respect of the trade practices cause of action and apart from general defences, Flottweg particularly pleads that it had a reasonable basis for believing, and did believe, that the olive oil line would be capable of meeting performance guarantees which were made contractually. Over the time which followed from the commencement of the trial to the conclusion of the time that had been originally allocated, it became abundantly clear that there had been a gross under estimation of the time necessary to hear and determine this case. It was said, as I recall, that the time allocated had been fixed initially by the court. That may well be so, but it remains the duty of counsel who have the particular knowledge of the issues in the case and their plan in respect of cross-examination to appraise the court of their own estimate, if that differs from that which the court is prima facie disposed to fix. 7 Prior to the adjourning of the case until 17 March 2008, I made in December directions which permitted the reception of further evidence by leave both from the Applicant as well as from the Respondent. Those directions were particularly directed to the reception of expert evidence which had not been filed in accordance with directions made pre-trial. I also granted liberty to apply at that time. It suffices to note that there was no application made between the time of adjournment of the proceeding in December last year and 17 March 2008 for the reception of any further evidence on behalf of the Respondent. The application is made at a time when the Applicant has, in a formal sense, closed its case. Olivaylle has led all such evidence in-chief as its advisors have regarded as necessary, appropriate and possible. 8 That has included evidence materially from Mr de Moya, who was not a layman in matters of engineering, Mr Carey, a chartered engineer, and also it has involved the cross examination in a particular way of Dr Paterson, who was also not a layman in matters of engineering, and Mr Nieuwkerk, who was likewise not a layman in matters of engineering. Each of Mr de Moya, Mr Carey, Dr Paterson and Mr Nieuwkerk have, to varying degrees, a familiarity with the very plant which is of interest in this proceeding in terms of, materially, observation of its actual performance. The application to receive his evidence was supported by oral evidence from Mr Forbes, who is the senior local representative of Messrs Baker and McKenzie, who are the solicitors for Flottweg. That evidence disclosed that, both within that firm and from counsel, an advice on evidence was prepared, and prepared pre-trial. 10 A very helpful statement in respect of the role of an advice on evidence is to be found in Atkins' Court Forms , second edition, volume 18, 1992 issue at page 422, para 68. It is, in effect, counsel's plan of campaign. The giving of the advice on evidence is therefore one of junior counsel's most important duties. A proper advice, followed by the instructing solicitor, greatly helps the advocate at the hearing. There is, however, a traditional way in which an advice on evidence is set out which it is wise to follow. The learned authors then set out in some detail and in a traditional way the contents of an advice on evidence in terms of headings that one might usefully cover. 12 For reasons that were quite understandable, the advices themselves were not produced or tendered. Mr Forbes though, did, quite frankly I thought, acknowledge that there was a deliberate decision made not to call Mr Lorenz pre-trial. I also had the impression from his evidence that the nature and extent of Mr Lorenz's knowledge and experience, both in the particular case, as well as more generally, were not the subject of any fulsome proof of evidence prior to trial. 13 The importance of the giving of an advice on evidence cannot be underestimated and it was obviously that usual and proper practice that was followed by the Respondent's legal advisors in this case. 14 Atkins , of course, refers to, in its English origins, an English practice whereby it is traditionally the role of junior counsel to furnish an advice on evidence. In Australia, that certainly can be so but especially in more recent times, both solicitors themselves, as well as senior counsel, have an involvement in the furnishing of an advice on evidence. An example of the difficulties which can be encountered where an advice on evidence is not prepared is offered by Fryberg J in a Queensland case, Maguire v Leather , BC200705438, given on 13 July 2007, [2007] QSC 164 , see especially para 71. 15 In terms of general principle, it seems to me that an appropriate starting point is a decision given in the New South Wales Court of Appeal, Bassett v Host (1982) 1 NSWLR 206. That case was the subject of a subsequent appeal to the High Court, Host v Bassett (1983) 57 ALJR 681 , in which an appeal was dismissed. The passages from which I quote now from the judgments in the New South Wales Court of Appeal were not the subject of express reference in the High Court, but there is nothing in the High Court's judgment, which was confined to the more narrow issues that arose in that case, that calls into question the passages concerned. What philosophy should inform a trial judge's participation in a trial (whether he should be an umpire or something more) will no doubt require reconsideration from time to time. But whatever philosophy be adopted, a trial judge has the right and, in my opinion, the duty in the proper case, to use his influence to see that the court has before it the evidence necessary for the proper determination of the issues. I do not mean by this that each judge must be a Sirica in pursuit of Watergate, but whatever be the philosophy adopted, it places no premium on gaps in the evidence. I appreciate the niceties of trial practice and the right of parties to the presentation of the case of their choice. What a judge will do will depend on the circumstances of the case and there will be sometimes reasons why he will not intervene. A system which requires courts to resolve issues in the circumstances in which the issues in this case have had to be resolved is surely deficient, for instead of assisting the finding of the truth, the system has prevented the court from having before it the only witnesses who could have spoken directly as to what the truth was. In some other parts of the world where the adversary system prevails, this patent defect has been remedied as regards to civil cases by enabling courts to call, or to require the calling of, witnesses with adequate protection to the parties by the giving of directions as to examination and cross examination, either generally or in respect of particular issues. The present case highlights the need for some such remedial measures in this State. 18 Neither party suggested, in this case, that the court should, of its own motion, call Mr Lorenz. Particularly having regard to a deliberate forensic decision made pre-trial not to call him by the Respondent, it would not, in my opinion, now be an appropriate course for me to take to call Mr Lorenz of my own motion. 19 The circumstances in which witnesses can be called even after a party has closed its case are many and varied. Some singular examples show just how far the extent of the discretionary power to permit the calling of a witness after the closing of a case can reach. In that regard, note might usefully be taken of two South Australian cases. The first, Betts v Whittingslowe (No. 1) (1944) SASR 163 is a decision of then Chief Justice, Napier CJ. 21 More recently in time, Zelling J, then an acting justice of the South Australian Supreme Court, in Jingellic Minerals NL v Beach Petroleum NL (1991) 55 SASR 424 , also had occasion to consider the subject of the calling of a witness after the closing of a case. The circumstances there were rather singular in the sense that it became apparent that counsel in that case had not appreciated that a particular issue was material to the determination of the proceeding before the court. The application was made after the close of the case. His Honour held that a judge had power to reopen a case and to do so even in respect of a case where he had given judgment, but before orders had been sealed, if the interests of justice required such a course. His Honour counselled that such applications are to be kept in strict bounds. There must be on the cases some specific cause which triggers the use of the remedial jurisdiction. 22 More recently in time the High Court has had occasion in State of Queensland v JL Holdings (1996/1997) [1997] HCA 1 ; 189 CLR 146 to consider the place of case management systems in the obtaining of justice according to law. Their Honours cite two authorities which, in my opinion, have pertinence in the context of the present application. Speaking for myself and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to over reach, the court ought not to correct if it can be done without injustice to the other party. Courts do not exist for the sake of discipline but for the sake of deciding matters in controversy and I do not regard such amendment as a matter of favour or of grace. The view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions of the court's lists with the consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard are pressing concerns to which a court may have regard. 24 Their Honours continue in Queensland v JL Holdings at page 154 that they did not regard the passages that they cited from Sali v SPC as sanctioning any departure from Cropper v Smith and accepted in cases such as Clough and Rogers v Frog (1974) 48 ALJR 481. And I considered they had just such relevance in refusing the application made by Olivaylle in December. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation but it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim. Those are observations reflect the views of an ultimate appellant court. Obviously enough, their application will differ in the context of particular cases and especially will differ in relation to an application of this nature, made in the course of a trial, in terms of whether prejudice will be occasioned to an opposing party. It must be said that in this court the reception of Queensland v JL Holdings has not been, with the very greatest of respect, an entirely subordinate one. In this regard and in the very particular context of the case before his Honour, in Black and Decker Australasia Pty Limited v GMCA Pty Limited [2007] FCA 1623 on 23 October 2007, Finkelstein J observed at para 3 that a state of affairs whereby case management directions were overlooked had as one of its chief causes what his Honour described as "the chilling effect" of the High Court's decision in Queensland v JL Holdings . 26 With the very greatest respect, I do not regard Queensland v JL Holdings as having a chilling effect. It seems to me that there is a need not to confuse the particular principle enunciated in JL Holdings with the outcome in particular cases. In terms of principle and in the context of this particular case, the most material consideration in my opinion is, is there prejudice and, if so, what is its nature and extent and having regard to that, what impact does that have on the discretion to permit the reception of some or all of the contents of Mr Lorenz's affidavit as evidence in the trial? 27 Before departing from questions of principle I should also make reference to another decision of the New South Wales Court of Appeal, Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471 to which I was very helpfully referred by counsel. The leading judgment in the Court of Appeal in that case is that of Clarke J with whom Mahoney and Meagher JJ agreed. There are passages which appear at pages 475 and 476 which are pertinent to the discretion I have to exercise in this case. It suffices for present purposes if I note, by reference to what is an accurate summary of them in the head note, that a failure to lead evidence from a witness whom it is afterwards desired to call, even where such failure to due to a deliberate decision taken for tactical reasons, can not be a decisive ground for a court to refuse to exercise its discretion to grant an application by a party to re-open its case, albeit that is, an important factor. 28 Strictly speaking, the Respondent has not closed its case although, as I have mentioned, there were directions which required the identification of the Respondent's evidence in-chief by affidavit filed pre-trial, subject to a grant of leave. It is quite apparent from the opening of the Applicant's case, as well as from passages in the cross examination of, especially, Dr Paterson, that aspects of the Applicant's case have been cast by reference to a predicated absence of Mr Lorenz from the witness box. "Predicated" in the sense that no affidavit from him was served by or on behalf of Flottweg until 2 April. Olivaylle also identifies and draws attention to the lateness of the application and the fact that Mr Lorenz's affidavit is not short, and it highlights and emphasises the prejudice I have mentioned. The latter involved his observation of the line. In his affidavit at para 40, he purports to give an opinion in respect of the performance of that line. 31 On behalf of Flottweg, attention is directed to the court's overriding obligation to achieve justice between both parties. The point is also developed that some of the forensic advantage may depend on the interpretation of a particular email authored by Mr Lorenz on 28 January 2004 which is page 196 in the exhibits to the affidavit of Mr de Moya, (which became document 26 on the court file). 32 Attention is also directed by and on behalf of Olivaylle to Mr Lorenz's authorship of another key document, which is a memorandum sent by him on behalf of Flottweg to Mr de Moya on behalf of Olivaylle on 23 June 2006, which document appears at page 773 in the exhibits to Mr de Moya's affidavit, which is document 26 in the proceeding. 33 That Mr Lorenz had a vital role in the deliberations of Flottweg between 2004 and 2006 is undoubted. Moreover, there can be no doubt that that role was, especially to a trained eye, readily apparent from the exchange of correspondence. His name is littered throughout that exchange. 34 Having regard to the evidence that has already been received in respect of the performance of the plant and the excusing of relevant witnesses in that regard, it seems to me that it would be unfairly prejudicial, in the context of this particular trial, at its particular stage, to permit Flottweg to lead evidence from Mr Lorenz in respect of his opinion as to the performance of the plant based on his observation in May 2006. 35 There is more than a possibility that to permit that course would require the recalling of witnesses who have been already excused and in respect of a case which, as I have mentioned, was grossly underestimated in terms of its hearing time. It may well be, of course, that the particular passage in para 40 of Mr Lorenz's affidavit, in which he voices or purports to voice an opinion, is objectionable for want of lack of adequate factual foundation. Although that particular objection could doubtless be met by the enlarging upon the factual foundation by him, I am not prepared to permit that. It seems to me that the contents of para 40 after the sentence "On 1 and 2 May 2006 I attended the Olivaylle site and observed the line in operation...", should not be the subject of any permitted tender. The balance of that section of Mr Lorenz's affidavit recites his collection of samples and his return to Germany and delivery of the samples for analysis at Flottweg's laboratory. The results of that particular testing are already known and I do not discern any particular prejudice in the allowing of his evidence in that regard. 36 There remains, in my opinion, a question as to what, if anything, should be permitted beyond that. I am disposed as a matter of discretion and because it seems to me it involved in-house deliberation and contact, to allow Mr Lorenz to give evidence in the way set out in his affidavit as to his correspondence with and conversations with Dr Paterson. That, it must be said, comprises the bulk of the remainder of the affidavit. 37 There remains, though, para 30 in which he makes reference to his visit to Australia. There is an exhibit to that affidavit which is ML1 which is apparently a plan of sorts. It is not clear to me whether or not that plan has already been received in evidence, if for no other reason than the reproduction of the plan is so small that it does not admit in the time available to me of a precise comparison. If the plan which appears at tab 9 of ML1 is already in evidence and has already been able to be shown to others who have already given evidence, I am disposed to allow it to become part of the evidence in the case but not otherwise, for that too would introduce more than the possibility of a need to recall witnesses already excused. Beyond that, though, the reference made by Mr Lorenz to his visit to Australia in September 2004 is noteworthy for its generality; generality in the sense that he does not attribute particular remarks or admissions to any person but rather gives the most general of descriptions by way of saying that the discussions at the meeting ranged across all aspects of the project, etc. That, in itself, does not seem to be controversial. 38 So the rulings then that I make in respect of the application are to allow the application to read in the proceeding the affidavit of Martin Lorenz, save for all of para 40, which follows the first sentence, and subject to a question of identification, save for the plan identified by Mr Lorenz in para 30 of his affidavit. 39 That will have the consequence that the Respondent is not permitted to lead from Mr Lorenz an opinion from him based on his observation of the plant in operation. It seems to me that to permit that would be, at this stage of the case, to occasion undue prejudice to Olivaylle, especially having regard to a deliberate forensic decision not to file an affidavit from Mr Lorenz, either in accordance with the directions made pre-trial, or in accordance with the possibility opened by the adjournment and liberty to apply granted in that regard between December and March. In making that observation, I especially also have regard to a very particular reference to a statement that consideration that would be made in relation to evidence from Mr Lorenz by senior counsel for Flottweg, which appears at page 557 of the transcript. 40 Formal orders will be in the terms that I have mentioned. In addition, it seems to me that Olivaylle should have the costs of and incidental to the application and, in the circumstances, that those costs should be taxed on an indemnity basis. For the assistance of the taxing officer, in that regard, it seems to me that the application took half a day for its hearing and determination. It also seems to me that the nature of the indulgence being extended, having regard to a deliberate forensic decision made earlier to the contrary, is such that Olivaylle ought also to have, and again on an indemnity basis, the costs of the time taken for the hearing of Mr Lorenz's evidence. The extent of the time required is as yet unclear, but I foreshadow that I am disposed to make an order in favour of Olivaylle in respect of that part of the trial, irrespective of what may be the ultimate outcome. 41 I also reserve any other questions of costs arising from the granting of leave to file and read the identified portions of Mr Lorenz's affidavit. By that, I mean if Mr Lorenz's evidence does prove to have an influence in the course of the case, that may have ramifications in terms of the way in which some or all of other parts of cost issues in the trial ought to be determined. I will have drawn up formal orders in that regard. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | timetable for filing evidence application to file additional evidence whether court should exercise discretion to permit reception of evidence whether reception of evidence would cause unfair prejudice to other party where other party has closed case practice & procedure |
The proceeding concerns the question of whether the sale of foreign currency at Sydney (Kingsford Smith) Airport ( Sydney Airport ) to a passenger who has passed through to the departure side of the Customs barrier is exempt from Goods and Services Tax ( GST ). The question involves a consideration of the provisions of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) ( the GST Act ), by which liability for GST is assessed. Travelex occupies premises on the departure side of the Customs barrier of Sydney Airport ( the Travelex Counter ). The Travelex Counter is held by Travelex under a tenancy arrangement with Sydney Airports Corporation Limited. In order to have access to the Travelex Counter, a customer must have a valid boarding pass for an outbound international flight and must have cleared the Customs barrier or must have arrived in Australia on an international flight and be awaiting an outbound international flight. When Travelex sells foreign currency to, or buys foreign currency from, a customer, it does so at a published rate of exchange with the Australian dollar. The rates at which Travelex is prepared to sell a foreign currency are usually different from the rates at which it is prepared to buy that foreign currency. When Travel sells foreign currency, it receives the margin derived in relation to the difference between the total cost to Travelex of obtaining the foreign currency and the rate at which it is sold to the customer. In addition, Travelex receives a sum of money described as commission and calculated as a percentage of the amount of currency sold, but which is a minimum of $2. Approximately 90% of the transactions at the Travelex Counter are sales of foreign currency. Mr Geoffrey Urquhart is the tax manager of Travelex. Mr Urquhart is responsible for all income tax and indirect tax, including GST, for Travelex and related companies in Australia, New Zealand, Japan and the Pacific region. Mr Urquhart reviews the preparation of monthly GST returns in Australia and New Zealand. On 25 November 2007, Mr Urquhart travelled from Sydney to Fiji for the purpose of observing operations of Travelex in Fiji. On that day, Mr Urquhart attended the check-in counter of Pacific Blue Airlines at Sydney Airport, where he showed his ticket and passport to the attendant. He was asked to answer questions about the contents of his luggage. He placed his suitcase on the weighing machine and the attendant handed to him a boarding pass. The attendant also handed to Mr Urquhart an immigration departure form, which he completed. Mr Urquhart then entered the secure area of the departure side of Sydney Airport. At the Customs barrier, he presented his departure form, his boarding pass and his passport. Having been permitted to continue, he went through the luggage inspection procedures. Mr Urquhart then went to the Travelex Counter, where he made a request to purchase 400 Fijian dollars. The sales assistant quoted a rate and the total amount of consideration in Australian dollars that would be required. Mr Urquhart accepted the quote and paid $AUD 339.65 in cash in return for which he received Fijian bank notes in the sum of 400 Fijian dollars. Mr Urquhart also received a receipt. The receipt shows that the rate of exchange was 1.2060 Fijian dollars to every one Australian dollar. The receipt showed the total amount payable was $AUD 339.67. That represented $AUD 331.67, based on the exchange rate, and an amount of $AUD 8, described as "commission". At the time of entering into that transaction ( the Fijian Currency Transaction ), Mr Urquhart intended that he would have sufficient Fijian cash on hand at the end of his visit to Fiji to enable him to pay cash for a taxi to the airport and to make other purchases should his flight be delayed. Mr Urquhart departed Australia and travelled to Fiji shortly after entering into the Fijian Currency Transaction. He carried the Fijian bank notes with him. While in Fiji, Mr Urquhart used the Fijian bank notes to pay for taxis, for lunch and water and to purchase office materials to assist him in the work that he was engaged in while he was in Fiji. He also used the Fijian bank notes to purchase pre-dinner drinks during his stay. Under s 9-10(1) of the GST Act, a supply is any form of supply whatsoever. Relevantly, for present purposes, s 9-10(2) describes supply by reference to "goods", "services" and "any right" and by reference to "a financial supply". None of the terms goods , services or right is defined in the GST Act. Those terms must therefore be construed, in the context in which they appear in the GST Act, according to their ordinary English meanings. However, under s 40-5(2), financial supply has the meaning given by the A New Tax System (Goods and Services Tax) Regulations 1999 (Cth) (the Regulations ). Regulation 40-5.09(1) relevantly provides that the provision, acquisition or disposal of an interest mentioned in r 40-5.09(3) is a financial supply if the provision, acquisition or disposal is for consideration, is in the course or furtherance of an enterprise and is connected with Australia, and the supplier is registered as a financial supply provider in relation to supply of the interest. Regulation 40-5.09(3) relevantly provides that an interest, for the purposes of Regulation 40-5.09(1), is an interest in or under Australian currency, the currency of a foreign country or an agreement to buy or sell currency of either kind. The term currency is not defined either in the GST Act or the Regulations. Under s 9-10(4), a supply does not include a supply of money , unless the money is provided as consideration for a supply that is a supply of money. Under s 195-1 the term money relevantly includes currency, whether of Australia or any other country. However, the definition of money in s 195-1 recognises that some items that would be currency are not money. Thus, the term money does not include a collector's piece, an investment article, an item of numismatic interest, or currency the market value of which exceeds its stated value as legal tender in the country of issue. Clearly, the Fijian Currency Transaction was a supply of money where money was provided as consideration for that supply. Accordingly, notwithstanding s 9-10(4), there was a supply for the purposes of the GST Act. Section 9-5 relevantly provides that a person makes a taxable supply if: the person makes the supply for consideration; the supply is made in the course of furtherance of an enterprise that the person carries on; the supply is connected with Australia; and the person is registered. However, under s 9-5, a supply is not a taxable supply to the extent that it is GST-free or input taxed . Section 9-30(1)(a) relevantly provides that a supply is GST-free if it is GST-free under Division 38. Section 9-30(2)(a) relevantly provides that a supply is input taxed if it is input taxed under Division 40. However, s 9-30(3)(a) relevantly provides that, to the extent that a supply would be both GST-free and input taxed, the supply is GST-free and not input taxed. If a supply is GST-free, no GST is payable on the supply, but an entitlement to an input tax credit for anything acquired or imported to make the supply is not affected. If a supply is input taxed then no GST is payable on the supply and there is no entitlement to an input tax credit for anything acquired or imported to make the supply. Under s 40-5(1) of the GST Act, a financial supply is input taxed. Accordingly, a financial supply is not a taxable supply to that extent. However, by reason of s 9-30(3)(a), even if the Fijian Currency Transaction was a financial supply, it would not be input taxed to the extent that it is also GST-free. Subdivision 38-E in Division 38 is concerned with "Exports and other Supplies that are for Consumption outside Australia". The matters dealt with in Subdivision 38-E are as follows: s 38-185 - exports of goods s 38-187 - lease, etc, of goods for use outside Australia s 38-188 - tooling used by non-residents to manufacture goods for export s 38-190 - supplies of things, other than goods or real property, for consumption outside Australia. However, s 38-185 may also have some bearing on the question. Section 38-190(1) provides that the third column of the table contained in s 38-190 sets out supplies that are GST-free, except to the extent that they are supplies of goods or real property. Regulation 38.185.01 provides that, for Item 7 of the table in s 38- 185 , the rules set out in Schedule 5 are specified in relation to the supply of goods to a relevant traveller. While there does not appear to be any reason why those rules could not be complied with in relation to the supply of foreign currency, there is no evidence that they were complied with as such in relation to the Fijian Currency Transaction. However, for the reasons given below, even with the extention provided by s 38- 185 (3), Item 1 in the table in s 38- 185 is not relevant to the Fijian Currency Transaction because the Fijian bank notes are not 'goods' within the meaning of the GST Act. In the alternative, Travelex claimed a declaration that any such sale of foreign currency is a supply of goods and a GST-free supply by reason of Item 7 of s 38-185(1) of the GST Act. By its amended application, Travelex claimed, in addition, a declaration that the Fijian Currency Transaction was a supply of or in relation to rights, and a GST-free supply by reason of Item 4(a) of s 38-190(1). It also claimed a declaration that the Fijian Currency Transaction was a supply of or in relation to goods and a GST-free supply by reason of Item 7 of s 38-185(1). At the hearing, Travelex abandoned all reliance upon Item 7 in the table in s 38-185(1) of the GST Act. It also accepted that it could not obtain a declaration concerning any sale of foreign currency in the terms originally claimed. Accordingly, the only question for the Court is whether Travelex is entitled to a declaration that the Fijian Currency Transaction was a supply made in relation to rights and, if so, whether the rights were for use outside Australia , such that it was a GST-free supply by reason of Item 4(a) in s 38-190(1) of the GST Act. They were money within the meaning of s 195-1 of the GST Act. Apart from any provisions of the GST Act, the Fijian bank notes, being paper or plastic, may have been goods under the general law, at least for some purposes. However, it is common ground that the Fijian Currency Transaction was not a supply of goods within the meaning of the GST Act. That explains the abandonment of reliance on Item 7 in the table in s 38-185(1). Currency, consisting of coins and bank notes, is tangible property, in the sense that they can be transferred by delivery and can be the subject of possession. However, because of the particular significance that is attached to currency as being money, currency that consists of coins or bank notes will, for many purposes, not be regarded as goods. In that regard, the term "currency" may have different usages in relation to money. In the sense in which I have just used it, the term is a synonym for the medium of exchange itself, namely, coins and bank notes circulating in a particular polity. In another possible usage, the term refers to a characteristic feature of the proprietary regime that applies to money. That is to say, the full force of the general rule on derivate transfers of title does not apply to title to money, in that title to money is exempt from the maxim nemo dat quod non habet . In that regard, currency refers to the negotiability of money, such that, as a general rule, the right to money is inseparable from the possession of it. Where coins or bank notes are delivered in payment of a debt or for the provision of goods or services, it is not incumbent upon the recipient of the coins or bank notes to enquire into the title of the payer. Not only possession of, but also property in, coins and bank notes passes by mere delivery, irrespective of the title of the payer (see Miller v Race (1758) 1 Burrow 452 and David Fox, Property Rights in Money (Oxford University Press: Oxford, 2008) at 265-6 and the authorities there cited). Money is any generally accepted medium of exchange for goods and services and for the payment of debts (see Butterworth's Australian Legal Dictionary at 759). Currency and legal tender are examples of money. However, a thing can be money and can operate as a generally accepted medium and means of exchange, without being legal tender. Thus, bank notes have historically been treated as money, notwithstanding that they were not legal tender. It is common consent and conduct that gives a thing the character of money (see Miller v Race (1758) 1 Burrow 452 at 457). Money is that which passes freely from hand to hand throughout the community in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it and without the intention of the person who receives it to consume it or apply it to any other use than in turn to tender it to others in discharge of debts or payment for commodities (see Moss v Hancock [1899] 2 QB 111 at 116). A polity may enact legislation with a view to organising its currency. Such legislation will define the unit of account by reference to name and any applicable subdivisions of the unit. In relation to physical money, the applicable domestic law of a polity will lay down rules on legal tender, being the technical specifications for coins and notes. The monetary system of the polity will normally comprise a central bank that enjoys the exclusive privilege of issuing legal tender. Legal tender is concerned with the prescription of that which is, at any particular time, to be a lawful mode of payment within a polity ( Watson v Lee [1979] HCA 53 ; (1979) 144 CLR 374 at 398). Legal tender is such money, in the legal sense, as the polity defines in legislation that organises the monetary system. Accordingly, those tangible objects, which might otherwise be goods, that are legal tender necessarily have the quality of money, although not all money is necessarily legal tender (Charles Proctor, Mann on the Legal Aspect of Money , Sixth Edition (Oxford University Press: Oxford, 2005) at 66). A tender, in discharge of a debt, made in any currency that, at the time of tender, is lawful money, will be effective to discharge the debt ( Jolley v Mainka [1933] HCA 43 ; (1933) 49 CLR 242 at 259). An essential quality of money that is legal tender is its sufficiency to discharge a debt ( Jolley's Case at 261). Accordingly, a money debt incurred in a polity that is payable in that polity may be discharged by a payment of currency that is legal tender in that polity. Section 21 of the Reserve Bank of Fiji Act , 1983, ( the Reserve Bank Act ) provides that the monetary unit of Fiji is the dollar, divided into 100 cents. The Reserve Bank of Fiji is established under s 3 of the Reserve Bank Act. Section 22 provides that the Reserve Bank is to have the sole right of issuing currency in Fiji and that no other person is to issue currency or any documents or tokens payable to bearer on demand having the appearance of or purporting to be currency. Section 24 provides that currency issued by the Reserve Bank is to be legal tender in Fiji, in the case of notes, for the payment of any amount. However, s 26 provides that the Reserve Bank is to have power to call in, for the purpose of withdrawing from circulation, any currency issued by it, on payment of the face value thereof. Any currency so recalled ceases to be legal tender, providing that the holders of any currency are entitled at any time to claim payment from the Reserve Bank of the face value of the currency. Under s 27, the Reserve Bank is to issue, reissue and exchange on demand, and without charge, currency that it has issued. A debt incurred in Fiji, which is payable in Fiji, may be discharged by payment of currency that is legal tender in Fiji. Thus, the bank notes supplied to Mr Urquhart by Travelex pursuant to the Fijian Currency Transaction could be used by him, in Fiji, to discharge a debt, such as a debt arising from the purchase of food, drinks or stationery or the provision of taxi services. The word goods , in ordinary English usage, designates moveable personal property, especially merchandise used in trade and commerce. The word refers to choses in possession, as distinct from choses in action, and is to be contrasted with immoveables, being interests in land. Goods are tangible, personal property capable of physical possession and which are capable of transfer by delivery. Coins and bank notes that are legal tender in Australia will, for most purposes, not be goods within Australia. More particularly, they will not be goods within the meaning of the GST Act. However, the question of whether foreign currency is in the same category as Australian currency, when considered in Australia, may produce a difference answer. Clearly, bank notes issued by the central bank of a polity other than Australia, while they may be legal tender within that polity, will not, in the absence of some Australian legislation, be legal tender in Australia. On the other hand, such foreign currency could, in practice, be accepted in a transaction conducted in Australia. That would depend upon the consent of the parties and not upon any formal obligation on the part of the creditor ( Mann at 67). Foreign currency has no particular legal status or standing in Australia that would make coins or bank notes issued by the central bank of a foreign polity anything different from medals or tokens that would constitute goods in Australia. The mere fact that the foreign currency might be legal tender in another polity does not make it legal tender in Australia. The mere fact that it might be money does not necessarily mean that, in Australia, it is not goods. However, even if a supply of foreign currency may be a supply of chattels under the general law, the GST Act treats supply of foreign currency as being a supply of currency. That is to be seen in the definition of money in s 195-1, which treats foreign currency as being on the same footing as Australian currency. For example, Division 11 of the GST Act deals with creditable acquisitions . The term acquisition is defined in s 11-10 as being any form of acquisition whatsoever, including a number of acquisitions that correspond with s 9-10(2). Section 11-10(3) corresponds with s 9-10(4) and provides that an acquisition does not include an acquisition of money unless the money is provided as consideration for a supply that is a supply of money. Thus, ss 9-10(4), 11-10(3), the definition of money in s 195-1, and the definition of financial supply in the Regulations pursuant to s 40-5(2) show that the GST Act treats money, being both Australian currency and foreign currency, as being in a category that is distinct from goods. It is essential for the case mounted by Travelex that it be accepted that the supply constituted by the Fijian Currency Transaction was not a supply of goods, since a supply of goods is expressly excluded from Item 4 of the table in s 38-190. As I have said, the proceeding has been conducted on the basis that foreign currency, being the currency of Fiji, is not goods for the purposes of s 38-190. Both the Commissioner and Travelex have accepted that the structure and scheme of the GST Act indicate that the supply constituted by the Fijian Currency Transaction was not a supply of goods. I accept that, for the purposes of the GST Act, a supply of money, whether Australian currency or foreign currency, is not a supply of goods. It is common ground that it was a financial supply and would be input taxed. However, that is of no present relevance since, if the supply in question was GST-free, it was not input taxed. The Court is not presently concerned with the consequences that would flow if the supply constituted by the Fijian Currency Transaction was not GST-free. Travelex contends that, by engaging in the business of foreign exchange transactions at the Travelex Counter, it was providing a service within s 9-10(2)(b). It may be true, in one sense, that Travelex was providing a service. It is doubtless convenient for a traveller at Sydney Airport, after passing through the Customs barrier to the departures side of the Airport, to be able to exchange one currency for another. Travelex derives a benefit in relation to such transactions entered into by it. It describes the benefit as a commission. However, the reasoning that leads to the conclusion that there was no supply of goods involved in the Fijian Currency Transaction, also demonstrates that there was no supply of services, within the meaning of the GST Act. There was a financial supply. There was a supply of money the consideration for which was a supply of money. The structure and scheme of the GST Act makes clear that the Fijian Currency Transaction did not involve a supply of services within the meaning of s 9-10(2)(b). By reason of the acquisition by Mr Urquhart of the Fijian bank notes, he may have acquired, as an incident of being the owner or holder of the bank notes, one or more rights, in one sense. I shall return to that question below when dealing specifically with the language of Item 4 of s 38-190. However, the structure and scheme of the GST Act makes clear that the Fijian Currency Transaction was not the creation, grant, transfer, assignment or surrender of a right within the meaning of s 9-10(2)(e). There can be no suggestion that the supply constituted by the Fijian Currency Transaction was a provision of advice or information within the meaning of s 9-10(2)(c). The term real property is expansively defined for the purposes of the GST Act, however there can be no suggestion that the Fijian Currency Transaction involved a grant, assignment or surrender of real property within the meaning of s 9-10(2)(d). Travelex contends that the supply was made in relation to the rights that arose by reason of Mr Urquhart's being the holder or owner of bank notes issued by the Reserve Bank of Fiji. It says that those rights were for use outside Australia , within the meaning of Item 4(a). That latter proposition may well be sound. The real question, however, is whether the former proposition is sound, namely, whether the supply constituted by the Fijian Currency Transaction was made in relation to such rights and whether such rights can fairly be characterised as rights within the meaning of Item 4. The application of Item 4 of s 38-190(1) does not turn on the characterisation of the supply in question. The question requires that attention be directed to the Fijian Currency Transaction. The phrase in relation to is a wide one, which signifies some connection or association between two subject matters. The connection or association may be direct or indirect, substantial or real. However, the connection or association must be relevant to the inquiry at hand. The sufficiency of the connection or association will depend upon the subject matter of the enquiry, the statutory framework within which the enquiry is conducted and the particular facts of the case in question. The degree of connection or association is to be gleaned from the context in which the phrase is found in the statutory framework (see HP Mercantile Pty Ltd v Commissioner of Taxation [2005] FCAFC 126 ; (2005) 143 FCR 553 at [35] ). Travelex contends that there is a substantial and immediate connection between the supply constituted by the Fijian Currency Transaction and the so called rights described above. Travelex says that, as the holder or owner of the Fijian bank notes, Mr Urquhart had a means of exchange in Fiji. From a practical and business point of view, he obtained the right to spend the bank notes in Fiji since, as legal tender in Fiji, the bank notes were sufficient to discharge a debt owed in Fiji. Travelex says that, as the holder or owner of the Fijian bank notes, Mr Urquhart obtained the right to spend the bank notes by tendering them in discharge of a debt that he incurred in Fiji for the purchase of, for example, stationery, drinks or taxi fares. It says that the supply constituted by the Fijian Currency Transaction was therefore also a supply in relation to that so called right. Travelex also contends that, even if the only right that Mr Urquhart acquired was a right of exchange as against the Reserve Bank of Fiji, that is a right within the meaning of Item 4, being a right that can only ever be used outside Australia. Travelex says that, since that right is an incident of being the owner or holder of the Fijian bank notes in question, the supply in question, constituted by the Fijian Currency Transaction, was a supply in relation to that right. The Commissioner contends that the phrase a supply that is made in relation to rights , as it appears in Item 4, should be construed as meaning a supply of rights . The Commissioner attaches significance to s 9-10(2)(e), in so far as that provision refers to the creation, grant, transfer, assignment or surrender of any right . The Commissioner says that Item 4 is concerned only with a supply that would fall within that provision; only such a supply would be a supply that was made in relation to rights. That is to say, item 4 is concerned with a supply in relation to a right that could be the subject of creation, grant, transfer, assignment or surrender by Travelex. There is much to be said for the Commission's construction. The drafting technique employed in the GST Act and, by setting things out in tables, results in the use of abbreviations and the absence of finite sentences. Thus, the Commission says that the phrase "a supply that is made in relation to rights" should be understood as meaning "a creation, grant, transfer, assignment or surrender of any rights". The so called rights, as described by Travelex, which are incidents of being the holder or owner of bank notes issued by the Reserve Bank of Fiji, are clearly not the subject of any creation, grant or surrender by Travelex. Nor could they be said to be the subject of any transfer or assignment by Travelex, merely because they are incidents that pass with ownership or possession of the bank notes. As the owner of a chattel, such as a book, a person is entitled to handle, read and deal with the book, something that the person, if not the owner, could not do without the consent or licence of the owner. A supply of a book would not be a supply that was made in relation to the right to handle or read the book. It would be a supply of goods. A supply in relation to rights must be something more than the supply of goods the ownership of which has incidents that might in some senses be described as rights. An incident that is the consequence of a supply, whether or not that incident can fairly be characterised as a right, is not something in relation to which the supply is made. There is no sufficient connection or association between the supply constituted by the Fijian Currency Transaction within the meaning of the GST Act and the incidents of being the owner or holder of bank notes. The incidents of being the owner or holder of bank notes issued by the Reserve Bank of Fiji are not rights in relation to which a supply of the bank notes is made within the meaning of Item 4. The so-called rights identified by Travelex, being the incidents of holding or owning bank notes, are not relevantly connected with the supply constituted by the Fijian Currency Transaction, such that it can be said that the supply of the bank notes was a supply made in relation to those so called rights. The supply was a supply of the physical notes, albeit that the physical notes are money within the meaning of the GST Act and are legal tender in Fiji and carry the incidents identified. The subject matter of the supply was bank notes having a face value of 400 Fijian dollars. The incidents of being the holder or owner of those bank notes were simply the consequences of becoming holder or owner. The supply was not relevantly in relation to those incidents. Item 4 only applies to a supply if the essential character or substance of the supply, or of a separately identifiable part of the supply, is one of rights. Item 4 does not apply where the supply of rights is merely integral, ancillary or incidental to another dominant part of the supply, the supply being characterised by the dominant part. Before a supply can be said to be made in relation to a right within Item 4, the right must bind the parties in some way. The word right has a very broad meaning under the general law and might fairly be described as a benefit or claim entitling a person to be treated in a certain way. A supply that does not bind the parties in some way is not a supply that is made in relation to rights. A supply that is made in relation to rights in Item 4 in the table in s 38-190(1) means a supply of the rights by way of the creation, grant, transfer or assignment of the rights or a supply by way of the surrender of the rights. The proceeding should be dismissed with costs. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | goods and services tax whether a supply of foreign currency is a supply of goods whether a supply of foreign currency is a supply that is made in relation to rights for use outside australia meaning of "goods" and "money" in the a new tax system (goods and services tax) act 1999 (cth) meaning of "supply that is made in relation to rights" in s 38-190(1) taxation |
The Tribunal affirmed two decisions made by delegates of the respondent. The appeal to this Court is brought under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) and is limited to an appeal on a question of law. 2 At the commencement of the hearing, the applicant sought to tender two affidavits which he had sworn. The first affidavit was sworn on 23 May 2007 and the second affidavit was sworn on 1 June 2007. I rejected the tender of the affidavit sworn on 23 May 2007 because the matters raised in the affidavit are irrelevant to the issues on the appeal. I received the affidavit sworn on 1 June 2007, subject to arguments as to relevance. For reasons I will give, I do not think that any of the matters raised in that affidavit are relevant to the issues on the appeal. Those disabilities include an "anxiety state" and a blood disorder, "neutropaenia and lymphopaenia with CD4 suppression". The applicant receives a service pension, the rate of which is calculated by reference to, among other things, the assets he owns. 4 The applicant owns a Toyota Prado motor vehicle and a camper trailer. The question before the Tribunal was whether those items of property were assets which should be taken into account for the purposes of calculating the rate of his pension within the provisions of the Veterans' Entitlements Act 1986 (Cth) ("VE Act"). It found that he avoided public places and public transport and that he found that his anxiety, in particular, was helped by regular trips into the Australian outback, where he felt more relaxed and normal within himself. The Tribunal found that the applicant purchased the motor vehicle and the camper trailer for the specific purpose of having annual trips to the outback. The Tribunal found that the motor vehicle was not specifically designed for use by a disabled person. It was a standard motor vehicle and it had not been modified in any way that related to the applicant's particular disabilities. The Tribunal found that the camper trailer was a standard item owned by many members of the community and it was not specifically designed for use by a disabled person. It found that it was not modified in any way to accommodate the applicant's specific disabilities. The Tribunal referred to the only decision of which it was aware that might have been relevant to the issue before it ( Re Perrone v Secretary, Department of Family and Community Services [2004] AATA 775). 8 The Tribunal held that s 52(1)(k) and (l) of the VE Act refers to specific aids for the disabled and did not refer to standard items that have the additional feature that they give some comfort or relief to a disabled person. The Tribunal said that the submission advanced by the applicant, namely, that an asset not normally seen as being designed for a disabled person can be "reinterpreted" to be designed for a disabled person with a particular disability if that item has the effect of alleviating their disability, went well beyond a beneficial interpretation of the legislation. The Tribunal said that the relevant legislative provisions were straightforward and unambiguous. It said that the motor vehicle and camper trailer were not specifically designed or modified for a disabled person and that they were standard items owned by many members of the community. Both came within the definition of "assets", as contained in the VE Act , and had been properly brought to account as assets of the applicant and his wife. 9 The Tribunal affirmed the decisions under review. 11 I think the Tribunal's interpretation of s 52(1)(k) and (l) is the correct one. Personal property falls within the terms of s 52(1)(k) if there is a feature or features of the design that indicates that it was designed for use by a disabled person. Assets designed for use by persons who are not disabled, such as the motor vehicle or camper trailer in this case, do not become assets designed for use by a disabled person because of the intention of the owner or disabled person or the particular way in which it is used by a person. If there is any doubt about the proper interpretation of s 52(1)(k) (and I do think that there is), it is removed by the provisions of s 52(1)(l) , which deal with modifications made so that personal property can be used by a disabled person. In those circumstances, only that part of the value of the personal property that is attributable to the modifications is to be disregarded under s 52(1). As I understood the applicant's submission, it was that Parliament intended to exclude from the assets taken into account for the purposes of determining the rate of pension assets which a disabled person needed because of his or her disability and what was needed was a question of fact to be determined in each case. That is not the test laid down by the clear words in s 52(1)(k) and (l). Those paragraphs focus attention on the purpose for which personal property was designed or the reason it was modified. 12 The applicant sought to raise a number of matters on the appeal that appear not to have been raised before the Tribunal. First, he submits that he is receiving a recreation transport allowance and that it is inconsistent for the respondent to pay such an allowance and, at the same time, fail to disregard as assets the motor vehicle and the camper trailer. He submits that the Tribunal overlooked or, at least placed no weight on, the fact that he was receiving a recreation transport allowance. This submission must be rejected. In its reasons, the Tribunal referred to the fact that the applicant asserted that he received a recreation transport allowance as it had been previously accepted that his ability to move from one place to another was affected by his illness. In any event, the receipt of the recreation transport allowance under s 104 of the VE Act is not inconsistent with the decisions that the motor vehicle and camper trailer should not be disregarded in calculating the value of the applicant's assets. As counsel for the respondent submitted, the Act provides for a range of pensions and the recreation transport allowance is, relevantly, a different allowance from the service pension. Secondly, the applicant refers to the fact that in s 80 , which appears in Part V of the VE Act , there is a definition of treatment which includes the provision of social or domestic "transport". In my opinion, the provisions of s 80 cannot affect the proper interpretation of s 52(1)(k) and (l). Thirdly, the applicant submits that the Tribunal may have misunderstood whether or not his service pension was taxable. He refers to a record of the respondent which appears in the appeal book and which suggests, in his submission, that his pension was taxable when, in fact, his pension was not taxable. In my opinion, the respondent's submission to the effect that whether or not the service pension is taxable is irrelevant should be accepted. I will hear the parties as to costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | appeal from decision of administrative appeals tribunal where applicant receiving service pension where applicant owned motor vehicle and trailer whether vehicle and trailer personal property which should be disregarded under s 52(1) of the veterans' entitlements act 1986 (cth) where vehicle and trailer not designed or modified specifically for use by a disabled person whether payment of recreation transport allowance inconsistent with motor vehicle and trailer being included in assets test. administrative law |
2 Critical to the application is the fact that Ambernap is a sole member, sole director company. The sole member and director is Mr Jon McArthur. Mr McArthur was made bankrupt by a sequestration order made in the Federal Magistrates Court on 26 March 2008. Mr Pascoe was appointed as Mr McArthur's trustee in bankruptcy. 3 It appears that the sole asset of Ambernap is shares in a company called Pendarves Estate Pty Limited. Pendarves has been in members' voluntary liquidation since January 2008. The liquidator of that company is Mr Manfred Holzman. Ambernap owns approximately 34 per cent of the issued share capital in Pendarves. 4 On 3 December 2004, Mr Holzman wrote to the solicitors for Mr Pascoe stating that Mr Holzman expected to pay a dividend of approximately $95,000 as soon as Mr Holzman received confirmation of Mr Pascoe's appointment as official liquidator of Ambernap. On 8 December 2008, Ambernap passed a resolution in accordance with s 249B of the Corporations Act 2001 (Cth) that Ambernap be wound up in accordance with s 461(1)(a) of the Act. The resolution was signed as a true record by Mr Pascoe in his capacity as the trustee of the property of Mr McArthur. Mr Pascoe was not registered as the holder of the shares in Ambernap Pty Limited held by Mr McArthur. 5 In those circumstances, two issues arise on the present application. The first is whether it was open to Mr Pascoe to rely upon the provisions of s 1072C of the Act. I have been taken this afternoon to a number of authorities which deal with the effect of that section. The decision of Campbell J in the Official Trustee in Bankruptcy v Buffier (2005) ACSR 839 seems to me plainly to support the applicability of s 1072C to authorise Mr Pascoe to pass the resolution. Other authorities to the same effect include the decision of Sackville J in Prentice v Cummins [2002] FCA 1165 at [7] ; the decision of Hasluck J in Nilant v RL & KW Nominees Pty Ltd [2007] WASC 105 ; and the decision of Heerey J in Rambaldi; in the matter of Weeden, a bankrupt v Weeden [2008] FCA 1597 at [40] . 6 The second issue which arises is whether it is appropriate to appoint Mr Pascoe as the liquidator of Ambernap. In theory, it might be thought that there may be a conflict arising from Mr Pascoe's position as the trustee in bankruptcy of Mr McArthur and his position as the liquidator of Ambernap. However, it seems to me that in the present case, where Ambernap is a sole member, sole director company, there is no real difference between the interests of the bankrupt and the interests of the member of the company. 7 Of course, the interests of creditors need to be considered, and I have been taken to evidence of the somewhat scanty records of Ambernap, which include a balance sheet as at 30 June 2005. The effect of the balance sheet, after adjustment for the fact that the receivables of the company now appear to be a maximum of $97,000 is that the sole asset of the administration will be the dividend from Pendarves in that amount, whereas the liabilities of the company comprising borrowings set forth in the balance sheet are in excess of $3.7 million. 8 It seems to me that, whether or not there is any real conflict of interest, I ought to accept the submission of Mr Baird, who appears for the plaintiff, that the practical and sensible approach in the present case is to appoint Mr Pascoe as the liquidator. This is because, as I have said, the sole asset would appear to be the dividend of approximately $97,000 that will come into the administration, and there is a plain need to avoid incurring duplicated costs and expenses arising from the appointment of a different person as the liquidator of Ambernap. 9 It seems to me, therefore, that I should make an order for the winding up of Ambernap and the appointment of Mr Pascoe as the official liquidator. I propose to make orders and declarations in terms of [1], [2], [4], [5] and [6] of the short minutes of order, which I have signed and dated and placed with the Court papers. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | winding up application sole member, sole director company member bankrupt order that company be wound up and trustee in bankruptcy be appointed as liquidator corporations |
123181 and 129239) ('the designs') registered in the name of the third applicant. That consent was required by s 50(4) of the Designs Act 2003 (Cth) ('the Act'). The Court gave its consent on 2 May 2006 without opposition from the respondent ('Housewares'). At issue are the costs incurred in these proceedings in relation to the designs. Housewares submits that its costs of Bodum's motion for the Court's consent and its cross-claim for rectification of the Register of Designs should be paid by Bodum on an indemnity basis. Bodum submits that each party should pay its own costs. (2) Are costs payable on an indemnity basis? (3) Are costs payable from the filing of the cross-claim until Bodum's approach to the Court? 123181) claims a monopoly in the shape and configuration of ' a set of articles comprising a coffee maker and drinking vessel '. That design was registered on 13 April 1995 and claims priority as at 16 March 1994. The second design (Australian Design No. 129239) was registered on 21 February 1997 and claims priority as at 5 January 1995. It claims a monopoly in the shape and configuration of a bowl. 5 Bodum and Housewares each sell coffee plungers and related household products in Australia. One such product, manufactured and distributed by Bodum, is a coffee plunger called the "Bodum Chambord Coffee Plunger" ('the Chambord plunger'). On 20 August 2004, Bodum's solicitors wrote to Housewares and demanded that Housewares cease importing and selling three products alleged to be ' direct copies ' of the Chambord plunger in Australia. The importation and sale of those products was said to constitute an infringement of the first design and give rise to causes of action for trade mark infringement, contravention of ss 52 and 53 of the Trade Practices Act 1974 (Cth) and passing off. No reference was made to the second design. 6 Housewares responded by its solicitors on 1 October 2004. Relevantly, Housewares' response alleged that coffee plungers of the same shape and configuration as the first design had been available for sale in Australia well before the priority date of that design. The letter stated that Housewares would apply to the Court for an order ' revoking the registration ' if Bodum proceeded with an action for design infringement. 7 Bodum's solicitors proceeded to draft pleadings and in so doing received further instructions. Relevantly, those instructions were that the first design did not, in fact, relate to the shape and configuration of the Chambord plunger. It related to a different plunger instead. That fact was relayed by Bodum's solicitors to Housewares' solicitors in a "without prejudice" letter on 4 April 2005. The letter stated '[t] herefore, if litigation becomes necessary, the case will proceed based on infringement of Australian Registered Trade Mark No. 659903, breaches of sections 52 and 53 of the Trade Practices Act and passing off only ' (my emphasis). Bodum now seeks to rely on the relevant passages of that letter and waives any privilege attaching to those passages. 8 Housewares' responded by reserving its right to apply for an order revoking the first design on 12 April 2005. Its solicitors stated in their response '[w] e assume that your client is not proceeding with the previously threatened design infringement claim because your client understands that your client, in 1995, had no basis upon which to seek to register the design '. A reply "without prejudice" letter was sent by Bodum's solicitors to Housewares' solicitors on 20 April 2005. The reply stated that ' it is not the case that our client is no longer proceeding with a design infringement claim against [Housewares] because there was no basis for the design's initial registration '. It also elaborated upon the explanation earlier given by Bodum's solicitors that the first design in fact related to a different coffee plunger. That plunger was said to incorporate a plastic (rather than metal) frame and had been discontinued. Bodum also seeks to rely on the relevant passages of the letter of 20 April 2005 and waives privilege attaching to those passages. 9 These proceedings were issued by Bodum on the following day. By its application and statement of claim, Bodum alleged trade mark infringement, passing off and contraventions of ss 52 and 53 of the Trade Practices Act in respect of coffee plungers and related products distributed and sold by Housewares. Those products allegedly incorporate features of Bodum products, including the Chambord plunger. An amended statement of claim was filed by Bodum on 31 May 2005. Allegations of passing off and contraventions of ss 52 and 53 of the Trade Practices Act in respect of other products distributed by Housewares were included. No claim for infringement was made in respect of the first or second designs. 10 Pursuant to s 39(1) of the Designs Act 1906 (Cth) ('the old Act'), a ' person aggrieved ' by an entry wrongly made or remaining in the Register of Designs may apply to the Court for an order to rectify the Register. Housewares' filed a cross-claim on 28 June 2005 pursuant to that section relevantly seeking an order to expunge the first and second designs. Orders for rectification were sought under the old Act as the designs were registered before the commencement of the Act (s 151(3) of the Act). The basis for expungement was an allegation that the first and second designs were not new or original in Australia at their priority date. Bodum filed its defence to the cross-claim on 15 July 2005. Bodum denied that Housewares was a "person aggrieved" and entitled to bring the cross-claim. Each offer was made without prejudice save as to costs. 12 First, under cover of separate letters dated 12 September 2005 in respect of the first and second designs, Housewares offered to discontinue its cross-claim for rectification of the Register on the condition that Bodum release Housewares and others (including purchasers of Housewares' products) from any claim for infringement of the designs. According to the terms of offer, Housewares' costs of the cross-claim would be payable by Bodum. The covering letters acknowledged that no infringement of the second design had ever been claimed by Bodum. Nevertheless, Housewares asserted it was a "person aggrieved" by the second design because sugar bowls the subject of allegations made in the amended statement of claim possessed the same shape and configuration as was covered by the monopoly of the second design. Moreover, our client cannot leave its customers exposed to similar threats. According to the terms of that offer, Bodum would voluntarily surrender the designs in return for Housewares discontinuing the cross-claim. Each party was to pay its own costs. No release was included in the offer. Bodum's solicitors explained in the letters '[o] ur clients are of the opinion that [Housewares ' ] offer does not involve any real element of compromise on your client's behalf. Acceptance of the offer would mean that [the first or second design] could never be enforced against [Housewares] , and Bodum would be required to pay your client's costs in circumstances where it did not claim infringement' of the first design and ' neither threatened nor claimed infringement ' of the second design. 14 A third offer of compromise was proposed by Housewares on 11 October 2005. That offer was in substantially identical terms to Bodum's offer, save for the fact that Housewares' costs of the cross-claim were to be payable by Bodum and each party was to give written consent to the surrender of the designs. That offer was rejected by Bodum by its solicitors on 25 October 2005. Bodum's solicitors maintained the position that Housewares' was not a "person aggrieved" and denied that the terms proposed by Housewares represented a genuine offer of compromise in circumstances where there was no waiver by Housewares of its entitlement to costs. The media release identified Housewares as one of two companies targeted by Bodum in legal proceedings in this Court as part of ' an extension of [Bodum's] worldwide crackdown on pirate copies of its designs '. The media release further stated '[t] he companies who are behind the copying and manufacturing of pirated designs...target Australia and New Zealand '. Specific reference was made to ' design infringement ' and the fact that the second applicant ' would not tolerate importers or manufacturers pinching the innovative Bodum designs nor trading off the Bodum reputation '. 16 Not surprisingly, the media release resulted in a flurry of correspondence between the parties' solicitors. Of particular relevance for present purposes is an open letter sent by Bodum's solicitors to Housewares' solicitors on 28 November 2005 seeking to ' clarify ' the media release so far as it referred to a claim or possible claim for design infringement. According to that letter, no allegation of infringement by Housewares of any registered design owned by Bodum was ever intended to have been made by the media release. The letter reiterated that Bodum had at no stage made any allegation of design infringement by its pleadings. Bodum's solicitors replied on the following day by open letters stating that they had received instructions to surrender each design voluntarily in accordance with the procedure set out in s 50 of the Act. By s 50(4) of the Act, Housewares' consent or the Court's consent to the surrender of the designs was required. The letters proposed that, if consent from Housewares' were not forthcoming, a notice of motion seeking the Court's consent to the surrender of the designs would be filed. 18 Housewares' solicitors replied on 1 March 2006 and advised that Housewares was prepared to consent to the surrender of the designs on the condition that Bodum agree to pay its costs of the cross-claim for rectification on a party and party basis. The letter complained that Bodum's further offer to surrender the designs was made, notwithstanding Housewares' previous offers of comprise, at a time when Housewares' evidence on the cross-claim was substantially complete. Bodum rejected that offer on the same day in an open letter. Its letter of rejection ' formally put [Housewares] on notice that it need not take any further steps in these proceedings relating to the [designs]' (my emphasis). 19 A notice disputing some, but not all, facts in respect of the shape and configuration applicable to the first and second designs and products the subject of these proceedings was served by Bodum under cover of a letter dated 9 March 2006. In the event that Bodum is liable to pay any of Housewares' costs, it submits that those costs should be limited to costs incurred up to 29 September 2005. That was the date when Bodum's offer of compromise was formally put to Housewares ([13] above). No claim for infringement of the second design was ever made. Further, although an initial threat was made in respect of the first design, Housewares was put on notice as at 4 April 2005 that that design did not relate to the Chambord plunger and would not be the subject of the foreshadowed proceedings. • In the absence of any threat of design infringement, Housewares is not, and never has been, a "person aggrieved" within the meaning of s 39 of the old Act. The registration of the designs was not a matter which either affected or disadvantaged Housewares. Accordingly, Housewares does not have (and has not had) standing to bring the cross-claim. • There was no good reason for Housewares to maintain the cross-claim following Bodum's offer of compromise on 29 September 2005. The cross-claim was maintained solely as a forensic weapon in relation to costs. Any costs incurred by Housewares after that date were incurred as a result of Housewares' unreasonableness. Bodum submits that that evidence, which was not read by Housewares on the costs dispute, confirms that there are differences between the first and second designs and the Bodum products the subject of this litigation. Bodum also points to the fact that Mr Voon's affidavit was affirmed on 14 March 2006, some two weeks after Bodum informed Housewares that it would surrender the designs and that the incurring of further costs was unnecessary. • Bodum has proceeded at all times in full knowledge that the validity of the designs was seriously in dispute and that there is no substantive basis for justifying their validity. • By its offer of comprise dated 12 September 2005, Housewares proposed to resolve the cross-claim on terms that would have left the designs registered; had Bodum accepted that offer, it would have been in a better position than it will now be. The rejection of that offer was unreasonable. However, it submits that Bodum took no step in open correspondence to withdraw the initial threat of design infringement until 28 November 2005. By then, the cross-claim had already been filed. The "without prejudice" letter of 4 April 2005 provided insufficient comfort to Housewares and no assurance about threats and claims that might be made to its customers. The risk of such claims being made is said to have been confirmed by the assertions made in the media release. 26 Housewares also disputes the proposition that it is not a "person aggrieved". It points to the broad terms of the statement of monopoly of each design and similarities between the monopolies claimed and the products the subject of these proceedings. Those similarities are said to be apparent upon "simple visual inspection" of the designs and confirmed by admissions made by Bodum in response to Housewares' notice to admit facts. In circumstances where Bodum issued proceedings against Housewares' for incorporating design features of Bodum products and those features are covered by designs, Housewares submits that its entitlement to bring the cross-claim for rectification is clear. Bodum submits that, if that submission be accepted, it follows that Housewares acted unreasonably in filing and pursuing the cross-claim and should pay its own costs. 28 Bodum's submission that Housewares cannot be a "person aggrieved" is not accepted. Those words embrace ' any person having a real interest in having the entry expunged ' and include ' any person who would be or in respect of whom there is a reasonable possibility of his or her being "appreciably disadvantaged in a legal or practical sense" by the entry not being expunged ' ( Assa Abloy Australia Pty Ltd v Australian Lock Company Pty Ltd [2005] FCAFC 246 ; (2005) 147 FCR 126 at [19] ; Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158 at 193). A ' close and direct connection in both a legal and practical sense between the existence and duration of the designs and potential damage to the appellant ' was sufficient in Assa Abloy , although Heerey and Allsop JJ thought it inappropriate in that case to express a view as to what the limits may be (at [24]). 29 The statement of monopolies in the designs is broad; for example, the monopoly in the first design does not appear to be limited to a plastic framed coffee maker (cf [8] above). Bodum concedes, by its notice disputing facts, that the visual features of shape and configuration applicable to the designs exactly reproduce some Bodum products the subject of these proceedings. The adoption of those features by Housewares in its products is said to amount to passing off and contravention of ss 52 and 53 of the Trade Practices Act . With reference to these matters, Housewares might have been able to establish a "reasonable possibility" that it would be disadvantaged in a practical or legal sense by the designs not being expunged from the Register. This is especially so in relation to the first design, in respect of which a direct threat of infringement had been made. Although Bodum informed Housewares on 5 April 2005 that it would not bring infringement proceedings in respect of the first design, the communication was "without prejudice". It gave Housewares no assurance as to allegations that might be made against potential customers. There is evidence that Bodum asserted rights in the first design against a third party's product that allegedly incorporated features of the Chambord plunger. It was not unreasonable for Housewares to file the cross-claim for rectification and seek to establish standing. Nor was it unreasonable for Housewares to pursue the cross-claim after the "without prejudice" letter of 5 April 2005. Bodum submits that Housewares could have later relied on that letter with reference to an exception in the Evidence Act 1995 (Cth) (s 131(2)(g)) but it is by no means certain that this is the case. Such reliance on the letter may well have been disputed by Bodum. 30 Housewares filed a cross-claim for expungement of the designs and Bodum has now approached the Court for its consent to the surrender of those designs. It follows that, unless the offers of compromise or the parties' conduct changes the position, Bodum is liable to pay Housewares' costs of the cross-claim for rectification and the motion seeking the Court's consent on a party and party basis. (2) Are costs payable on an indemnity basis? Housewares submits that Bodum's rejection of the first offer of compromise ([12] above) is so unreasonable as to justify indemnity costs. Housewares asserted in correspondence that it would seek indemnity costs from the date of that offer in accordance with Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121. 32 Mere refusal of an offer or a Calderbank offer does not of itself warrant an order for indemnity costs; the offeror needs to show that the conduct of the offeree was unreasonable ( Alpine Hardwoods 190 ALR at [28], [35]; Black v Lipovac (1998) 217 ALR 386 at [217] to [218]). Bodum took the position that Housewares was not a "person aggrieved" in relation to the first and second designs and, for that reason, rejected the offer to release Housewares from any claim for design infringement in circumstances where Bodum would be liable to pay Housewares' costs. While Housewares was entitled to seek to establish that it was so aggrieved, the cross-claim would fail if Housewares had no standing to bring the action. It was not unreasonable for Bodum to argue that Housewares was not a "person aggrieved" in circumstances where no allegation of design infringement had been pleaded. Mere refusal by Bodum of the first offer of compromise does not justify indemnity costs. 33 On 29 September 2005, Bodum proposed its own offer of comprise. By the terms of that offer, open for 21 days, Bodum would surrender the designs, the cross-claim for rectification would be discontinued and each party would pay its own costs. Bodum's solicitors asserted that the offer was a genuine compromise because Bodum had never claimed infringement of the designs. That position at to infringement was contradicted by the assertions made in the media release issued 11 days later. Those assertions were not clarified until 28 November 2005, when Bodum "unequivocally withdrew" any earlier allegation of infringement of the first design by an open letter. 34 In my view, it was unreasonable for Bodum to issue the media release when the offer to surrender the designs and resolve the cross-claim had been made. The media release sent a mixed message to Housewares. It unreasonably provoked Housewares to protect its position and the position of the retailers of its products. Bodum should pay the costs incurred by Housewares in respect of its cross-claim for rectification of the Register of Designs between the issue of the media release on 10 October 2005 and the "clarification" by Bodum on 28 November 2005 on an indemnity basis ( Hamod v New South Wales (2002) 188 ALR 659 at [20]). 35 That leaves for consideration whether costs are payable on an indemnity basis after 28 November 2005. By then, Housewares was aware that there was no intention on the part of Bodum to allege design infringement. There was, however, still a dispute as to Housewares' entitlement to bring the cross-claim and costs. Bodum had offered surrender of the designs on the condition that the cross-claim for rectification be discontinued and each party pay its own costs; Housewares had offered to discontinue the cross-claim in return for the surrender of the designs on the condition that Bodum pay its costs. The cross-claim for rectification of the Register of Designs was capable of resolution subject to the dispute as to who should be liable for costs. 36 Neither party sought to bring that situation to finality. Neither party approached the Court to finalise the surrender of the designs or the cross-claim and resolve question of costs. Bodum did not approach Housewares or the Court with respect to orders for surrender of the designs. Housewares, knowing of the proposed surrender and the effect on its cross-claim for rectification, did not seek to finalise the matter with Bodum, nor approach the Court for orders as to its cross-claim. That was the time to finalise the status of the cross-claim for rectification and any costs associated with it. Instead, the matter did not progress until after Housewares served a notice to admit facts relevant to the cross-claim and the designs on 23 February 2006. It was entitled to do so because the cross-claim for rectification was still in issue; the designs had not been surrendered. Directions had been made requiring Housewares to prepare its evidence. 37 It was Housewares' notice to admit facts that seemed to have enlivened Bodum to take the necessary steps to resolve the dispute concerning the designs. Neither party acted to resolve the cross-claim before then. Instead, in order to take positions on costs, the parties engaged in correspondence that only served to increase the costs in respect of an arid dispute over Housewares' entitlement to bring a cross-claim in respect of designs that Bodum was prepared to surrender. While Bodum is liable to pay Housewares' costs up to the time it formalised its position on surrender ([39] below), subject to the consequences of the media release, it is not liable to pay indemnity costs in circumstances where both parties acquiesced in the ongoing accumulation of costs. (3) Are costs payable from the filing of the cross-claim until Bodum's approach to the Court? 39 On 24 February 2006, Bodum informed Housewares of its instructions to surrender the designs, with or without agreement from Housewares. That communication was an open letter in respect of each design. The letters stated '[i] f [Housewares] is not willing to consent to the offer to surrender [the designs] , we propose to file a motion seeking the Federal Court of Australia's consent to the surrender and propose to seek costs if your client unreasonably rejects this offer '. It was not unreasonable for Housewares to insist that Bodum pay its costs to date as a condition for its consent. It did so by letter dated 1 March 2006. It was, however, unreasonable for Housewares to continue to incur costs on the cross-claim after being put on notice in an open letter that Bodum had instructed its solicitors to surrender the designs. This is especially so after 1 March 2006, when Bodum ' formally put [Housewares] on notice that it need not take any further steps in these proceedings relating to the [designs]'. Bodum should not be liable to pay the costs incurred by Housewares after the letters dated 24 February 2006. Bodum should also pay Housewares' costs of the cross-claim for rectification of the Register of Designs incurred prior to the letters of 24 February 2006. Costs incurred by Housewares between 10 October 2005 and 28 November 2005 are payable on an indemnity basis. Costs are otherwise payable on a party and party basis. Each party is to bear its own costs in relation to the cross-claim for rectification after 24 February 2006. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | cross-claim for rectification of the register of designs offers of compromise rejected cross-respondents sought the court's consent to the surrender of the designs media release asserting design infringement and piracy was unreasonable indemnity costs payable until media release qualified costs otherwise follow the event no costs payable after the cross-respondents informed the cross-claimant in an open letter of their intention to surrender the designs "person aggrieved" no allegation of design infringement pleaded adoption of features of shape and configuration alleged to constitute passing off and contravention of ss 52 and 53 of the trade practices act 1974 (cth) threat of design infringement made but later withdrawn arguable that cross-claimant is a "person aggrieved" costs designs |
She arrived in Australia on 12 June 2004. On 6 July 2004 she lodged an application for a protection visa with the Department of Immigration and Citizenship (the Department). A delegate of the first respondent refused the application for a protection visa on 13 July 2004. The appellant applied to the Tribunal for a review of that decision and on 7 December 2004 the first Tribunal affirmed the decision of the delegate. The appellant sought judicial review of that decision in the Federal Magistrates Court and on 1 September 2006 the matter was remitted to the Tribunal by consent. The second Tribunal affirmed the decision of the delegate on 9 January 2007. The Federal Magistrates Court upheld that decision. This appeal is from the judgment of the Federal Magistrate delivered on 30 July 2008 ( NBKB v Minister for Immigration and Citizenship [2008] FMCA 1046). The fear was based on reasons of 'religion' and imputed 'political opinion' based on her practice of Falun Gong in China since 1997. She claimed that in March 2001 she had been called to the local police station, arrested, detained by the Public Security Bureau (PSB) for three days and then sentenced to re-education through labour for one year in a labour camp. She claimed she was mistreated physically and mentally in the camp, including verbal abuse, sleep deprivation and beatings. She stated that she more or less gave up Falun Gong after being released from detention. The appellant further claims that when she came to Australia to do business she saw people practising Falun Gong in a park and this reignited her interest in Falun Gong, which she had not practised for some time. She claims that she feared she would come to the attention of the PSB in China but while in Australia she could practise without any fear. It also accepted that she had 'some involvement with a group of Falun Gong practitioners in Hurstville' and that she subsequently joined a Falun Gong study group in Parramatta. However, the Tribunal did not accept that she had been involved with these groups prior to the first Tribunal hearing. The Tribunal found that the appellant's Falun Gong activities in Australia constituted conduct undertaken by her for the purpose of strengthening her claim for refugee status and hence disregarded such conduct as required by s 91R(3) of the Migration Act 1958 (Cth) (the Act). The Tribunal found that the appellant did not flee China seeking protection and that she applied for protection in Australia 'as an afterthought'. It noted that she had come to Australia to do business and that when she first made her travel arrangements she had not intended to stay until she saw people practising Falun Gong in a park which she said 'touched' her. The Tribunal found the appellant had provided no plausible or consistent evidence to support her claim about having been detained. It found that her claim regarding the ease with which she had 'resumed' work in her usual field of business despite her claim that her career was interrupted by a period in detention was implausible. The Tribunal was not satisfied that the appellant had a well-founded fear of persecution for a Convention reason in China. As to the first ground, the learned Federal Magistrate concluded that the questioning by the previous Tribunal did not constitute information that the Tribunal considered would be the reason or part of a reason for affirming the decision under review within s 424A(1) of the Act. Her Honour found that the appellant's answers did amount to information, however the Court took the view that these answers were considered information given by the appellant for the purpose of the review and were excluded from the obligation in s 424A due to s 424A(3)(b) of the Act. In relation to the second ground the Federal Magistrate held that just as a delegate's decision may put an appellant on notice of relevant issues, so too may the content of an earlier Tribunal hearing conducted as part of the same review. Her Honour held that even if there was an obligation on the Tribunal as reconstituted to alert the appellant to the relevance of what occurred at the first Tribunal hearing, 'this was met by the Tribunal when it stated at the outset of the second hearing that the evidence that the [appellant] gave to the original Tribunal member was evidence that the second Tribunal member may consider as evidence before him'. Thirdly, the Federal Magistrate found that while the Tribunal did not expressly say that the appellant was not a genuine practitioner of Falun Gong, this finding is apparent from a fair reading of the Tribunal decision. As the Tribunal did not accept that the appellant was a genuine Falun Gong practitioner it was not necessary for it to consider whether she would face persecution in China by reason of her practice of Falun Gong should she return. In relation to the fourth ground, the learned Federal Magistrate found that the Tribunal did not treat the appellant's evidence as incapable of proving sincere adherence to the principles of Falun Gong but rather was considering whether or not the appellant was a genuine Falun Gong practitioner at the time of the protection visa application as the issue of good faith clearly related to that application. Further her Honour found that the Tribunal addressed the appellant's conduct in Australia but disregarded it under s 91R(3) of the Act as she had not satisfied it that she engaged in such conduct otherwise than for the purpose of strengthening her claims to be a refugee. The Tribunal was not obliged to consider the evidence of the appellant's conduct in Australia in relation to what would occur if she returned to China. The Tribunal fell into jurisdictional error when it took into account and relied upon the appellant's conduct in Australia in determining whether or not she was a refugee. At the hearing of the appeal before me the central point advanced for the appellant was that it was unfair for the Tribunal to proceed to make its decision without directing the appellant's attention to the critical issues. Counsel for the appellant identified the critical factors taken into account by the Tribunal as being: the appellant's evident familiarity with the five Falun Gong exercises and the principles behind them, the appellant's oral evidence to the previously constituted Tribunal about her involvement in the alcohol trade over several years right up to the time she left the PRC for Australia, the appellant's claim about her career being interrupted by a period in detention for breaching the ban against Falun Gong, a finding as to there being no plausible, consistent evidence to support her claim about having been detained, the appellant's claim to the previously constituted Tribunal about 'resuming' work in her usual field of business, a finding that the appellant's explanation for the ease with which she 'resumed' that work was an implausible one, relying on a selective and inconsistent argument regarding the effectiveness of contacts in the PRC, the appellant's claims about the reasons for her divorce. The Tribunal found that it could not give the claims any weight and that the appellant's divorce had nothing to do with the Convention-related factors cited by her. the appellant's evidence to the previously constituted Tribunal in which the Tribunal found that 'she indicated that her family was not living under any relevant pressure in the PRC'. The appellant submitted that none of the matters referred to above were raised with her at the second Tribunal hearing. In particular, the appellant complains that the Tribunal relied on the first Tribunal's questioning of her and considered this sufficient compliance with s 425(1) without alerting her to any of the substance of the questioning. The appellant contended that the Tribunal failed to comply with s 425(1) which required it to conduct a hearing on the issues arising in relation to the decision under review. Further, the appellant says that she was not put on notice as to the critical issues for the purposes of the review and that it was not apparent from the delegate's decision what were likely to be issues on the review. The appellant relied on SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 228 CLR 152 and SZHKA v Minister for Immigration and Citizenship [2008] FCAFC 138 to support the proposition that the Tribunal has an obligation to identify to the appellant the issues which are critical to the decision. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Under s 425 of the Act, the Tribunal must invite an applicant to appear before it to give evidence and present arguments relating to the issues arising in relation to the decision under review. The Tribunal will have breached s 425 where it fails to notify the applicant of the determinative issues arising in relation to the decision under review: SZBEL [2006] HCA 63 ; 228 CLR 152. If the Tribunal takes no steps to identify the issues which it considers dispositive or determinative, an applicant is entitled to assume that the issues that the delegate considered dispositive or determinative are the issues arising in relation to the decision under review: SZBEL . The learned Federal Magistrate held that SZBEL is not authority for the proposition that a reconstituted Tribunal must in all cases take the appellant through evidence given to the delegate or to the Tribunal as originally constituted and tell the appellant what it accepts and what remains of concern. The Tribunal does not have to provide a running commentary of what it thinks about the evidence it is given. There is no doubt as to the correctness of the latter proposition. The learned Federal Magistrate found [at 64] that the fact that the issues had been raised with the appellant at the first hearing gave the appellant the opportunity to address those issues both before the first and second Tribunal via oral evidence or written submissions. The Federal Magistrate found that in circumstances where issues had been raised with the appellant at the first hearing, it could not be said that the appellant was unaware of their potential relevance to the Tribunal decision. Her Honour stated that just as a delegate's decision may put an appellant on notice of relevant issues, so too may the content of an earlier Tribunal hearing conducted as part of the same review. The Federal Magistrate found that as long as the Tribunal has taken steps to identify issues other than those considered dispositive by the delegate and has informed the appellant of the issues, the appellant will be on notice of the issues arising in relation to the decision under review. Finally, her Honour held that even if there was an obligation on the Tribunal as reconstituted to alert the appellant to the relevance of what occurred at the first Tribunal hearing, this was met by the Tribunal when it stated at the outset of the second hearing that the evidence that the appellant gave to the original Tribunal member was evidence that the second Tribunal member may consider as evidence before him. Her Honour concluded that advising of this information sufficiently alerted the appellant to the fact that the discussion of issues at the first hearing was material before it. At the hearing of the appeal before me, the appellant submitted that it was not sufficient for the Tribunal to simply rely on a discussion which had taken place at the first Tribunal two years before, with an applicant being required to deduce what adverse conclusions a later Tribunal would arrive at based on the records available of that discussion. It was submitted that the Federal Magistrate erred in finding that 'the fact that evidence at the previous hearing was evidence before the Tribunal also sufficiently alerted her to the fact that the discussion of issues at that hearing was material before it'. The first respondent submitted that where the issues had been squarely raised with the appellant at the first hearing, the appellant may be taken to have been put on notice of the issues arising in relation to the review. The first respondent contended that the review continues until a valid decision is made: SZEPZ v Minister for Immigration and Multicultural Affairs [2006] FCAFC 107 ; (2006) 159 FCR 291. Under s 425(1) of the Act, the Tribunal has an obligation to invite the appellant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review. Section 425(2) of the Act provides exceptions to this obligation in circumstances where the Tribunal considers that it should decide the review in the applicant's favour, where the applicant consents to the Tribunal deciding the review without the applicant appearing before it, or where s 424C(1) applies to the applicant. None of these exceptions apply in the present case. That is the nature of the obligation, although it must be accepted that questions of fact and degree will often be involved. Second, initially the issues will be defined by the reasons given by the person who made the decision under review, but the issues may, and often will, undergo change in the course of the Tribunal's conduct of the review of that decision. Third, because the Tribunal starts from the position of being unpersuaded by the material already before it, the hearing will inevitably explore the reasons why the Tribunal might not be persuaded by that material; the Tribunal will not perform its function adequately if it does not provide the applicant with the opportunity to satisfy the Tribunal's specific reservations about the applicant's case . However, the Tribunal did not address the appellant's evidence in relation to her involvement in the alcohol trade in China, her claim about having been detained and her career being interrupted by the detention, her claim about resuming work after the detention, her claim in relation to her divorce and her evidence that her family was not living under any relevant pressure in China. The Tribunal relied on the appellant's evidence on these issues in concluding that her claims were not plausible, consistent or credible. However, the Tribunal did not question the appellant on any of these issues at the second Tribunal hearing nor did it indicate that these aspects of the appellant's account were live issues in relation to the decision under review. As a result, in my view, the appellant did not have a realistic opportunity to provide further evidence or make submissions on these issues. In SZHKA [2008] FCAFC 138 Gyles J considered the application of the statutory obligation arising under s 425(1) of the Act in circumstances where in each case, the decision of the first Tribunal had been set aside and the matter had been remitted to the Tribunal. There is no analogy between that situation and a rehearing ordered on an appeal in judicial proceedings or pursuant to statutory provisions such as s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) or the former s 481 of the Act. Mandatory statutory obligations must be carried out again . The suggested dichotomy between an administrative decision and what precedes it is unconvincing in this context. Such a conclusion would not mean that what has taken place in the previous review cannot be taken into account in the second review if considered relevant. The proceedings are administrative, not judicial, and the Tribunal can have regard to all relevant material, including a transcript of what took place at the previous hearing, subject to compliance with the statutory regime . Similarly, for the member to regard his or her task as being no more than to repeat the views and conclusions of the member responsible for the earlier Tribunal decision, without the jurisdictional error identified in the proceeding in which that decision was quashed, would be a failure to perform the function of reviewing the primary decision to refuse a protection visa. Once the member embarks on the process of considering the material before the Tribunal, including both the material provided originally by the applicant and the material emerging from the earlier hearing, the Tribunal member's mind will begin to focus on reasons why he or she is not persuaded by the case that the applicant put. If this were not so, and the member was persuaded as to the applicant's case, then a visa would be granted and no further hearing would be required. The process of focussing on reasons for being unpersuaded will give rise to issues of the kind that the High Court identified in SZBEL as being issues arising in relation to the decision under review. It is these issues on which the applicant is entitled by s 425(1) to be invited to provide information by giving evidence and to persuade by presenting arguments. The Federal Magistrate granted the application by consent, quashed the decision of the first Tribunal and remitted the matter to the Tribunal to be re-determined according to law. In my opinion, the obligation under s 425(1) of the Act is not discharged by the first Tribunal having discussed with the appellant some of the issues that ultimately became critical to the decision under review. In my view, the Tribunal failed to sufficiently alert the appellant to the critical issues arising under the review. This ground of appeal should be allowed. The conclusion I have reached is intended to be consistent with the extracts I have cited from the Full Court decision of SZHKA [2008] FCAFC 138. To the extent that it may be argued that those views may be inconsistent with SZEPZ [2006] FCAFC 107 ; 159 FCR 291 , I would respectfully prefer the analysis of Gyles J (at [31]) in SZHKA to the effect that such an argument would misconstrue the reasoning in SZEPZ (for the reasons examined by his Honour at [32]-[37). Section 91R(3) can only sensibly be applied after primary findings of fact have been made: SZJGV v Minister for Immigration & Citizenship [2008] FCAFC 105. Once primary facts have been found that include conduct engaged in by the applicant in Australia, s 91R(3) is engaged. The appellant relied on the decision of SZJGV [2008] FCAFC 105 and the reasoning expressed at [24] where the Full Federal Court stated: The central issue in these cases is, then, whether, in these circumstances, the appellants' conduct could be and was taken into account by the Tribunal when it determined that they were not refugees. The conduct is to be disregarded in determining "whether" an applicant has a well-founded fear of persecution for a Convention reason. The conduct may suggest that such a fear is or is not well-founded. In either case it must be disregarded. If the Tribunal brings the conduct into account it will contravene s 91R(3). It was further submitted that the Tribunal looked at the appellant's conduct in Australia in making adverse credibility findings. The Tribunal gives weight to the fact that the Applicant arrived in Australia to do business and went on to Adelaide and conducted the meetings she planned to undertake. The Tribunal gives weight to the Applicant's claim that she only decided to claim protection in Australia after she witnessed Falun Gong practitioners doing exercises in Sydney, after she came to Australia for another purpose, which other purpose she then went on to pursue. The Tribunal gives weight to the fact that, according to oral evidence given to the previously-constituted Tribunal, the Applicant did not apply for protection until after she went to Adelaide and pursued her business agenda there to some extent or degree. Taking all these factors into account, the Tribunal concludes that the Applicant did not flee to the PRC seeking protection and that she applied for protection in Australia as an afterthought. It says that what the Tribunal was addressing in the above passage was when the appellant decided to make her application for a protection visa. It was not addressing the appellant's conduct in Australia. However in my view the activities in Australia were given greater significance than is suggested. Those activities are the factors which demonstrate or prove the true reason for bringing the claim --- that is, as an afterthought on arrival in Australia and on doing business in Australia. In SZJGV [2008] FCAFC 105 the Court noted that the subsection is cast in imperative terms --- it obliges a decision maker to disregard any conduct engaged in by the applicant in Australia subject to the proviso in paragraph (b). Further, the stipulation that a decision maker must 'disregard' an applicant's conduct in Australia requires that such conduct not be brought into consideration when determining whether the applicant has a well-founded fear of being persecuted for a Convention reason. In the immediately following paragraph, the Tribunal makes the contradictory statement that it disregarded the appellant's Falun Gong related activities in Australia. Both statements cannot be correct. Having regard to the Tribunal's reasons as a whole, we think it more likely than not that the Tribunal did have regard to the appellant's conduct in Australia, if only for the limited purpose of assessing the credibility of his claim to have been a Falun Gong practitioner in China and to have suffered persecution for having done so. In doing so, the Tribunal contravened s 91R(3). It thereby made a jurisdictional error. This appeal should be allowed. The Tribunal acknowledged that the appellant had knowledge of the exercises and principles of Falun Gong. The Tribunal also noted that the appellant practised Falun Gong in Australia. The Tribunal then gave weight to the appellant's evidence that she came to Australia to do business, the fact that she pursued her business agenda whilst in Australia and that she only decided to claim protection after seeing other practitioners doing Falun Gong exercises. The Tribunal concluded, taking these factors into account that the appellant did not flee China seeking protection and that she applied for protection in Australia as an afterthought. Although the Tribunal stated that it disregarded the appellant's conduct in Australia under s 91R(3) of the Act, it is apparent from the Tribunal's decision record that it did have regard to the appellant's conduct in Australia for the purpose of assessing the merits of her claim for protection in Australia. The 'evidence of afterthought' is further relied upon in assessing the appellant's credibility. In my view, the Tribunal breached s 91R(3) of the Act. It follows that the decision of the Federal Magistrate to dismiss the application should be set aside. I will make the following orders: The decision of Federal Magistrate Barnes delivered on 30 July 2008 be set aside. The first respondent or any of the officers of his Department are prevented from acting on the decision of the second respondent of 18 December 2006 to affirm the decision of a delegate of the first respondent not to grant the appellant a protection visa. (the Tribunal decision). The Tribunal decision be quashed. The application of the appellant for review of the decision of a delegate of the first respondent not to grant the appellant a protection visa be remitted to the Refugee Review Tribunal for re-determination according to law. The first respondent do pay the appellant's costs of the appeal and of the proceedings in the Federal Magistrates Court. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | protection visa earlier decision of tribunal set aside tribunal constituted by different member on second review failure by tribunal to adequately identify to the appellant 'the issues arising in relation to the decision under review' as required by s 425(1) of the migration act 1958 (cth) effect of s 91r(3) of the migration act tribunal required to disregard the appellant's conduct in australia tribunal considered appellant's conduct in course of finding she did not have a well-founded fear of persecution the tribunal breached s 91r(3) jurisdictional error established migration |
2 One of the orders then made was that the decision of the Tribunal was to be set aside. Liberty was reserved for the parties to apply within seven days should one or the other seek to have the orders varied. That liberty was not invoked but the orders as made on 27 March 2008 have not yet been entered. 3 Today, however, an oral application was made in accordance with O 35(7)(1) of the Federal Court Rules 1979 (Cth) to vary Order 3 as made on 27 March 2008. The application is supported by both parties. The matter be remitted to the Tribunal for further consideration in accordance with law. There be no order as to costs of the present application. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | federal court rules 1979 (cth) o 35(7)(1) liberty to apply variation of orders not entered practice and procedure |
As in the recent case of Virgin Holdings SA v Commissioner of Taxation [2008] FCA 1503 ( Virgin Holdings ), a decision of Edmonds J given on 10 October 2008, the issue in each proceeding is whether income tax is not payable on the amount of a capital gain by reason of the operation of a Double Taxation Agreement (DTA). In Virgin Holdings the DTA was that between Australia and Switzerland. In the case of proceeding NSD 1283 of 2006 (the First Proceeding), in which Undershaft (No 1) Ltd (First Applicant) is the applicant, the DTA is between Australia and the United Kingdom of Great Britain and Northern Ireland (UK) (not the current DTA between those countries but an earlier one) (the UK Agreement). In the case of proceeding NSD 1282 of 2006 (the Second Proceeding), in which Undershaft (No 2) BV (Second Applicant) is the applicant, the DTA is between Australia and the Netherlands (the Netherlands Agreement). The full title of the UK Agreement is: Agreement between the Government of the Commonwealth of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains. The UK Agreement was signed on 7 December 1967. The full title of the Netherlands Agreement is: Agreement between Australia and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. The Netherlands Agreement was signed on 17 March 1976. The UK Agreement was Schedule 1 to the International Tax Agreements Act 1953 (Cth) (Agreements Act). The UK Agreement was replaced in 2003 by a new DTA between Australia and the UK, which is the present Schedule 1 to the Agreements Act. This new UK Agreement is not presently relevant because the capital gain in question was made in the financial year ended 30 June 2001. The Netherlands Agreement is found in Schedule 10 to the Agreements Act. The two proceedings result from a merger on or around 20 December 2000 of the businesses of CGU Insurance Australia Ltd (CGUIA) and Norwich Union Australia Ltd (NUA). All of the shares in those two companies were sold by their respective parent companies, the present applicants, to a company then known as CGNU Australia Holdings Ltd. It was those sales that gave rise to the capital gains. Each applicant filed an income tax return for the year ended 30 June 2001 which did not include its capital gains as assessable income. The Commissioner issued a notice of assessment to each applicant dated 9 December 2005. Each applicant lodged a notice of objection against its assessment, objecting to the inclusion of any net capital gain in its assessable income. On 22 May 2006, the Commissioner made objection decisions disallowing the applicants' objections. On 3 July 2006, the applicants appealed against the objection decisions by filing the applications that commenced these proceedings. The question in the First Proceeding is whether the capital gain made by the First Applicant, formerly called CGNU Holdings (Australia) Ltd, on the sale of shares in CGUIA is not subject to income tax in Australia by reason of Art 5 of the UK Agreement. The question in the Second Proceeding is whether the capital gain made by the Second Applicant, formerly called Norwich Union Overseas Holdings BV, on the sale of shares in NUA is not subject to income tax in Australia by reason of Art 7 of the Netherlands Agreement. Articles 5 and 7 have, for convenience, been referred to as "Business Profits" Articles, and I shall use that form of reference. It is not in dispute that each sale was a CGT Event A1 within s 104-10 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) --- each sale was a disposal of a CGT asset (within s 108-5 of the ITAA 1997) having the necessary connection with Australia (within the then s 136- 25 of the ITAA 1997 (Div 136 was replaced by Div 855 by the Tax Laws Amendment (2006 Measures No. 4) Act 2006 (Cth) (No 168 of 2006))). The parties agree that the gain of $273,000,000 made by the First Applicant and the gain of $108,585,000 made by the Second Applicant were on capital account and were not income within the meaning of s 6-5 of the ITAA 1997. The parties agree that the gains were capital gains within the meaning of s 104-10(4) of the ITAA 1997 because the capital proceeds from the disposal of the shares were more than their cost base. In the UK Agreement, the Business Profits Article prevented Australia from taxing the "industrial or commercial profits" of a UK enterprise unless that enterprise carried on business through a permanent establishment in Australia. In the Netherlands Agreement, the Business Profits Article prevented Australia from taxing the "business profits" of an enterprise of the Netherlands unless that enterprise carried on business through a permanent establishment in Australia. It is agreed that the First Applicant was a UK enterprise and that the Second Applicant was an enterprise of the Netherlands and that neither of them carried on business through a permanent establishment in Australia. It follows that if the respective capital gains fell within the Business Profits Articles, Australia was prevented from taxing those capital gains. The First Applicant was a resident of the UK for the purposes of the UK Agreement, and was not a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936), the ITAA 1997, or the UK Agreement. The First Applicant acquired, after 19 September 1985, all of the issued shares in CGUIA. At that time the First Applicant was a subsidiary of CGU plc. The Second Applicant was a resident of the Netherlands for the purposes of the Netherlands Agreement, and was not a resident of Australia for the purposes of the ITAA 1936, the ITAA 1997 or the Netherlands Agreement. The Second Applicant acquired, after 19 September 1985, all of the issued shares in NUA. At that time, the Second Applicant was a subsidiary of Norwich Union plc. On 30 May 2000, CGU plc and Norwich Union plc merged their respective insurance businesses to form the Aviva group of companies, and the First and Second Applicants became subsidiaries of Aviva plc. Shortly after the merger, the Aviva group decided to restructure its Australian shareholdings. On 10 November 2000, it established a new Australian holding company, CGNU Australia Holdings Ltd (now called Aviva Australia Holdings Ltd). By contract dated 20 December 2000, the First Applicant sold the shares in CGUIA to CGNU Australia Holdings Ltd for a consideration of $950,000,000. By contract dated 20 December 2000 the Second Applicant sold the shares in NUA to CGNU Australia Holdings Ltd for a consideration of $570,585,000. I referred at [8] and [9] above to the parties' agreement as to the capital gains to which the two sales gave rise. Under s 5, the provisions of the UK Agreement, so far as those provisions affected Australian tax, were deemed to have the force of law in relation to tax in respect of, relevantly, income of the year ended 30 June 2001. Articles 2 and 3 of the UK Agreement contained definitions for the purposes of that Agreement. Paragraph (4) of Art 2 is of general relevance. If the enterprise carries on trade or business as aforesaid, Australian tax may be imposed on the industrial or commercial profits of the enterprise but only on so much of them as is attributable to the permanent establishment. As noted earlier, it is agreed between the parties to the First Proceeding that the First Applicant was a UK resident and a UK enterprise for the purposes of the UK Agreement. The Commissioner, on the other hand, contends that it falls within neither expression and that therefore the tax that would have been imposed on the capital gain by Australia is outside the scope of the UK Agreement. The First Applicant also contends that its capital gain of $273,000,000 falls within the Business Profits Article, while the Commissioner contends that it does not. The Commissioner submits that in denying Australia the right to tax the industrial or commercial profits of a UK enterprise, the Business Profits Article applies only to revenue profits; it does not deny the power to tax capital gains that are not revenue profits, since capital gains, not being income from the conduct of a trade or business, do not fall within the exhaustive definition of "industrial or commercial profits" given in Art 5(7). The Commissioner accepts that the expression "the Commonwealth income tax" in Art 2(1)(b) refers to a tax assessed under the ITAA 1936. It is therefore not in dispute that, for the purposes of para 4 of Art 2 of the UK Agreement, the ITAA 1936, at least as it stood as at the date of the signing of the UK Agreement in 1967, is a law of the Commonwealth relating to taxes subject to the UK Agreement. It follows, according to Art 2(4) that the ITAA 1936 is relevant to the interpretation of any undefined term in the UK Agreement. Under s 11A, the provisions of the Netherlands Agreement, so far as those provisions affected Australian tax, were deemed to have the force of law in relation to tax in respect of, relevantly, income of the year ended 30 June 2001. The Netherlands Agreement has been amended by two Protocols, the first dated 17 March 1976 and the second dated 30 June 1986. Article 3 of the Netherlands Agreement contained definitions for the purposes of that Agreement. Paragraph (3) of Art 3 is of general relevance. It will be noted that the UK Agreement did not contain an equivalent to Art 13 of the Netherlands Agreement. At the end of each calendar year, the competent authority of each State shall notify the competent authority of the other State of any substantial changes which have been made in the taxation laws of his State to which this Agreement applies. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only so much of them as is attributable to that permanent establishment. As noted earlier, it is agreed between the parties to the Second Proceeding that the Second Applicant was a resident of the Netherlands and an enterprise of the Netherlands for the purposes of the Netherlands Agreement. The Commissioner, on the other hand, contends that it falls within neither expression and that therefore the tax that would have been imposed on the capital gain by Australia is outside the scope of the Netherlands Agreement. The Second Applicant also contends that its capital gain of $108,585,000 falls within the Business Profits Article, while the Commissioner contends that it does not. The parties agree that the Alienation of Property Article does not apply in the present case. However, the Commissioner seeks to rely on it as relevant to the construction of the Business Profits Article. I set out that submission in greater detail at [138]ff below. In Thiel v Commissioner of Taxation (Cth) [1990] HCA 37 ; (1990) 171 CLR 338 at 356 ( Thiel ), McHugh J, citing Shipping Corporation of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd [1980] HCA 51 ; (1980) 147 CLR 142 at 159, said that the Swiss Agreement (in Schedule 15 to the Agreements Act and given the force of law in Australia by s 11E of that Act) was to be interpreted in accordance with the rules that are recognised by international lawyers and that are found in the Vienna Convention on the Law of Treaties (Opened for signature 23 May 1969. [1974] ATS 2. Entered into force 27 January 1980. ) (Vienna Convention). To give it that meaning, the rules applicable to the interpretation of treaties must be applied to the transposed text and the rules generally applicable to the interpretation of domestic statutes give way [ Chan v Minister for Immigration and Ethnic Affairs [1989] HCA 62 ; (1989) 169 CLR 379 at 413]. As such they are to be interpreted in accordance with the requirements of the Vienna Convention on the Law of Treaties (23 May 1969, entered into force on 22 January 1974) (the Convention) and in particular Art 31 of the Convention. The leading authority in this Court on interpretation of double taxation agreements is [ Commissioner of Taxation v Lamesa Holdings BV (1997) 77 FCR 597]. It is unnecessary here, to set out again what is there said. The text must be given primacy in the interpretation process. The ordinary meaning of the words used are presumed to be "the authentic representation of the parties' intentions": Applicant A . The courts must, however, in addition to having regard to the text, have regard as well to the context, object and purpose of the treaty provisions. The approach to interpretation involves a holistic approach. International agreements should be interpreted "liberally". Treaties often fail to demonstrate the precision of domestic legislation and should thus not be applied with "taut logical precision". The Commissioner submitted that the UK Agreement was also influenced by what the Commissioner referred to as the "Colonial Model Treaty". According to the Commissioner, the Colonial Model Treaty was used by the UK in treaties with Commonwealth countries. The Commissioner explained that there was no published edition of the Colonial Model Treaty. The Commissioner explained that he drew attention to the Colonial Model Treaty simply to make the point that there were both similarities and differences as between the UK Agreement and the Draft Convention, and that the background to the UK Agreement extended beyond the Draft Convention and the Draft Commentary to include the Colonial Model Treaty. The Commissioner argued that the Draft Convention and the Draft Commentary did not assist in interpreting the UK Agreement and that the ordinary principles of statutory construction should be applied to the text of the UK Agreement. The First Applicant did not seek to draw assistance from the Draft Model or the Draft Convention. In Lamesa Holdings BV v Federal Commissioner of Taxation (1997) 97 ATC 4229 , which, like the Second Proceeding, concerned the Netherlands Agreement, the primary judge accepted (at 4,237), on the basis of expert evidence, that the supplementary material relevant to construction of the Netherlands Agreement was the 1977 OECD Model Double Taxation Convention on Income and Capital which included as Annex I "Model Convention for the Avoidance of Double Taxation with respect to taxes on Income and Capital" (Model Convention) and as Annex II "Commentaries on the Articles of the Model Convention) (Model Commentary) because they had been "largely formulated and published" before the conclusion of the Netherlands Agreement. Neither party submitted that the Model Convention or the Model Commentary was not able to be taken into account as relevant to the construction of the Netherlands Agreement, and indeed, the Commissioner submitted that the Netherlands Agreement must be construed in light of these documents. Authority for resort to extraneous materials of the kinds referred to may be found in Thiel at 344 (per Mason CJ, Brennan & Gaudron JJ), 349 (per Dawson J), 357 (per McHugh J); Unisys Corporation Inc v Federal Commissioner of Taxation 2002 ATC 5146 at [44]; and Commissioner of Taxation v Lamesa Holdings BV (1997) 77 FCR 597 ( Lamesa ) at 604. A purpose of a DTA is to avoid the potential for the imposition of tax by both of the Contracting States on the same income. It is appropriate to say that the Contracting States achieve their objective by "allocating" as between themselves the right to bring to tax a particular item to one Contracting State while the other State agrees to abstain from doing so ( Lamesa at 600, Chong v Commissioner of Taxation [2000] FCA 635 ; (2000) 101 FCR 134 at [24] - [27] ). A DTA does not give a Contracting State power to tax, or oblige it to tax an amount over which it is allocated the right to tax by the DTA. Rather, a DTA avoids the potential for double taxation by restricting one Contracting State's taxing power. Section 5(1) of that Act provides that income tax is imposed in accordance with that Act and at the relevant rates declared by the Income Tax Rates Act 1986 (Cth). Section 12(1) of the latter Act provides that the rates of tax are those set out in Schedule 7 to that Act. Section 7 of the Income Tax Act 1986 provides, relevantly, that the tax imposed by s 5(1) is levied, and shall be paid, for the financial year commencing on 1 July 1986 and for all subsequent financial years. Part IIIA of the ITAA 1936 (dealing with capital gains) was inserted into that Act by the Income Tax Assessment Amendment (Capital Gains) Act 1986 (Cth) (No 52 of 1986) with effect from 24 June 1986 but operating in respect of assets acquired after 20 September 1985. The result, which is now produced under the ITAA 1997, is to include net capital gains in the assessable (and therefore taxable) income of a taxpayer (currently by s 102- 5 of the ITAA 1997, formerly by s 160ZO of the ITAA 1936). Taxable income is calculated by reducing the assessable income by "deductions" (s 4 - 15 of the ITAA 1997, s 48 of the ITAA 1936 (which used the expression "allowable deductions")). The so-called "capital gains tax" is not a separate tax. The applicants submit, and the Commissioner does not dispute, that if it were, the Income Tax Act 1986 would offend s 55 of the Constitution , which requires that laws imposing taxation deal with one subject matter only: cf Mutual Pools & Staff Pty Ltd v Commissioner of Taxation (Cth) [1992] HCA 4 ; (1992) 173 CLR 450. The Commissioner assessed to tax the net capital gains made by the First Applicant and the Second Applicant under what I will, for convenience, call the " Pt IIIA régime" even though, in fact, it was the ITAA 1997 that applied in the year ended 30 June 2001. As will be already clear, both the UK Agreement and the Netherlands Agreement were entered into before the Pt IIIA régime was introduced. Section 25 was the familiar "income according to ordinary concepts" provision. Other receipts were also deemed to form part of a taxpayer's assessable income. It entered into force on 3 June 1947. The 1947 UK Agreement became Schedule 1 to the Agreements Act. It became Schedule 1 to the Agreements Act, in place of the 1947 UK Agreement. In general terms it included in the assessable income of a taxpayer any profit arising from the sale of property that the taxpayer purchased after 21 August 1973 and sold before the expiration of the period of 12 months from the date of purchase. It became Schedule 10 to the Agreements Act. A "First Protocol" to the Agreement was signed on the same day. It became Schedule 15 to the Agreements Act. That Act omitted s 26(a) and enacted a similar provision as s 25A(1). Section 26AAA was prevented from overlapping with the new Pt IIIA by s 160L(3), and s 25A was prevented from overlapping with the new Pt IIIA by s 25A(1A). The Swiss Agreement was entered into in 1980, was found in Schedule 15 to the Agreements Act, and was given the force of law in Australia by s 11E of that Act. His Honour also briefly addressed an argument that if Art 7 did not apply, then Art 13(3), which denied Australia the right to tax income from the alienation of capital assets in certain circumstances, applied. There is no equivalent to Art 13(3) in either the UK Agreement or the Netherlands Agreement. His Honour commenced by considering whether tax imposed pursuant to the Pt IIIA régime fell within the Taxes Covered Article (Art 2) of the Swiss Agreement. Article 2 provided, relevantly, that the Swiss Agreement applied to "the Australian income tax" (subpara 1(a)), or any "identical or substantially similar tax" (para 2). His Honour considered whether the expression "the Australian income tax" in the Swiss Agreement included tax imposed on a "net capital gain" under the Pt IIIA régime. The expression "the Australian income tax" was not defined in the Swiss Agreement which, in those circumstances, gave it the meaning that it had under Australian law. Edmonds J referred (at [30]) to the definition of "Australian tax" in s 3(1) of the Agreements Act as meaning, relevantly, "income tax imposed as such by an Act". His Honour referred (also at [30]) to s 4(1) of the Agreements Act which provided, relevantly, that the ITAA 1936 was incorporated and to be read as one with the Agreements Act. He observed (also at [30]) that s 6(1) of the ITAA 1936 defined "income tax" or "tax" as meaning "... income tax imposed as such by any Act as assessed under [the ITAA 1936]". Edmonds J decided (at [31]) that the expression "the Australian income tax" in subpara (1)(a) of Art 2 of the Swiss Agreement meant income tax as assessed under the ITAA 1936, and (at [49]) that the expression included tax on net capital gains under the Pt IIIA régime. His Honour referred (at [44]) to several examples of capital gains that were already included in assessable income under the ITAA 1936 when the Swiss Agreement was signed in 1980, as showing that income tax under the ITAA 1936 was not limited to tax on income in accordance with ordinary concepts. His Honour also referred to observations made in Resch v Federal Commissioner of Taxation [1942] HCA 2 ; (1942) 66 CLR 198 ( Resch ) and South Australia v The Commonwealth [1992] HCA 7 ; (1992) 174 CLR 235 ( South Australia v Commonwealth ). Edmonds J also concluded (at [58]) that if he was wrong in finding that the expression "the Australian income tax" included tax on net capital gains under the Pt IIIA régime, the latter tax was nevertheless a "substantially similar tax" to "the Australian income tax", and was for that alternative reason, a tax covered by the Swiss Agreement pursuant to Art 2(2) of that Agreement. His Honour then went on to consider whether the capital gain made by the applicant fell within the Business Profits Article, Art 7, of the Swiss Agreement. That Article denied Australia the right to tax the "profits of an enterprise" of Switzerland unless the enterprise carried on business in Australia through a permanent establishment in Australia. The parties were agreed that the applicant did not carry on business through a permanent establishment in Australia. The Commissioner in that case had sought to argue that, having regard to the existence of Art 13 of the Swiss Agreement headed "Alienation of Property", Art 7 was concerned only with revenue profits of an enterprise. Edmonds J did not agree, concluding (at [72]) that Art 7(1) of the Swiss Agreement denied Australia the right to tax the capital gain concerned. First, he submits that the terminology of the UK Agreement differs from that of the Swiss Agreement that was before Edmonds J. In support of this submission, the Commissioner refers to the UK Agreement's use of the expression "the Commonwealth income tax" rather than "the Australian income tax" in the Taxes Covered Article. He also refers to differences between the Business Profits Articles of the two Agreements: Art 5 of the UK Agreement and Art 7 of the Swiss Agreement. Article 5 of the UK Agreement uses the expression "industrial or commercial profits" which is defined in para (7) of that Article to mean "income derived by an enterprise from the conduct of a trade or business..." (see [22] above). Article 7 of the Swiss Agreement, on the other hand, uses the expression "profits" which it does not define. In my view, there is no substance in the difference between the expressions "the Commonwealth income tax" and "the Australian income tax". However, the Commissioner's submission in relation to the definition of "industrial or commercial profits" is of more substance. I address the meaning of that expression at [112]ff below. Second, the Commissioner submits that the UK Agreement was entered into 13 years before the Swiss Agreement was entered into, and, in particular, that it was entered into before the Parliament inserted s 26AAA into the ITAA 1936 in 1973 (by s 7 of the Income Tax Assessment Act (No 5) 1973 (No 165 of 1973) with effect from 11 December 1973). In my view it is not to the point that s 26AAA was not introduced into the ITAA 1936 until 1973, and therefore did not form part of that Act when the UK Agreement was signed. Edmonds J referred to s 26AAA only as one of several illustrations of the inclusion of capital gains in assessable income. His Honour's adoption (at [44]) of the examples given in the submissions (noted at [38]) supported a proposition that rested on the reasons for judgment in Resch of Rich J at 210-211 and Dixon J (as Dixon J then was) at 224-225, and the reasons of the majority joint judgment in South Australia v Commonwealth at 251. (I refer to Resch at [94]-[97] below and to South Australia v Commonwealth s at [100] below). Edmonds J stated (at [45]) that Pt IIIA was introduced into the ITAA 1936 as part of the same legislative scheme and history as were referred to by Dixon J in Resch and by the majority in South Australia v Commonwealth . His Honour relied on the fact that if the relevant transactions had occurred at the time of the conclusion of the Swiss Agreement, when s 26AAA was still in the ITAA 1936, they would have been assessed under that provision, only as fortifying his earlier conclusion that the term 'the Australian income tax' under the relevant laws of Australia accommodated and encompassed, at the time of the conclusion of the Swiss Agreement, the assessment of capital gains as income (at [48]). In sum, the unavailability of the s 26AAA example in respect of the UK Agreement does not serve to make Virgin Holdings distinguishable. The Commissioner recognises that, in relation to the Second Proceeding, the precise wording of the Swiss Agreement differs from that of the Netherlands Agreement in various respects, but does not suggest that the provisions of the Swiss Agreement were materially distinguishable from those of the Netherlands Agreement. I turn now to the comity aspect. I am not bound to follow Edmonds J in Virgin Holdings , it being a decision of co-ordinate authority. However, the answers to the following questions are not so obvious. In what circumstances, if at all, am I bound to accord influence to his Honour's decision? Am I bound independently to reach my own conclusion? If so, and my conclusion does not accord with that of his Honour, by reference to what principles, if at all, am I at liberty to discard my own conclusion in favour of his Honour's? Before referring to the authorities, I will state my understanding of the role of considerations of judicial comity by reference to the task confronting me. First, I must embark on my own independent consideration of the issues for decision with a view to reaching my own independent conclusion on them. The oath of judicial office requires me to do no less. If my own conclusion, independently reached, is consistent with his Honour's, there is no scope for his decision to influence me beyond "fortifying" me in my conclusion. Second, I must not follow his Honour should I reach the view that his Honour was "clearly" or "plainly" wrong. Third, I may (not must) follow his Honour's (supposedly inconsistent) decision once it is clear that that decision is not "plainly" or "clearly" wrong. Fourth, accepting the strong desirability of certainty and stability in judicial decision-making in the administration of justice, I will in fact follow his Honour's inconsistent decision unless I conclude that it was clearly or plainly wrong, or that for some other reason those same interests of justice demand that I adhere to my own conclusion in preference to his Honour's supposedly erroneous one. While the expression "clearly wrong" and "plainly wrong" may be open to criticism, they usefully remind the later judge of the interests of justice in consistency of decision-making in a system of which the individual judge is but a part. The "choice" to follow an earlier inconsistent decision of co-ordinate authority is, however, as a matter of law, discretionary and depends on the circumstances of a particular case. These will properly include considerations of the length of the period during which the earlier decision has stood, and whether it has been relied upon in the arrangement of human affairs. I turn now to the authorities to which I was referred. Submitting that I should follow Virgin Holdings , the applicants cite Cooper v Commissioner of Taxation [2004] FCA 1063 ; (2004) 139 FCR 205 at [46] - [47] per Lander J and Hicks v Minister for Immigration, Multicultural & Indigenous Affairs [2003] FCA 757 at [76] per French J. In the first case, Lander J followed a statement by me in Bank of Western Australia Ltd v Commissioner of Taxation (1994) 55 FCR 233 at 255 that I would follow a certain earlier decision unless I thought it was "clearly wrong". In the second case, French J accepted (at [75]) that it was well established that a judge of this Court should follow an earlier decision of another judge of the Court unless of the view that the earlier decision was "plainly wrong". French J added (at [76]) that where questions of law and statutory construction are concerned, the proposition that a judge who had taken one view of the law or statute was "clearly wrong" was one not lightly to be advanced having regard to the choices that so often confront the courts, particularly in the area of statutory construction. The Commissioner relied on a decision of the Court of Appeal of the Supreme Court of Western Australia in Mustac v Medical Board of Western Australia [2007] WASCA 128 ( Mustac ). After reviewing the authorities, Martin CJ, with whom Wheeler JA and Buss JA agreed, said (at [46]) that the authorities showed that judicial comity is a practice, not a legal principle, the practical application of which varied depending on the circumstances of the two cases in question. Clearly, and inevitably, their Honours accepted that an earlier decision of a court of coordinate authority is not required, as a matter of binding judicial precedent, to be followed. Since writing what appears at [68]-[80] above, I have become aware that the issue of comity has been the subject of considerable judicial discussion to which the parties did not refer. In Fernando v Commissioner of Police (1995) 36 NSWLR 567 ( Fernando ) the New South Wales Court of Appeal (NSWCA) considered the matter. The question was whether the NSWCA should follow a decision of the Full Court of the Supreme Court of South Australia in R v Franklin (1979) 22 SASR 101 ( Franklin ) on a statutory provision in substantially identical words to those of the relevant New South Wales statute. All three members of that Court thought that the South Australian Full Court's construction of the provision had been wrong. Priestley JA described (at 584) the "rule of comity" as a "sound one for most purposes", such that the NSWCA "usually follows the decisions of courts of like position in other Australian jurisdictions on similar points". Priestley JA said (also at 584) that the reasons favouring the construction of the provision which his Honour thought to be right, were "so strong" that an exception should be made to the "rule of comity". Powell JA was of a similar view, going as far as to describe the South Australian decision as "clearly wrong" (at 593). However, Clarke JA, while also preferring the construction favoured by Priestley JA and Powell JA, considered (at 591) that the question was one on which minds could reasonably differ and that Franklin was not "plainly wrong". Applying as a matter of comity a rule that the NSWCA should follow a decision of another Australian intermediate appellate court on the construction of the substantially identical statutory provision unless "it is convinced that the earlier decision is clearly wrong or that considerations of justice require the court to decline to apply the decision of the other court" (at 589-590), his Honour decided that Franklin should be followed. In R v Dyson (1997) 68 SASR 156 ( Dyson ) the Supreme Court of South Australia Court of Criminal Appeal was specially constituted as a bench of five members to consider the conflict between Franklin and Fernando . Bollen J distinguished Fernando . All other four judges, and Bollen J in the alternative, considered that Franklin was correct and Fernando incorrect. The issue of comity as between intermediate appellate courts was again discussed by the NSWCA in Tillman v Attorney-General for the State of New South Wales (2007) 70 NSWLR 448 ( Tillman ). Tillman was decided on 26 November 2007, not longer after Muscat which had been decided on 21 June 2007. The judgments in Tillman do not refer to either Dyson or Muscat . In Tillman , Giles and Ipp JJ A, in a joint judgment, declared themselves (at [110]) in favour of following a decision of the Victorian Court of Appeal in TSL v Secretary to the Department of Justice (2006) 14 VR 109 ( TSL ) because it was not "plainly wrong". Mason P took a different approach. The learned President recognised that the Victorian legislation in question was relevantly indistinguishable and was not convinced that the Victorian decision was plainly wrong, yet departed from it in favour of his own firmly preferred different interpretation (at [19]). His Honour appears to have been content to accept the "not plainly wrong" or "not clearly wrong" formulation. He acknowledged (at [25]) that there was "a rule of precedent obliging intermediate appellate courts not to depart from decisions in intermediate appellate courts in another jurisdiction [but only] on the interpretation of (a) Commonwealth legislation or (b) uniform national legislation or (c) the common law of Australia unless convinced of plain error". The statutory provisions before the Victorian and NSWCA in TSL and Tillman respectively were State enactments that were not part of a uniform national scheme. Although Virgin Holdings is not a decision of a court of another jurisdiction, that case and the present proceedings concern the interpretation of Commonwealth legislation and DTAs that are given the force of law in Australia by that legislation. In this respect, therefore, the circumstances fall within class (a) identified by Mason P. Assuming it to be indistinguishable, I will follow Virgin Holdings unless I consider it to be clearly wrong or plainly wrong. I note that the applicants did not suggest that I am relieved by considerations of judicial comity of the necessity of embarking on a full consideration of the parties' submissions with a view to arriving independently at my own conclusion, and in my view, I am obliged to do so. In order for Art 5 to have that effect, the tax that would otherwise be levied on the capital gain must be a tax covered by the UK Agreement according to its Taxes Covered Article, Art 1. I set out the relevant provisions of the UK Agreement at [18]-[23] above, and I summarised the parties' contentions at [24]-[26] above. The dispute centres around the term "the Commonwealth income tax" (which was not defined in the UK Agreement) and the term "industrial or commercial profits" (which it will be recalled was defined by Art 5(7) to mean "income derived by an enterprise from the conduct of a trade or business..."). The term income is relevant to the meaning of both expressions, but it too is undefined in the UK Agreement. I therefore turn to its meaning in the ITAA 1936 (see [26] above). Scott v Commissioner of Taxation (1935) 35 SR(NSW) 215 concerned the Income Tax (Management) Act 1928 (NSW) which provided for the assessment and collection of a tax on incomes. The question in Resch was whether the Income Tax Assessment Act 1922 (ITAA 1922) and the Income Tax Act 1930 infringed s 55 of the Constitution by reason of their dealing with more than one subject of taxation by bringing to charge profits of a capital nature as well as profits in the nature of income according to ordinary concepts. Section 16B of the ITAA 1922 deemed to be assessable income of a company's shareholders, amounts which the liquidators of the company received as the proceeds of the sale by them of the company's assets and which they paid to the shareholders. An "Act to impose a tax upon incomes" is not less general in scope; it must be liberally construed, and include everything which by reasonable understanding might fairly be regarded as income. The subject is profits or gains, and the distinction between gains of an income nature and gains of a capital nature is neither instituted nor maintained by the assessment Act. An income-tax Act usually groups together more than one subject of income, profit, revenue or receipts, but such a grouping does not necessarily involve the conclusion that these subjects are separate and distinct. It is a question of fact in each case and the substance and provisions of the particular Act must be considered. That a particular label or a general name has been given to the Act is of little or no importance where there is no ambiguity in the provisions of the Act. The word "income" is comprehensive enough to include the subjects dealt with in the Act, and its use in this connection is in accordance with common understanding, which is one main clue to the meaning of the legislature: Cf. Bank of Toronto v Lambe [(1887) 12 App Cas 575 at 582]. Over and over again, this Court has upheld the validity of the Act by deciding that its subject matter is single and has been dealt with by Parliament as a unit. The subject has rather been regarded as the substantial gains of persons or enterprises considered over intervals of time and ascertained or estimated by standards appearing sufficiently just, but nevertheless practical and sometimes concerned with avoidance or evasion more than with accuracy or precision of estimation. They are in fact attempts to ensure that where income or profit has been earned or wealth increased, those whom it advantages shall at some point or other incur a proper measure of liability to tax on that account, or, in other words, that they shall not escape the consequent aggregation of taxable income. The distinction between profits of a capital nature and profits in the nature of income in the strict sense is not one which the Act maintains. Nor is it a discrimination which the legislature is bound to regard. Indeed, in the United States, under the 16th Amendment which speaks of "income," the term is considered to include all profits whether on account of capital or on account of income in the strict sense. In United States v Stewart [(1940) 311 US at p 62] Douglas J. says: "'Income' is a generic term amply broad to include capital gains for purposes of income tax," citing Merchants' Loan & Trust Co. v. Smietanka [1921] USSC 82 ; [(1921) 255 US 509]. On the other hand, a distribution of stock dividends in consequence of the capitalization of profits is considered to be a transaction in relation to capital and therefore outside the constitutional power ( Eisner v Macomber [(1920) 252 US 189]). The Commonwealth enactment proceeds somewhat differently; it treats the appropriation of income in order to effect the capitalization as the occasion of taxing the shareholder: See James v Federal Commissioner of Taxation [1924] HCA 34 ; [(1924) 34 CLR 404] and Nicholas v Commissioner of Taxes (Vict. ) [1940] UKPCHCA 2 ; [(1940) AC 744 ; 63 CLR 191]. In requiring the inclusion of the paid-up value of shares distributed by a company representing the capitalization of profits sec. 16(b)(ii) does not appear to me to introduce a new subject of taxation. The subject is profits and the occasion is the appropriation of the profits to be used for the advantage of the shareholder. However, when it was enacted, the ITAA 1936 brought to charge as "assessable income" a wide range of classes of amounts, many of which were not income according to ordinary concepts. Nonetheless, it is correct to say of [the ITAA 1936], as Starke J. said of the Income Tax Assessment Act 1922, that income tax "is not a tax upon everything that comes in whether as income receipt or a capital receipt" [ New Zealand Flax Investments Ltd v Federal Commissioner of Taxation [1938] HCA 60 ; (1938) 61 CLR 179 at 197]. In Virgin Holdings, Edmonds J referred, inter alia, to the following examples (at [38]): Notional amounts that were not derived by the taxpayer at all; eg where stock was disposed of at less than market value and outside the ordinary course of trade, the market value was included in assessable income (s 36 of the ITAA 1936, re-enacting s 17(3) of the ITAA 1922); and, where its criteria were satisfied, amounts caught as a result of the operation of s 260 of the ITAA 1936; Distributions by a liquidator in satisfaction of a shareholder's interest in a company to the extent to which they represented income derived by the company (s 47 of the ITAA 1936); Consideration received on the disposal of property in respect of which depreciation had been allowed, to the extent that the consideration exceeded the depreciated value (s 59 of the ITAA 1936); Gains made on the disposal of capital assets in cases where certain circumstances of acquisition were met (s 25A and its predecessor s 26(a) of the ITAA 1936 --- s 26(a) formed part of the ITAA 1936 from its commencement, but its predecessor, para (ba) of the definition of "income" in s 4 of the ITAA 1922 , had been introduced into that definition by s 2(c) of Act No 50 of 1930). As mentioned, this expression was not defined in the UK Agreement. Nor was the expression defined in the ITAA 1936. It has not subsequently been defined in either the ITAA 1936, or its successor, the ITAA 1997. However, in 1967 this was a well-known category of tax --- the tax imposed by the Commonwealth on "income" as assessed under the ITAA 1936. Section 6(1) of the ITAA 1936 defined "income tax" to mean "income tax ... imposed as such by any Act, as assessed under the [ITAA 1936] or under that Act as amended at any time " (my emphasis). As noted at [101] above, the ITAA 1936 imposed tax on certain amounts coming in on capital account at the time when the UK Agreement was entered into in December 1967. It would be artificial and unreasonable to construe the expression "the Commonwealth income tax" as the tax imposed as income tax on only some of the categories of income referred to in the Commonwealth's income tax statute. Indeed, the ITAA 1936 did not (and nor does it or its successor, the ITAA 1997, now) separately impose tax on particular amounts or categories of income making up a taxpayer's assessable income. It imposed tax on taxable income which is an amount equal to the total of assessable income minus the total of (allowable) deductions. It cannot be accepted that "the Commonwealth income tax" referred, in 1967, to the income tax that was notionally imposed on only those categories of income brought to tax by the ITAA 1936 that merited the description "income according to ordinary concepts" or "income on revenue account", and that omitted all other categories of income that were brought to tax by the same income tax statute. I disagree. To my mind, the expression "the Commonwealth income tax" refers to tax imposed at any time and from time to time by the Commonwealth Parliament as what that Parliament characterised as an "income tax" (see [103] above). That is to say, the expression "the Commonwealth income tax" is the tax for the assessment of which the ITAA 1936 or, its successor, the ITAA 1997, provided or might provide at any time and from time to time (an "ambulatory" meaning). The expression "the Commonwealth income tax" does not refer to the income tax for the assessment of which the ITAA 1936 provided only as at the time when the UK Agreement was entered into. An ambulatory approach has been supported by leading commentators: see Avery Jones et al, The Interpretation of Tax Treaties with Particular Reference to Article 3(2) of the OECD Model (1984) BTR 14 at 25 --- 48, esp at 47 --- 48; Gzell J, Treaty Application to a Capital Gains Tax Introduced After Conclusion of the Treaty (2002) 76 ALJ 309 at 316 --- 317; Deutsch R and Sharkey N, Australia's Capital Gains Tax and Double Taxation Agreements (2002) 56(6) Bulletin for International Taxation 228 at [3.2] and [3.3]. In my view, while subsequent amendments to the Commonwealth Act providing for the assessment of an "income tax" were intended to be accommodated within the expression "the Commonwealth income tax" in subpara (1)(b) of Art 1, para (2) of Art 1 is directed to the different idea of an independently assessed tax. (An Australian example of an independently assessed tax is the Goods and Services Tax for which the A New Taxation System (Goods and Services Tax) Act 1999 (Cth) provides). It follows that the amendment to the ITAA 1936 by the introduction of the Pt IIIA régime in 1986 formed, at the time when the First Applicant made its capital gain, part of the Commonwealth income tax referred to in Art 1(1)(b), and is therefore a tax covered by the UK Agreement. I referred at [92] above to the fact that the term "income" was not defined in the UK Agreement, and at [93]ff above, to the meaning that that term had under the ITAA 1936 at the time when the UK Agreement was entered into, and, in particular, to the fact that the term included a reference to amounts that were not income according to ordinary concepts. However, pursuant to Art 2(4), that meaning of the term "income" applies only if the context does not otherwise require. The Commissioner points to a number of contextual factors in the UK Agreement which he submits demonstrate that the expression "industrial or commercial profits" refers only to revenue profits, and has no operation in relation to capital gains. First, the Commissioner points to the distinction between income and capital that is maintained elsewhere in the UK Agreement, such as in the title: "Taxes on Income and Capital Gains"; and in Art 1(1)(a) which refers to "the income tax...and the capital gains tax" of the UK. The Commissioner submits that this distinction shows that where the term "income" is used elsewhere in the UK Agreement, such as in Art 5, it refers only to income of a revenue nature. Second, the Commissioner relies on the definition of "industrial or commercial profits" in para (7) of Art 5 as "income derived by an enterprise from the conduct of a trade or business". The Commissioner argues that capital receipts would not usually arise from the normal conduct of a trade or business. Third, the Commissioner refers to Art 5(4) which applies if an enterprise resident in one of the two countries has industrial or commercial profits attributable to a permanent establishment in the other country. The industrial or commercial profits that are taxable in the country of source are to be determined after allowing "as deduction all expenses of the enterprise ... which would be deductible if the permanent establishment were an independent enterprise and which are reasonably connected with the profits so taxable ...". The Commissioner points out that a net capital gain is not determined by subtracting expenses of the enterprise, but rather as the difference between capital proceeds and a cost base (see s 100-40(1) of the ITAA 1997). The Commissioner submits that therefore para (4) of Art 5, which is expressed to apply to all industrial and commercial profits, cannot be applied to capital gains. Fourth, the Commissioner draws attention to the exclusions in subpara (a)-(c) of the definition of "industrial or commercial profits" in Art 5(7) (set out at [22] above). He points out that all three exclusions refer to receipts that are income according to ordinary concepts. Fifth, the Commissioner refers to Art 13 of the Draft Convention which provided for the allocation of taxing rights in respect of, to quote its heading, "Capital Gains". The Draft Commentary stated that Art 13 was "applicable only when the laws of one or both Contracting States provide[d] for the taxation of such gains". Article 13 was omitted from the UK Agreement. The Commissioner submits that the Commentary referred to is consistent with Art 13 having been omitted intentionally because Australia did not impose a tax on capital gains. It follows, according to the Commissioner, that the UK Agreement was not intended to allocate taxing rights in respect of capital gains. Sixth, the Commissioner points to Art 19 of the UK Agreement which is the operative provision affording relief from double taxation. The Commissioner submits that this is consistent with the notion that it is the Australian tax on income only which is the subject of the exclusionary provisions, such as Art 5, of the UK Agreement. In my view, while relevant, none of the submissions made by the Commissioner persuade me that the parties did not intend to adopt the expansive notion of income that underlay the ITAA 1936, which already included in 1967 certain amounts that were gains on capital account. I will address the Commissioner's arguments in turn. In relation to the first argument, the references to income and income tax on the one hand and to capital gains and capital gains tax on the other can be explained by the fact that in the UK in 1967 there was an independent capital gains tax (see Pt III of the Finance Act 1965 (UK) entitled "Capital Gains"). The Commentary to Pt III of the Finance Act 1965 stated that "This Part of the Act ... imposes a new tax called "capital gains tax" which is distinct from income tax, ...". Section 19(3) provided that "Subject to the said provisions, a tax, to be called capital gains tax, shall be assessed and charged for the year 1965-66 and for subsequent years of assessment...". The terms of the UK Agreement had to be wide enough to embrace the income taxes of both Australia and the UK, as well as the then recently introduced UK capital gains tax. There was no occasion to take into account a comparable Australian independent capital gains tax, because none existed. Those capital gains that were taxed fell within a taxpayer's "assessable income", and were liable to income tax. In relation to the Commissioner's second argument, I do not think that either the expression "carries on trade or business" in Art 5(1) or the expression "the conduct of a trade or business" in Art 5(7) is to be read so as to require continuing or repeated business activities so as to stamp the word "profits" or "income" in those articles respectively with a revenue character: cf Thiel at 343-345 per Mason CJ, Brennan and Gaudron JJ; 347-352 per Dawson J; 355-361 per McHugh J. The Commissioner's third argument does not persuade me. Paragraph 4 of Art 5 may raise a question as to the interaction of the deductibility provided for in that paragraph, the measurement of net capital gains under the Pt IIIA régime and the general deductibility provisions of the ITAA 1936 and the ITAA 1997, but any complexity involved does not, to my mind, show an intention to confine the operation of Art 5 of the UK Agreement in the manner contended by the Commissioner. The Commissioner's fourth argument is likewise unpersuasive. The circumstance that the three exclusions happen to be items of income according to ordinary concepts does not mean that "income" as used earlier in that paragraph refers only to income according to ordinary concepts. I note in relation to the Commissioner's fifth argument the Commissioner's submission (noted at [42] above) that it was not only the Draft Convention, but also the Colonial Model Treaty on which the parties relied in formulating the provisions of the UK Agreement, and that Art 5 should be interpreted by applying the ordinary principles of statutory construction to the text. I agree with that submission. I therefore draw no assistance from the fact that Art 13 of the Draft Convention or a provision similar to it was not carried forward into the UK Agreement. Nor am I persuaded by the Commissioner's sixth argument. The expression "profits, income or chargeable gains" was no doubt chosen as an expansive catch-all expression intended to be capable of application generally to all amounts that might be subjected to tax by both countries. It follows that Art 5 of the UK Agreement is not, in my opinion, limited in its potential application to "revenue profits" or "income according to ordinary concepts", but extends to "capital profits", including the capital gain made by the First Applicant. The First Applicant puts its argument in two ways. First, the First Applicant submits that the tax on net capital gains imposed by the Pt IIIA régime is a "substantially similar tax" to "the Commonwealth income tax". In this respect, the First Applicant relies on the reasons given by Edmonds J in Virgin Holdings at [54]-[58] with respect to the Swiss Agreement. The First Applicant submits that a similar conclusion was reached in both Canada and Ireland, citing Gadsden v Minister of National Revenue [1983] CTC 2132 ; 83 DTC 127 at 132; Gladden Estate v Minister of National Revenue [1985] 1 CTC 163; 85 DTC 5188 ; and Kinsella v Revenue Commissioners [2007] IEHC 250. If the assumption to be made is that the Pt IIIA régime tax is not within the expression "the Commonwealth income tax" because the latter expression embraces only tax on income according to ordinary concepts, then the Pt IIIA régime tax is not substantially similar to "the Commonwealth income tax". But to construe "the Commonwealth income tax" so narrowly would also mean that tax on the various other forms of capital gain that the ITAA 1936 included in a taxpayer's assessable income as at the time of the signing of the UK Agreement (referred to at [101] above) would likewise be excluded, and tax on them would also not be a "substantially similar tax" to "the Commonwealth income tax". In my view, the only assumption to be made for the purposes of Art 1(2) is that the Pt IIIA régime tax is not within the expressions "the Commonwealth income tax" and I am not to go further and make any assumptions as to the reason. The Pt IIIA régime tax can then be seen to be substantially similar to the remaining tax for which the ITAA 1936 provided, if for no other reason than because other kinds of capital gains remain included in a taxpayer's assessable income. In my view, the capital amounts that formed part of the Australian income tax base in 1967 (referred to at [101] above), and the broad nature of "income" for Australian income tax purposes (referred to at [93]-[100] above) suffice to show that tax hypothetically imposed pursuant to the Pt IIIA régime regarded in isolation would be substantially similar to the tax hypothetically assessed pursuant to the ITAA 1936 as it stood in 1967 without Pt IIIA. The second submission made by the First Applicant is that the tax on capital gains under the Pt IIIA régime is a "substantially similar tax" to the UK capital gains tax referred to in Art 1(1)(a). The tax that is hypothetically imposed by the Pt IIIA régime regarded in isolation is to be compared not only with "the Commonwealth income tax" referred to in subpara (b) of Art 1(1), but also with the "income tax ..., the corporations tax and the capital gains tax" of the UK referred to in subpara (a) of Art 1(1). Again, I make no assumption as to the reasons why the Pt IIIA régime tax does not (hypothetically) fall within the expression "the Commonwealth income tax". I referred to the UK capital gains tax that existed in 1967 when the UK Agreement was signed at [121] above. That tax was only applicable to individuals. The capital gains made by corporations were taxed by means of the corporations tax. The inclusion of both the UK capital gains tax and the UK corporations tax as taxes covered by the UK Agreement suggests that the parties would have regarded an Australian tax imposed on capital gains, whether through the existing income tax or by means of a new tax, on either individuals or corporations, or both, subsequent to the signing of the UK Agreement, such as the tax hypothetically imposed by the Pt IIIA régime regarded in isolation, as "substantially similar" to either of the UK taxes referred to or to both of them viewed in combination. In sum, if I should be wrong in thinking that the tax introduced on the tax base as enlarged by the Pt IIIA régime fell within the notion of the "Commonwealth income tax" of subpara (1)(b) of Art 1 of the UK Agreement, nonetheless it was a tax substantially similar either to that tax or to the UK capital gains tax (or the UK corporations tax) referred to in Art 1(1)(a), or to both of them viewed in combination, and was therefore one of the taxes covered by the UK Agreement. I referred to the relevance of the Model Convention and Model Commentary at [43] above. In particular, it was headed "Business Profits" and referred to "profits of an enterprise of a Contracting State". It contained in Art 7(7) a provision similar to that of Art 7(5) of the Netherlands Agreement, namely, that where profits of an enterprise within Art 7 include items of income dealt with separately in other Articles, then the provisions of those Articles were not affected by the provisions of Art 7. The Model Commentary stated in respect of Art 7(7) (at para 31) that although it had not been found necessary to define the term "profits", it should be understood that that term when used in Art 7 and elsewhere in the Model Convention had a broad meaning including all income derived in carrying on an enterprise, and that such a broad meaning corresponded to the use of the term made in the tax laws of most OECD Member countries. Paragraph 34 of the Model Commentary in respect of Art 7(7) explained that it had seemed desirable to lay down a rule of interpretation in order to clarify the field of application of Art 7 in relation to categories of income that were treated separately in other Articles but that were within the "profits" addressed in Art 7. The Model Commentary stated that para (7) of Art 7 gave first preference to the special Articles. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent established (alone or with the whole enterprise) or of such a fixed base, may be taxed in that other State. Gains from the alienation of ships or aircraft operated in international traffic, boats engaged in inland waterways transport or movable property pertaining to the operation of such ships, aircraft or boats shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident. The Model Commentary in respect of Art 13 noted (at para 1) that a comparison of the tax laws of the OECD Member countries showed that the taxation of capital gains varied considerably from country to country. It also noted (at para 2) that in some OECD Member countries, capital gains were taxed as ordinary income and therefore added to the income from other sources, whereas in others, capital gains were subjected to special taxes that were levied, mostly at special rates, on each capital gain or on the sum of the capital gains accrued during the year without regard to the other income (or losses) of the taxpayer. Paragraph 3 of the Commentary on Art 13 noted that Art 13 did not deal with such questions, leaving it to the domestic law of each Contracting State to govern the question whether capital gains should be taxed and, if so, how. It is understood that the Article must apply to all kinds of taxes levied by a Contracting State on capital gains. The wording of Article 2 [the Taxes Covered Article] is large enough to achieve this aim and to include also special taxes on capital gains. The Commissioner submits that the Model Convention is based upon a distinction between Art 13, which was a "code" that dealt comprehensively with capital gains, and Art 7, which was therefore confined in its operation to revenue profits. Paragraphs 25 and 26 of the Commissioner's submissions in relation to the Second Proceeding are as follows: So far as the operation of Article 13 of the Dutch Agreement is concerned, it must be recognized that while the Model Convention contained Article 13 which dealt generally with the taxation of capital gains, Australia and the Netherlands did not include in the Dutch Agreement any provision dealing in a comprehensive way with capital gains. That non-inclusion was against the background of Australia's reservation [noted at [146] above]. Article 13 of the Model Convention was implemented in the Dutch Agreement in a modified form appropriate to the taxation regimes of Australia and the Netherlands. Against that background, the language used in Article 13 was significant. Whereas Article 13(4) of the Model Convention referred to " gains from the alienation of any property", Article 13(1) of the Dutch Agreement refers to " income from the alienation of real property". Article 13(3) on the other hand refers to "Gains from the alienation of shares or 'jouissance' rights in a company ... which is resident in the Netherlands". The appropriate conclusion is that the parties intentionally abandoned the word "gain" in favour of the word "income" in Article 13(1) because Australia did not impose a general capital gains tax and did not want the treaty to deal with such a tax in the event that it subsequently did introduce such a tax. In oral submissions, senior counsel for the Commissioner submitted that the conclusion that should be drawn is that Art 7 of the Netherlands Agreement was intended to have the same operation as Art 7 of the Model Convention, and that the allocation of taxing rights in respect of capital gains was subject to a decision to deal with that topic only on the limited basis that is found in Art 13 of the Netherlands Agreement. Article 7 applied to "[t]he profits on an enterprise". Section 4(1) provided that subject to a qualification not presently relevant, the Assessment Act was incorporated and read as one with the Agreements Act. The opening words of s 3(2), "[f]or the purposes of this Act" mean at least "for the purposes of the Netherlands Agreement having the force of law in Australia". Accordingly, for that purpose, s 3(2) requires us to read the reference to "profits" in Art 7 of the Netherlands Agreement as referring to the Second Applicant's taxable income derived from the carrying on of its business in Australia. Provided the Second Applicant's capital gain is properly to be seen as being derived from the carrying on of its business in Australia, the conclusion seems inescapable that it falls within the "profits" of the Second Applicant within the scope of the Business Profits Article (Art 7). At least that is the case unless Art 13 produces a different effect. I do not think that Art 13 produces a different effect. Whereas Art 13 of the Model Convention dealt in four paragraphs with the subject of "gains" from the alienation of classes of property that covered all alienable property, Art 13 of the Netherlands Agreement was confined to dealing with the subject of gains from the alienable property of particular specified classes of property that did not exhaust the field of all alienable property. Other gains that were taxed by taxes within the Taxes Covered Article (Art 2 considered at [162]ff below) were left to be the subject of the Business Profits Article (Art 7). I do not accept the Commissioner's submission that the Netherlands Agreement was not intended to apply in respect of capital gains at all. It has no direct concern with capital gains: cf the double tax agreement between the United Kingdom and Australia which refers specifically both to taxes on income and capital gains. The Pt IIIA régime taxes capital gains only in the sense that it includes net capital gains in the income tax base, that is to say, as part of "assessable income". The fact that the title to the Netherlands Agreement refers only to "Income" and not to "Capital" is not inconsistent with this position. The entitlement to tax the profits of an enterprise referred to in the above provision is a reference to an entitlement under the Netherlands Agreement. The opening words of para (1) of Art 7 are "[t]he profits of an enterprise". I agree with the Second Applicant that Art 6(a) of the Protocol indicates that a party to the Netherlands Agreement was to be at liberty to include capital gains as part of those profits, without prejudice to the allocation of taxing rights in Art 13(1) in respect of "[i]ncome from the alienation of real property". It follows that Art 7 will deny Australia the right to bring to tax the capital gain made by the Second Applicant, if the tax imposed in respect of that capital gain is a tax covered by the Netherlands Agreement. The Taxes Covered Article of the Netherlands Agreement is similar to that of the UK Agreement. As mentioned above, in my view, there is no substance in the difference between the expressions "the Commonwealth income tax" and "the Australian income tax". I adopt mutatis mutandis , in relation to the Taxes Covered Article of the Netherlands Agreement, what I have said earlier in relation to the Taxes Covered Article of the UK Agreement, save in respect of the First Applicant's argument noted at [133]-[135] above which was not available in respect of the Netherlands Agreement. By the time the Netherlands Agreement was signed in 1976, s 26AAA had been introduced into the ITAA 1936. This provision was therefore a further illustration of a capital gain that was treated as income for the purposes of "the Australian income tax". The Commissioner also raises some additional arguments which I address below. The list is not exhaustive ... In principle, however, it will be a complete list of taxes imposed in each state at the time of signature and covered by the Convention. I disagree with the Commissioner's submissions to the extent that he seeks to argue that the taxation of capital gains under the Pt IIIA régime is not caught by Art 2(1)(a) of the Netherlands Agreement. In my view, the "existing taxes" referred to in Art 2(1)(a) are classes of independent self-contained taxes, as distinct from a class or classes of things included in the tax base of one of them. Had capital gains been taxed in Australia by means of an independent and self-contained tax rather than being encompassed within the tax base of the income tax, it would not have been caught by Art 2(1)(a). It is in respect of that situation that the comments in the Model Commentary show that Art 2(3) of the Model Convention (and Art 2(1) of the Netherlands Agreement) applied only to the classes of tax imposed in each Contracting State at the time of signature that are listed in Art 2(1). As noted above, the taxation of capital gains in Australia was not introduced by way of a new tax, but rather by an enlargement of the scope of "assessable income" of the existing Australian income tax. That tax was included in the list in Art 2(1)(a) at the time of signature of the Netherlands Agreement. The term "the Australian income tax" must be given an ambulatory meaning, and the Netherlands Agreement should not be construed so that it applies only to the Australian income tax assessable in accordance with the provisions of the ITAA 1936 as they existed at a particular point in time (see [107]ff above). For present purposes, I will assume, without deciding, that the introduction of the Pt IIIA régime did indeed mark such a substantial change. The answer to the Commissioner's submission, in my respectful opinion, is that non-compliance with the second sentence of Art 2(2) does not prevent the first sentence from operating according to its terms. The first sentence is a self-contained substantive provision. The second sentence imposes a procedural requirement that is enlivened after the substantial change has been made. Whether a substantial change has resulted in the imposition of an "identical or substantially similar tax" is to be determined on the merits. The procedural requirement imposed by the second sentence goes to no more than administrative convenience. It will also be clear, for what significance it may be thought to have, that I do not think that Virgin Holdings was wrongly decided. Both appeals succeed, the Commissioner's objection decisions should be set aside and the objections allowed. The Commissioner should be ordered to pay the costs of the applicant in each proceeding. I certify that the preceding one hundred and seventy-four (174) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | international taxation treaties double taxation agreements (dtas) one dta between australia and the united kingdom another dta between australia and the netherlands both dtas entered into before "capital gains tax" (cgt) introduced in form or pt iiia of income tax assessment act 1936 (cth) (itaa 1936), continued in pt 3 1 of income tax assessment act 1997 (cth) (itaa 1997) whether cgt within the expressions "the commonwealth income tax" or "the australian income tax" in the "taxes covered articles" of the two dtas whether capital gains within the "business profits articles" of the two dtas whether issues for decision covered by recent single judge decision in virgin holdings sa v commissioner of taxation [2008] fca 1503 whether considerations of "comity" required that that decision be followed discussion of comity in judicial decision making. held: cgt within the taxes covered articles and capital gains within the business profits articles of both dtas, so that capital gains made after those dtas were entered into not assessable income within itaa 1997. precedent "comity" in judicial decision making earlier single judge decision of same court whether considerations of comity had any influence discussion of comity discussion of circumstances in which considerations of comity might be influential. income tax practice and procedure |
His Honour dismissed the applicant's application to set aside a bankruptcy notice issued against him by the respondent; Makucha v Fairbrook PMA Pty Ltd [2009] FMCA 577. The factual background of this matter is summarised at [5]-[6] of his Honour's reasons and was not challenged by either party in the submissions made before me. The company changed its name on 28 January 2005 to Fairbrook PMA Pty Ltd (ACN 003 292 895). Proceedings were commenced by Fairbrook in the Parramatta Local Court on 22 August 2005 and judgment was made in favour of Fairbrook against Mr Makucha by default on 18 June 2007. This judgment was subsequently entered on 23 June 2007. On 8 May 2006, Fairbrook was deregistered voluntarily under sub-ss.601AA(1) and (2) of the Corporations Act 2001 (Cth). Fairbrook Pty Ltd commenced proceedings on 30 March 2007 in the Supreme Court of New South Wales seeking reinstatement. On 3 May 2007 orders were made by a Registrar of the Supreme Court under sub-ss.601AH(3) and 601AH(5) of the Corporations Act . That amount included an amount of interest referrable to the period during which the company was deregistered. The applicant claimed before the Federal Magistrate that this interest should not have been included. Consequently, he submitted, the amount of the debt stated in the bankruptcy notice was incorrect and for that reason the bankruptcy notice should be set aside. The Federal Magistrate rejected this submission. His Honour held that: On re-registration a previously deregistered company "is taken to have continued in existence as if it had not been deregistered"; Corporations Act 2001 s 601AH(5). His Honour observed that the argument that the right to interest ceases on de-registration and only recommences with the Court's approval of re-registration involves a claim that the statutory right to interest is suspended during the period that the assets are held by ASIC. The Federal Magistrate noted that there was no dispute between the parties that a company ceases to exist on deregistration. His Honour held that deregistration did not affect the liabilities of individuals or entities associated with the company before it was deregistered. There was no evidence before the Federal Magistrates Court, and no submissions had been made, that the judgment had become unenforceable. Neither the Court nor the parties had located any authority that addresses the question of whether interest accrues on a judgment debt while a company is deregistered. I interpolate, that this was also the case in relation to the present application. In the absence of any authority to the contrary, interest is a statutory cause of action and the effect of s 601AH(3) enables a party to continue with a claim for interest on an unpaid judgment debt as if deregistration had not occurred. In support of that view, s 601AH(2) and s 601AH (5) of the Corporations Act when read together establish no absence of a title holder or owner of the chose in action. The Federal Magistrate therefore held that the Bankruptcy Notice did not exceed the amount due by the inclusion of interest referable to the period of deregistration and that the application to set it aside should be dismissed. The date of the Federal Magistrate's judgment was 23 June 2009. The time for filing a notice of appeal from that decision expired on 14 July 2009; O52 r 15(1) Federal Court Rules . Notwithstanding that requirement, O 52 r 15(2) states that the Court may give leave to file and serve a notice of appeal out of time "for special reasons". An application for an extension of time was filed on 12 August 2009. The application was supported by an affidavit sworn by the applicant and was accompanied by a draft notice of appeal. In his affidavit sworn on 12 August 2009, the applicant attributed his delay in seeking to appeal the Federal Magistrate's decision to ill health. The applicant deposed that as a result of his illness and mobility problems he was required to move his residence to gain better access to medical assistance and to recuperate. The above patient of mine was suffering from flu, diabetes, rotator cuff injury of the (R) shoulder, ear problems and gout during the period 17/6/09 to 24/7/09 & was unable to attend court. The applicant was represented in the Federal Magistrates Court by the same solicitors as represent him in this application. He has, therefore, had continuity of representation. Although he was undoubtedly unwell during the relevant period, I do not accept that the severity was such that he could not instruct his solicitors to proceed with an appeal. Were I to be satisfied that the applicant had special reason for his delay I would also have to consider whether any appeal would be a futility. As I said in Susaki v Minister for Immigration & Multicultural Affairs [2002] FCA 1229 at [9] , "It is not a proper exercise of the Court's discretion to expose the respondents to an appeal when it can be anticipated that the appeal will not succeed". In assessing the prospects of an appeal succeeding, however, the Court should refrain from holding a preliminary hearing on the merits of the appeal. The applicant's draft notice of appeal listed five grounds of appeal which together raised only one issue. The applicant contends that his Honour erred in finding that interest on the judgment debt referable to the period during which the company was deregistered could be included in the amount stated in the bankruptcy notice. I have summarised above the Federal Magistrate's reasons for decision; they are comprehensive and cogent. I am not satisfied that an appeal from his Honour's decision would have any realistic prospect of success. In the circumstances I decline to exercise my discretion to extend the time for filing and serving a notice of appeal. For these reasons the application must be dismissed with costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. | application for extension of time to appeal from decision to refuse to set aside a bankruptcy notice company deregistered and subsequently re-registered whether interest on debt accrues during period of deregistration bankruptcy |
2 These motions were heard over five days from early April 2007 to the middle of June 2007. That came about because between the first day of the hearing, 4 April 2007, at the conclusion of which the first motion was part-heard and the second day of the hearing, 24 April 2007, the applicants had prepared and were ready to file notice of the second motion seeking orders for punishment of Mr Chatham for contempt for further alleged breaches of the Orders. 3 As indicated above, an amended notice of the second motion was filed on 24 April 2007 when the hearing of all motions was adjourned to 18, 19 and 20 June 2007. I ordered that the first applicant ('Amway') should pay the respondents' costs thrown away by the adjournment. At the adjourned hearing, I heard all motions sequentially with the respondents' motion for setting aside or variation of some of the Orders being heard first. 4 However, in these reasons, I propose to deal first with the contempt motions and then with the motions for setting aside or variation of some of the Orders. (f) publishing, whether via email, the world wide web, letter or otherwise, any statement to the effect either of the applicants has engaged in criminal conduct. In these orders, "IBO" means an Independent Business Owner contracted to the first applicant for the distribution of the first applicant's products. 7 An affidavit sworn the same day by the second applicant, Mr Anthony Greig, General Counsel for Amway Australia, New Zealand and South Africa and a director of Amway ('Mr Greig') sets out background material going to the nature of the Amway business and the history of Amway's dispute with Mr Chatham, and the first respondent, Clifone Pty Limited ('Clifone'), of which Mr Chatham is a director and the principal shareholder. That material is not in dispute and I paraphrase it below. The Amway business plan is based around commissions from sales of Amway products and bonuses based on the level of these sales by Amway distributors, known as Independent Business Owners ('IBOs'), who have been recruited in that line of sponsorship. IBOs are not employees of Amway and are in effect distinct contracted businesses which purchase products from Amway and on-sell these products. 9 Amway commenced business in Australia in 1971. Amway is a retailer of health, beauty, home care and home living products. It sell products to its contractors by wholesale, it does not sell through its own shopping outlets. To the extent that it sells the same or equivalent merchandise as retail stores it can be said to be in competition with those stores. But of necessity, its cost structure is entirely different from such stores. It has none of the overhead costs associated with retail stores, but incurs other costs peculiar to its maintenance of a distributorship network. The existing distributors become the 'sponsors' of the new distributors. This system produces a chain of distributors in which a more senior distributor is described as 'upline' from the distributors so recruited (and from those recruited in turn down the chain). The recruits are known as 'downline' distributors from those 'upline'. As part of their agreement with Amway, the distributors are required to comply with certain rules of conduct. 11 The Amway distributors provide two forms of service to Amway: the selling and consequent ordering of Amway products at wholesale price; and the sponsoring of new distributors. Amway provides services such as training, product information, support and a 'money-back' satisfaction guarantee. Amway's income from products sales increases as each distributor increases its orders. The distributors increase their orders by increasing their own sales to consumers and by sponsoring new 'downline' distributors who will do likewise. 12 Amway IBOs are ranked in importance within the organisation (and with respect to bonuses and commission payments). These ranks are generally given the names of various gems and precious metals so that, for example, a 'Gold Producer' receives greater bonuses than a 'Silver Producer'. 13 Distributors earn points for sales at different rates according to the category of product. An IBO is eligible to become a Platinum IBO when they achieve a specified points value. As they increase their business, and meet the relevant qualification requirements (which includes both points and downline distributor groups), the Platinum IBO becomes eligible to reach higher levels such as 'Founders Platinum IBO', Sapphire, Emerald, Diamond and Executive Diamond. 14 Distributors may order products by telephone or mail sent to their 'upline' Platinum IBO. IBOs at all levels may also order products direct from Amway online via the internet. Platinum IBOs have the responsibility to train, supervise and foster their 'downline' IBOs with whom Amway may have little contact. 15 The distributors are free to build their own business, subject to certain standards required by Amway, but without minimum purchase requirements. Amway offers a range of rewards and incentives in order to encourage distributors to develop their business and thereby increase their purchase of Amway products. 16 One important aspect of the Amway business is the provision of support and mentorship amongst IBOs either on a one-to-one basis or by way of various meetings and conferences. The purpose of this support, motivation and mentorship is to allow successful IBOs to pass knowledge on to newer or less experienced IBOs. In particular, high-ranking IBOs with many IBOs in their 'downline' (a 'downline' means the IBOs who make up an IBOs group --- including people they have personally sponsored and people those IBOs have sponsored) are respected by those in their 'downline'. This process is generally encouraged and serves the purpose of having new IBOs follow the business practices of successful IBOs to result in increased sales of products. 17 In particular, regular group meetings and 'Business Building Seminars' take place involving IBOs within particular 'lines of sponsorship' (i.e. IBOs within a particular 'downline' group). These meetings regularly include mentoring by high-ranking IBOs with more junior IBOs in their line of sponsorship. 18 Often in the course of dealing with 'downline' IBOs, higher-ranking IBOs will obtain a certain level of personal information in order to provide their 'downline' IBOs with business and personal advice to help them build a productive Amway business. 19 Amway seeks to promote its business by promoting the businesses of its distributors by fostering and maintaining the Platinum Distributors. Platinum Distributors enjoy certain privileges and assume certain responsibilities. Because Amway does not retail its products itself, the continuing success of the Amway business is dependent on the continuing success of distributors in both selling products and sponsoring new distributors. On 16 June 1989, he was substituted by Clifone as the distributor or IBO. 21 In or around 1998, a dispute arose between Mr Chatham and Amway over payments to Clifone of money in relation to the Amway 'Emerald Enhancement Program' ('EEP'). The dispute was reviewed by counsel but Clifone did not accept the findings of that review. 22 In early 2003, a separate dispute arose between Mr Chatham and Amway over Mr Chatham's promotion to other IBOs of a practice called 'Emotional Freedom Technique' ('EFT') including other religious instruction. Despite being directed to cease the use of EFT and overt religious references in the context of his Amway business, Mr Chatham apparently continued to use EFT in that context well into 2003. 23 A further dispute arose between Mr Chatham and Amway over the latter's exercise of its discretion not to award the 'Founder's Achievement Award' ('FAA') (which would have equated to payment in the sum of approximately $34,000) to Clifone for the year 2004. 24 Both the EFT issue and the FAA issue went to arbitration and a hearing was conducted over 14 --- 16 March 2005. The arbitrator found in favour of Amway in respect of both issues. 25 Clifone was placed on probation until 31 May 2006 carrying with it a number of restrictions and limitations on its conduct and activities, with concomitant restrictions and limitations on Mr Chatham's conduct and activities. By letter dated 1 September 2005, Mr Chatham was informed that Clifone's probation had been extended until 31 December 2006. 26 From the time of the arbitrator's award, the relationship between Amway and Mr Chatham deteriorated into the depths of a tirade of threatening correspondence between Mr Chatham on the one hand and representatives of Amway and its parent corporation in the United States on the other. Indeed, some of the correspondence on Mr Chatham's part was nothing short of abusive and arguably defamatory. This correspondence is detailed at some length in Mr Greig's affidavit from paras 45 to 60 and I do not propose to refer to it otherwise than where it becomes necessary to do so in dealing with the charges of contempt considered below. (b) In alleged breach of Order 5(d), Mr Chatham at approximately 1.50 pm on 25 August 2006 sent an email to Mr Fred Kasparek which email published to Mr Kasparek a letter from Mr Greig to Mr Chatham dated 1 September 2005 which letter is page 229 to the affidavit of Mr Greig sworn 16 August 2006 ('the second charge'). (c) In alleged breach of Order 5(b), Mr Chatham at approximately 10.26 pm on 27 August 2006 sent an email to Mr Peter McKenna (who is an IBO of Amway) in connection with the activities of Amway ('the third charge'). (d) In alleged breach of Order 5(b), Mr Chatham at approximately 8.16 am on 28 August 2006 sent an email to twenty-five IBOs of Amway listed in the statement of charge in connection with the activities of Amway ('the fourth charge'). (e) By publishing the email of 28 March 2007, Mr Chatham in alleged breach of Order 5(e)(iv) denigrated an employee of Amway, namely Mr Greig (the applicants rely on the email as a whole, and in particular the paragraphs numbered 24 in the copy of the document annexed and marked `B') ('the eighth charge'). (g) By publishing the email of 2 April 2007, Mr Chatham in alleged breach of Order 5(e)(iv) denigrated or disparaged an employee of Amway namely Mr Greig (the applicants rely on the email as a whole, and in particular the paragraphs numbered 9, 11, 14, 16, 17 in the copy of the document annexed and marked 'C') ('the ninth charge'). (h) By publishing the email of 2 April 2007, Mr Chatham, in alleged breach of Order 5(e)(i) represented that Mr Greig had committed perjury, and alternatively made a statement to similar effect (the applicants rely on the email as a whole, and in particular the paragraphs numbered 10 to 13 in the copy of the document annexed and marked 'C') ('the tenth charge'). (i) By publishing the email of 2 April 2007, Mr Chatham, in alleged breach of Order 5(f) represented that Mr Greig had engaged in criminal conduct (the applicants rely on the email as a whole, and in particular the paragraphs numbered 10 to 13 in the copy of the document annexed and marked 'C') ('the eleventh charge') . (l) By publishing the email of 12 April 2007, Mr Chatham in alleged breach of Order 5(b) contacted IBOs in connection with activities of Amway and/or Mr Greig (the applicants rely on the email as a whole, and in particular the paragraphs numbered 25, 34, 35 and 38 in the copy of the email annexed and marked 'D') ('the thirteenth charge'). However, when the hearing resumed on 18 June 2007, they appeared to have parted company. It is enough that the relevant commission or omission was deliberate and not casual, accidental or unintentional. It is no defence that the party deliberately doing the act honestly believes, or was wrongly advised, that it would not be in breach of the order, if the act was deliberately done. There will be no contempt proved if the act or omission is "casual, accidental or unintentional". They submitted that the Court does not look to whether the act of publication itself was more than 'casual, accidental or unintentional'. These qualifications, they say, are placed upon the disobedience, not upon the 'commission or omission which is in breach'. In order to become contemptuous, Mr Chatham's disobedience to the Orders must have been more than 'casual, accidental or unintentional'. He may have published the material in breach of the Orders deliberately, but if the disobedience was merely 'casual, accidental or unintentional', then he is not guilty of contempt. 33 If by this argument, the respondents are saying that a deliberate act or omission which is in breach of a court order will not constitute contempt unless there is an intention to breach the court order, I cannot agree. The words 'casual, accidental or unintentional' do not introduce such an additional requirement. Viewed in the context of the extract from the joint judgment in Mudginberri cited at [30] above, the qualifications are not so much true exceptions to a deliberate act or omission; rather they are by way of contradiction to such an act or omission. 34 This is not to say that there can be contempt without disobedience. There cannot be disobedience if the alleged contemnor does not know of the order which he or she is alleged to have breached. Nor could there be disobedience where the breach of the order occurs by reason of circumstances outside the control of the alleged contemnor. But if the facts of the case enable one fairly to conclude that the alleged contemnor has disobeyed the order or undertaking then that is sufficient to constitute a contempt. That being so, the only issue is whether the relevant acts were in breach of the Orders referred to in the charges. Amway IBO. There my wife Jenny and I were told the reason for Trevor's suspension was his continuing use of EFT and the complaints of two women. Early December 2005 spoke via the phone with Tony Greig and the reason given for the Company continuing Trevor's suspension was for two alleged cases of sexual harassment. Mick and Jenny Mullett. You are downline from Mick Mullett. The letter I received from Tony Greig regarding the extension of my probation is reproduced in it entirety below. I refer particularly to my letter of 5 August 2005 noting your violation of the terms of your probation so far as they relate to your association with Independent Business Owners and your attempts to influence Amway business strategies. I note the confirmation in your response of 12 August 2005 that you have contacted IBOs seeking to broadly influence Amway business strategies. This contact occurred in direct contravention of the company's direction (confirmed in your communication to your group in June 2005) that during the period of probation you should stand aside from the business and that you should not seek to communicate beyond a one on one basis with members of your personal group (please now see below for extension of terms in this regard). As was foreshadowed in my letter to you of 5 August 2005 and given your demonstrated breaches of terms of your probation, the company has given serious consideration to further action which may be available to it. It has now been resolved that the period of your probation should be extended until 31 December 2006, and further, that you should be directed that from 1 September 2005 you are not to counsel or otherwise provide leadership to any Amway IBO or otherwise discuss the Amway business or its policies or strategies with any IBO, whether the IBO is in your personal group or elsewhere in the Amway business. It is our view that, given the ruling by the arbitrator the company has shown considerable restraint in its responses to date; this restraint has however not achieved the outcome which could reasonably be expected in these circumstances. Trevor, it has obviously taken many months for the company to arrive at a position where it has resolved that no further breach of the terms of your probation or the Rules of Conduct will be tolerated. Mr Chatham admits that he sent the 25 August 2006 email to Mr Kasparek, however, neither on its face, nor in any relevant context relied on in the applicants' submissions, does it have anything to do with the business activities of Amway or the activities of Mr Greig as an employee of Amway, engaged in that business. It follows, in my view, that the sending of this email (including the attachment) by Mr Chatham does not constitute a breach of Order 5(b). ... I sent the email dated 25 August 2006 (which appears as annexure "A" to Mr Greig's affidavit) to Mr Kasparek to put an end to any rumour that may develop regarding sexually inappropriate behaviour and, additionally, to protect my position in the Family Court proceedings. 5. The letter that I extracted in my email to Mr Kasparek appears at page 161 of Mr Greig's affidavit sworn 16 August 2006. 6. I extracted the letter dated 1 September 2005 in order to show Mr Kasparek that I was not on probation, and that I was not being disciplined by Amway, for any sexual inappropriate behaviour, but for the reasons alleged in that letter, namely contacting Amway IBO's with a view to influencing Amway business strategies. 7. At the time that I extracted the letter appearing at page 161 of Mr Greig's affidavit, I was not aware that that letter also appeared at page 229 of the same affidavit. 8. I sent the email to Mr Kasparek, and extracted the letter appearing at page 161 of Mr Greig's affidavit, in the hope that it would put an end to the rumour that I was being disciplined by Amway for sexual impropriety. It was submitted on behalf of the applicants that because the contents of both documents are the same, the difference in formatting is irrelevant. I would have readily accepted that submission if the document in question had only appeared at page 229, that is, within the range of restrained documents, or if the formatting of the published letter had corresponded with page 229. I am not satisfied that a breach has occurred in the circumstances where the letter (in a different format) also appears in a larger bundle of documents encompassing, but not confined to, the restrained documents and where the published letter is in a format consistent with the non-restrained version. Included in the material submitted by Amway is an affidavit sworn by you recently. The anti-Amway websites seem to find Court cases very useful in gathering information which can be used to depict the truth about Amway. My lawyers have stated to Amway that we wish to have a Mediation meeting to resolve the outstanding issues. If the issues are not resolved at the Arbitration meeting, we will immediately file a number of Cross Claims and the matter will proceed to the open Federal Court. As the case unfolds more information will appear on the world wide web. Date you qualified at Platinum. The number of 21 % in-country Qualifying legs you had in 2005-2006. The number of people in your business that have ever qualified at the Emerald level. The number of Australia IBO's in your business who qualified at Emerald in 2005-2006. The number of people in your business that have ever qualified at the Diamond level. The number of Australia IBO's in your business who qualified at Diamond in 2005-2006. The maximum number of qualified Platinums or Directs you ever had at one time in your business and the year that this occurred. The total number of Qualified Platinums in your entire business in 2005-2006. For the people that qualified at 21% Platinum or above in 2005-2006 the dates they joined Amway. The number of Q12 Platinums in your entire business. The total Amway bonuses received by you in 2005-2006 for your Australian business. Information regarding the recommendation made by you on behalf of the IBOAA to Amway Corporation regarding the change to the starters kit cost last year. Moreover, there is no issue that Mr McKenna is an IBO of Amway. However, neither on its face, nor in any relevant context relied on in the applicants' submissions, does it have anything to do with the business activities of Amway. It follows, in my view, that the sending of this email and the attachment by Mr Chatham does not constitute a breach of Order 5(b). Full details of the impending Court Case, including the Orders already in place, are already available on the Internet at www.fedcourt.gov.au. It is just a matter of doing a search on the website for Amway of Australia. www.mlmsurvivor.com is just one of many websites which seem to monitor Amway Court Cases. The anti-Amway websites seem to find Court cases very useful in gathering information which can be used to depict the truth about Amway. If the matter between Amway and I is not resolved at the Mediation which my Lawyers have suggested, then I can foresee all of the truth being revealed by people under oath in the Federal Court in Sydney, and this information being posted on the Federal Court Website with numerous links to it from other sites. As stated to you previously, I don't want to see anybody's business harmed including my own, but I have no control over the events that are now in place. I have been forced into a position whereby I will have to defend myself in the Public arena. It follows, in my view, that the sending of this email and the attachment by Mr Chatham did not constitute a breach of Order 5(b). 47 The sixth charge alleges alleged breach of Order 5(e)(iv) --- restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement that denigrates or disparages Amway or any of its employees or any statement to similar effect --- by Mr Chatham publishing the email of 21 March 2007. 48 The seventh charge alleges breach of Order 5(f) --- restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement to the effect of either Amway or Mr Greig has engaged in criminal conduct --- by Mr Chatham publishing the email of 21 March 2007 he asserted that Mr Greig had engaged in criminal conduct. 49 The document annexed and marked 'A' to the amended statement of charge annexed to the amended notice of the second motion is the email of 21 March 2007. In fact, many of the actions that have occurred since then have served to strengthen my resolve. Despite espousing the values that your fathers built the Amway business on, you act in a manner that is in a direct violation of the Founders' Principles. This meant that my income immediately dropped from around $600,000 per year, to zero. This to me means that there is about $12 million that my family and I will not receive over the next twenty years that I should have received. He spoke to Vaula for nearly 2 hours. None made a complaint. Whilst on oath at the Arbitration Tony initially refused to name the IBO from Perth but said there were other senior pins who had also complained. When directed to answer by the Arbitrator Tony refused to answer. It was only after a short recess called by Tony's QC that Tony stated that Peter Shack, Tom Avelsgaard, and Vaula McDermott had all made complaints to him regarding - the EFT at conferences I had run. In this affidavit Tony states that the concern about the EFT at the Summer Conference came from Kristen Cray, an Amway employee who attended the conference. I now have three affidavits which all clearly contradict Tony's evidence given at the Arbitration. They are affidavits of Peter Shack, Tom Avelsgaard and Tony Grieg himself. IDA stopped paying me bonuses because I was no longer an IBO, and so now I have nothing left to lose. I realize this is not much when compared with your $7 Billion annual turnover, but it was everything to my family and I. The emotional strain that my wife and I have been subjected to by Tony Greig's actions has been horrific and has taken a huge toll on my wife. She has been driven to the point of feeling suicidal on numerous occasions and has sought counselling, I believe that just like the family members of a murder victim, my family and I will feel much better knowing that justice has been done. As an IBO in Australia I did not have this right. This was confirmed at the Arbitration hearing. It was proven that under the Current Rules of Conduct, Amway Employees' directions override the United Nations Declaration of Human Rights. I believe I had about 140 qualified Platinums in my organisation at one time. I qualified at least at the Diamond level for 20 years consecutively until my business was terminated. In the 1980's and early 1990's it was relatively easy to get people to look at the Amway business and to get people to join the Amway business. Where as in the late 1980's we could sponsor about 1 in every 3 of 4 people who saw the Amway plan, now it about 1 in 30 to 40 people who see the Amway plan. The facts clearly indicate that since about 1992 the vast majority of leaders cannot even maintain what they had built. Consequently the business is now just a small fraction of what it was. ' They then go on to talk about what they did years ago without telling IBO's that it is now much more difficult to sponsor people than it was when they achieved their highest Pin Level. It is obviously not true to state that 'If I could build a big business 12-20 years ago, you can do it today,' The facts clearly indicate otherwise. They are still being promoted to the IBO's as Diamonds, but in fact only ever qualified at the Diamond level one time. I also believe this type of deliberate deception is occurring through out the Amway business. Today no more than 2 are qualifying for an Emerald Bonus. Now it is down to about 4,000. A lot of IBO's will remember what it was like when reminded. Apart from generating huge incomes from such programs, the Amway leaders know that if people do not submit themselves to the brainwashing program, they will not continue to spend thousands of dollars attempting to build the business. Some are still telling people it is possible to build a business because they are trying to maintain the income stream that they do [sic] have left. That is why they are able to get away with them for so long with so many people. The major costs are in travel to do presentations, books, tapes/CD's, seminars, demonstration products etc. These costs traditionally are much greater than the income received from the Amway bonuses until an IBO achieves about the Platinum Level in the business. Today people are actively being encouraged to spend thousands and thousands of dollars with virtually no likelihood of achieving what is being promoted by both the IBO leadership and Amway. The simple reason that both the IBO leadership and Amway promote the business still despite the facts, are because they both make money as a result of the ISO's purchasing the business tools and Amway products. The rules now state that an ISO's business can now not be renewed, any bonuses already qualified for kept by Amway, the business then sold to another person, and Amway may keep the proceeds of the sale of the business, and there is no recourse that an IBO may take against Amway through Arbitration or the Courts. A total of about $119,000 in bonuses already earned by Clifone Pty Ltd, has now been kept by you. To me this is the same as the two of you stealing $119,000 from my family and I. I know you will just say that it was provided for in the current rules, but to my way of thinking you changed the rules so that the theft would be legal. I also feel what they have done is despicable. Most IBO's do even know the changes have been made. The changed rules mean that no longer do IBO's our own their businesses despite the fact that they are called Independent Business Owners. This is another lie and deception. It is amazing just how effective the brainwashing has been. IBO's worldwide deserve to be told the truth and not to be continually brainwashed with lies and deceptions. I was selected by Amway to be the IBO to be interviewed by one of the TV Current Affairs programs in 1994. Amway flew me to Sydney for the interview. This Letter, along with his previous actions, convinced me that it was just a matter of time before he would terminate my business. I knew from reading the rules that he did not even need a reason for doing so, he could simply fail to renew my business and that there was nothing I could do about it. This is what happened. The EFT helped many IBO's. The discussions I had with the IBOAA was in an attempt to help IBO's, the IBOAA Board actually made a recommendation to Amway based on the ideas I put forward. I will continue to help IBO's by revealing the truth. You have not preserved the core. I also realize that financially you guys will not miss it, no matter what the figure. But the man who hears him will speak forever. In other words, a question of whether or not the arbitration in which you were involved amounts to a judicial proceeding is irrelevant. He identified Peter Shack, Tom Avelsgaard and Val McDermott as persons who had made complaints. We note that you now have affidavits form Peter Shack and Thomas Gene Avelsgaard to the contrary. We note that Val McDermott has not sworn an affidavit but has informed you that she has not made any complaint and indeed informed Mr Greig that she had no complaint about you or what you were doing. This certainly suggests that Mr Greig has been rather casual in relation to his evidence about that person. We point out that in any such criminal prosecution, conviction depends upon the criminal standard of proof beyond a reasonable doubt. For the purposes of this advice we do not offer any opinion as to possible outcome of any such prosecution as we do not regard ourselves in possession of all of the relevant facts, not having interviewed the various witnesses, and not being aware of any defence that Mr Greig might seek to mount. This was described as being a practice in which individuals would use a finger to tap their heads (and other parts of their bodies) with their fingers with the object of obtaining a positive state of mind. It was also reported that Mr Chatham was promoting Christian and Biblical messages, in conjunction with the 'tapping', as part of the promotion of EFT. 93 Paragraph 33 I subsequently wrote to Mr Chatham asking him to confirm whether or not he had been promoting EFT. It seems to me that Tony has finally told the truth. Today Tonight. 60 Minutes. Radio Talkback Programs. Internet. Paragraph 29 effectively states that: 'Diamond Ian McDermott ... immediately formed the view that Tony had perjured himself', but this is not an assertion by Mr Chatham that Mr Greig committed perjury; nor is it an assertion to similar effect. Paragraph 33 contains the phrase '... what now appears to be Tony's numerous lies on oath at Arbitration', but that is not an assertion by Mr Chatham that Mr Greig committed perjury, nor is it an assertion to similar effect; on the contrary, it is an assertion that Mr Greig appears to have lied on oath at the Arbitration; it does not assert that he did in fact lie. 51 It follows, in my view, that the publication of the email of 21 March 2007 did not constitute a breach of Order 5(e)(i). 52 Order 5(e)(iv) is designed to restrain publication of any statement that has a certain effect; that denigrates or disparages Amway or any of its employees. The word 'denigrate' is defined in the Macquarie Dictionary to mean 'to sully; defame', while the word 'disparage' is defined in the same dictionary to mean 'to bring reproach or discredit upon; lower the estimation of'. 53 Whether or not a publication breached Order 5(e)(iv) can only by determined by assessment of the effect of the statements contained in the publication on the audience to whom it is published. The email of 21 March 2007 was published to Mr DeVos and Mr Van Andel, senior executive officers of Amway's parent corporation in the United States, Mr Greig and Messrs Peter Williams and Jim Payne. There was no or little evidence as to the status of Messrs Williams and Payne apart from the inference, based on their being copied in on a letter from Mr Mike Mohr, Vice President and General Counsel of Amway's United States corporation, to Mr Chatham of 22 November 2005, that they are senior executive officers of Amway. Be that as it may, there is certainly no evidence, nor would one expect there to be having regard to the origin of the abovementioned letter and the persons to whom it was copied, that any of the recipients, apart from Mr Chatham, was an IBO. 54 Moreover, all members of this audience had previously (i.e., before the email of 21 March 2007) been in receipt of communications either from or to Mr Chatham alleging or denying perjury on the part of Mr Greig and arguably denigrating or disparaging both Amway and Mr Greig or refuting the conduct alleged against Mr Greig. In those circumstances, I am not satisfied that any of the statements made by Mr Chatham in publishing the email of 21 March 2007 had the effect of denigrating or disparaging Amway or Mr Greig in the eyes of any member of the audience to which the email of 21 March 2007 was published. 55 No evidence was called from Mr DeVos, Mr Van Andel, Mr Williams or Mr Payne in support of this alleged breach and Mr Greig's evidence did not touch upon it. 56 It follows, in my view, that the publication of the email of 21 March 2007 did not constitute a breach of Order 5(e)(iv). 57 I am unable to identify in the email of 21 March 2007 any statement that either Amway or Mr Greig has engaged in criminal conduct or any statement to similar effect. For some of the reasons canvassed at [50] above in relation to paragraphs 29, 33 and 89 of the email of 21 March 2007 I am not satisfied that the email of 21 March 2007 constituted a breach of Order 5(f). None of the assertions made at paragraphs 57, 58, 67, 68 and 69 amount to an assertion that Amway engaged in criminal conduct. 59 The document annexed and marked 'B' to the amended statement of charge annexed to the amended notice of the second motion is the email of 28 March 2007. 3 Cc Tony Greig, Peter Williams, Jim Payne . The events were a television program that depicted aspects of the Amway business in a negative fashion, and the "Directly Speaking Tape" sent out by Rich. 6 I was told that it was the honesty and integrity of the leadership that was cast into doubt by Rich that caused the biggest problem. 7 I remember reading a transcript of the Setzer Case in which Rich said whilst on oath that he was expecting about a 30% downturn in the business as a result of the "Directly Speaking" tape prior to sending it out, but it actually turned out to be much more, I think about 60% from memory. 8 I have been told by a number of US Diamonds that they actually lost 90% of their business during the "Holocaust". 9 Peter McKenna and others obviously believe the same thing could happen in Australia and other countries if the truth is revealed regarding the Amway business today. 10 Every night I lie awake thinking about all that Tony Greig has done and the $12 million that my family has been robbed of. That's just the way I see it. 11 I wanted to work with you guys but you came in and have tried to destroy my family and I. As far as I am concerned terminating my business was like declaring War on us. The first battles have been in the courts and I have just been in a defensive role. 12 Next Thursday, 5 th April, I will actually fire my first offensive round. The war will then continue on numerous other battlefronts, primarily the media and the internet. The timing of the launching of these counter attacks will obviously just depend on the Court Orders that are in place at the time. They may be delayed for a little while but that will not really matter as by the time they are removed the results of the battle commenced next Thursday will be known and will just strengthen the firepower available for the media battles. IBO's not learning about the truth for another 12 months is still much better for the ISO's concerned than not hearing the truth ever. 13 The weapons I will be using in our war will simply consist of the truth and a series of questions for IBO's world wide to ask. 14 I could imagine that there could be links to videos on Utube of Doug deVos speaking at Las Vegas to Australian IBO's regarding owning their own business. 15 There could also be sections of the current Rules Of Conduct showing that Amway can simply choose not to renew your business on the 31 st August in any given year, keep any bonuses that are due to you that you have qualified for at that time, sell that business to somebody else and keep the money they receive from the sale of that business. The rules also clearly state that in this situation they have no possible way of taking action against the company. People could then decide for themselves how they feel about things, whether or not they have been lied to and mislead by both their upline and the Amway staff including Doug deVos. 16 Today's technology is simply amazing. All of these bits could be simply linked. 17 The goal of coarse is merely to help IBO's worldwide to understand the facts about Amway as it is today. It is not the same business opportunity today as it was years ago. 18 I don't want to see millions of IBO's worldwide wasting literally billions of dollars chasing a false vision of what is possible today. I believe that many IBO leaders are just motivated by greed and that is why they continually promote the brain washing tools, on which many make by far the majority of their income, and the Amway business. They do not tell people the truth regarding the rules of conduct and the likelihood of success today because they do not want people to know the truth. 19 My goal is, and always has been, to help the IBO's. I tried to help by teaching them EFT. Amway's expert witness said that according to the 150 testimonials EFT had helped them. For this I was put on probation. I tried to help them by getting the starters kit price reduced so that it would be easier for them to sponsor others. For having discussions with members of the IBOAA regarding this issue my probation was extended and the terms of my probation tightened so that it was just a matter of time before my business was terminated. Now the only way I can help them is by fighting to reveal the truth about Amway and the likelihood of them being successful and maintaining a successful business. 20 I guess the first opportunity the media will have to pick up and report on this saga will be the Federal Court Contempt case on the 4 th April. This obviously could just be the first of numerous stories. 21 Just like the Americans and the Australians felt that they had to help the people of Iraq, I feel that I have to help the majority of IBO's worldwide who are at the lower levels of the business and who are being brainwashed, not told the truth, and used to generate incomes for both the IBO leaders and Amway. 22 The war that you guys have started is only just beginning. I have no doubt that as in any war there will be many casualties. My family is already a casualty. We have been hurt severely emotionally, psychologically and financially, but not killed. I will continue to fight to save other innocent victims suffering the same fate that I have suffered and to enable the truth to be revealed so that IBO's everywhere can make rational decisions about how they wish to spend their time and their money. 23 www.amwayystats.com is just one of the weapons I will use to disseminate the truth. At the moment I am preparing to go on the offensive next week. 24 Over the years Tony Greig has done everything in his power to fuck me and many others. 27 I believe God is in control. 62 The tenth charge alleges breach of Order 5(e)(i) - restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement that Mr Greig committed perjury or any statement to similar effect --- by Mr Chatham publishing the email of 2 April 2007. 63 The eleventh charge alleges breach of Order 5(f) --- restraining the respondents from publishing, whether via email, the world wide web, letter or otherwise, any statement to the effect of either Amway or Mr Greig has engaged in criminal conduct --- by Mr Chatham publishing the email of 2 April 2007 he asserted that Mr Greig had engaged in criminal conduct. 64 The document annexed and marked 'C' to the amended statement of charge annexed to the amended notice of the second motion is the email of 2 April 2007. 3 Cc Tony Greig, Peter Williams, Jim Payne . 6 For no other reason than just to get at me, he contacted the husband of a lady that I had had an affair with and persuaded both she and her husband to submit affidavits to the Arbitration. Full intimate details of the affair regarding her performing oral sex and her initiating having sex with me on two occasions were discussed in the open Arbitration proceedings. 7 He also got another woman to testify. She stated on oath in front of her husband that she had been having fantasies about having an affair before she ever met me and then after meeting me she started fantasizing about having an affair with me. We never had an affair except in her mind. 8 Years ago Amway was ordered by an Arbitrator to pay costs to Phil Ayoub, a very good friend of mine. Tony simply refused to pay the costs. I am sure Phil would also be happy to be interviewed by a TV presenter regarding this. 9 Tony bullied unmercifully both Diamond Peter Maddison and Diamond Stu Carseldine. Peter ended up resigning from Amway and Stu ended up suffering a massive stroke. 10 I am sure the above guys would also be celebrating the news if ever Tony was sentenced. 11 I guess Tony failed to tell Mr Thompson, his QC at the Arbitration, that it was actually information he had received from Kristen Cray regarding the EFT at the Summer Conference that he had acted on as stated in his latest affidavit. I am sure that if he had told Mr Thompson the truth at that time, Mr Thompson would not have instructed Tony to answer as he did. I am sure no lawyer would instruct his client to lie on oath. 12 I believe Tony knew exactly what he was doing at the Arbitration and that is why he refused to answer my question regarding who had complained about the EFT initially. 13 It will be interesting to see what others think when they also have the opportunity to view all the evidence. 14 I also realise that suicide is a possible option in the circumstances. 15 That will not prevent me revealing the truth in detail ultimately. 16 I believe most people would just conclude that he had obviously done something that he did not want to have to take responsibility [sic] for and could not bear to face the consequences of publically [sic]. 17 For years Tony has used his position with Amway to bully people. All of his actions have been condoned by Peter Williams and in some cases, by the two of you. 18 You have both viewed all the evidence and have obviously considered his actions as appropriate for an Amway/Quixtar employee. 66 I am unable to identify in the email of 2 April 2007 any statement that Mr Greig committed perjury or any statement to a similar effect. It follows, in my view, that the publication of the email of 2 April 2007 did not constitute a breach of Order 5(e)(i). 67 I am unable to identify in the email of 2 April 2007 any statement that Amway or Mr Greig engaged in criminal conduct or any statement to a similar effect. It follows, in my view, that the publication of the email of 2 April 2007 did not constitute a breach of Order 5(f). 69 The thirteenth charge alleges breach of Order 5(b) --- restraining the respondents from contacting IBOs in connection with activities of Amway and/or Mr Greig --- by Mr Chatham publishing the email of 12 April 2007. 70 The email annexed and marked 'D' to the amended statement of charge annexed to the amended notice of the second motion is the email of 12 April 2007. The cruise on the Enterprise V for having 9 in-country legs qualify at 21% for all 12 months in 1992/93 would have to have been one of the major highlights for me. This has meant that I have had zero income since then. Tom said something about them having made a commercial decision. To me it just seemed to be a case of pure greed. "Lets steal it from him while he is down and can't fight back. I simply cannot put in to words the hatred and loathing I now have towards Tom and others. It is quite possible that over the years to come you will gain some understanding of the hatred I now feel. I have nothing left to lose. I have many people who I thought were friends, but today I do not consider them friends, as many have stabbed me in the back. As I see it, about $12 million in future income over the next 20 years, has been robbed from my family and I. This income, which is still being generated, is currently going to other people. There is currently about $400,000 in income that I would have received in the last 7 months that has now clearly gone to other people. Steve Jakubenko, Tom Avelsgaard and others. I had agreed not to teach it at Seminars. I am now preparing to go on the offensive very soon. I believe this will occur soon. My understanding was that the trigger for the "holocaust" in the US was simply a negative TV program and then the honesty and integrity of the leadership being questioned. He said it took years to recover. Probably best to check with Bert exactly what happened. I believe the business overall suffered a 60% decline. Prospective IBOs and IBOs are simply not told the full story. All lines of sponsorship will be hurt. Wanted Trevor to continue to receive bonuses. Will result in financial loss for a significant number of IBO's. Is really fearful of the ramifications. The company should not underestimate the damage he can cause by revealing the truth. I think simply revealing the truth will have a devastating effect today. To say to IBOs "If I could build a big business then, you can build a big business today" is very clearly misleading and deliberately deceptive. What IBOs are not being told today is the fact that in a mature market it is much more difficult to sponsor people. They are not being told the truth about the number of Leaders that are no longer qualifying, or the fact that many that are still masquerading as Leaders are not even qualifying at the level below their Pin level. I also believe the truth will help you and your people to understand why I have acted as I have. If we did own our own business it would not be possible for the business to be simply taken from you, the income and bonuses that you had already qualified for not paid to you, the business could then be sold to someone else, and you receive none of the sale proceeds. To claim that we are business owners is nothing but a lie and will be readily seen to be so when the facts are explained to people. It is now simply a matter of a few dollars to make this all go away and for me to disappear quietly and never be heard from again. You are obviously going to need to contact the decision makers personally to express your view. The only point of disagreement now seems to be how many dollars I will receive under the agreement. Knowing the players involved, the annual turnover worldwide, the huge losses that could possibly occur, I am sure it is not really a money issue, I believe it is now simply an ego issue. The financial futures of the decision makers will not be affected in the slightest by the decision they make in this situation. "Holocaust" or "'Peace Treaty" will make no difference to them. I believe it will make a huge difference to you and to leaders all around the world though if the 'Holocaust' is not averted. I merely suggested a different dollar amount would be more appropriate than what was initially proposed. It really is just a few dollars that is standing between a "peace agreement" on one hand, and a "holocaust" on the other. It will not be win/lose. I will not be the only loser. I have had everything taken from me and actually have nothing left to lose. There is no downside to me and my family in this situation. It will be interesting to see whether others will feel the same way when the orders are lifted and I am able to tell the whole truth, I very much doubt Peter knows the full story. I know I certainly have not told him everything that has happened and I am sure no body else would have told him everything. If you really are leaders you will actually take action to influence the decision made by others and to protect your business. I would strongly suggest that you do not just allow Peter McKenna to express your views for you. Who knows what Peter will say? I am currently prevented by a Federal Court Order from telling you the truth. If no peace agreement is reached, I believe the Court Orders will soon be lifted and I will then be able to share with you and all members of your group exactly what has happened to me. Most of you did absolutely nothing about it. John Hargreaves. I can now see how vital it is to have numerous streams of income. I did not do this. My advice is don't make the same mistake I made. They are all IBOs. By publishing this email, it is said that Mr Chatham denigrated or disparaged Amway in alleged breach of Order 5(e)(iv). Reliance is placed on the email as a whole, and in particular paragraphs numbered 8, 11, 24, 25, 31, 34 and 38. For Mr Chatham it is said that nowhere in the email is 'Amway' mentioned; the complaints are directed against a company described as 'IDA'. 72 While it is true that there is no specific mention of 'Amway', it is also true that the references to 'IDA' are confined to paragraphs 5, 6 and 8. The references in the email to 'the business', in particular at paragraphs 24 to 38 inclusive, are clearly references to Amway's business and I am satisfied, having regard to the audience to which the email was published, that it would have the effect of denigrating or disparaging Amway in the eyes of that audience. 73 It follows, in my view, that there has been a breach of Order 5(e)(iv) by Mr Chatham, by the publication of the email of 12 April 2007. 74 I am also of the view that by publishing the email of 12 April 2007 Mr Chatham breached Order 5(b) by contacting IBOs in connection with the business activities of Amway. I find that the twelfth and thirteenth charges are proved. 76 It is clear to me that Mr Chatham acted deliberately in publishing the email of 12 April 2007 and intentionally included in that email the statements which I have found to prove the twelfth and thirteenth charges. He may not have intended to breach Orders 5(b) and 5(e)(iv) by publishing the email of 12 April 2007; indeed I would infer that his failure to mention 'Amway' by name in the email indicates an attempt on his part to avoid any such breach. On the other hand, that failure does not warrant characterisation of the contempt as merely technical. I find that he intended to denigrate or disparage Amway and the way it currently conducts its business activities in the eyes of those to whom he published the email of 12 April 2007, but to do so in a way which did not breach Orders 5(b) and 5(e)(iv). The fact that he was prepared to take the risk of failing to avoid breaches of these orders is obviously a consideration which is relevant in deciding what is the appropriate penalty. 77 In this regard I did indicate to the parties that if it was necessary, I would hear them on punishment. That said, having regard to the nature of the contempt and the conduct involved, nothing but a pecuniary penalty would, in my view, be appropriate. 78 I also indicated that in those circumstances I would hear the parties on costs. The need to do this is more so by reason of my finding that eleven of the thirteen charges of contempt have not been proved. The applicants did not, correctly in my view, press for the retention of Orders 5(b) and 5(c) and they will be set aside. By the time of the hearing of the motion, Mr Chatham had ceased to be an IBO more than six months prior to the hearing. 80 I am also of the view that Orders 5(d), 5(e) and 5(f) should be set aside. They no longer, if they ever did, serve any utility in preserving the status quo; that aside, they are an impediment on Mr Chatham's freedom of speech whatever the repercussions may be as to how he exercises that right. 81 With the further effluxion of time since the hearing of the motion, the reasons for setting aside Orders 5(d), 5(e) and 5(f) are only made more compelling. I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | misleading or deceptive conduct representations made by independent business organisation or distributor in communications against international direct-selling business application for substantive relief for alleged contraventions of s 52 declaration and damages trade practices act 1974 (cth) ss 52 , 82 , 87 motions for contempt of interlocutory orders of the court interlocutory orders to restrain independent business organisation or distributor from publishing statements against international direct-selling business applicable principles as to contempt whether wilful disobedience requires more than a deliberate act trade practices civil procedure |
It is common ground that he married Ms Channy Tong, who is an Australian citizen, in Cambodia on 18 April 2001. Mr Chey applied for an Australian visa on 3 September 2002. He made a combined application for a Partner (Migrant) (class BC) (subclass 100) visa ("permanent visa") and a Partner (Provisional) (class UF) (subclass 309) visa ("provisional visa"). His wife, Ms Tong, was his sponsor. On 10 September 2002, Mr Chey was granted the provisional visa he sought. A month later, on 9 October 2002, he arrived in Australia. 2 Mr Chey has, however, been denied a permanent visa. This was first refused him on 3 September 2004, when a delegate of the first respondent determined that he was not satisfied that Mr Chey was the spouse (as defined in the Migration Regulations 1994 (Cth) ("the Regulations ")) of Ms Tong. On 22 September 2004, Mr Chey applied to the Migration Review Tribunal ("the Tribunal") for review of the delegate's decision, but, on 3 March 2006, the Tribunal affirmed the delegate's decision. On 30 March 2006, Mr Chey filed a 'show cause' application in the Federal Magistrates Court challenging the Tribunal's decision. A Federal Magistrate dismissed this application on 6 September 2006. Mr Chey appeals from the judgment of the Federal Magistrates Court. There are no criteria to be met at the time of application. There are specific criteria to be met by the visa applicant at the time a decision is made. (b) On 12 August 2003, the Department wrote to Mr Chey advising that it had received information that the relationship had ceased and inviting him to provide additional information and documentation to enable further consideration of his application for a permanent visa. (c) On 11 November 2003, Ms Tong telephoned an officer of the Department, who recorded that she stated that Mr Chey wanted her to go to Melbourne to "sign papers" and would be sending her a ticket; and that she was scared about what he might do to her or her family and would be going to Melbourne. (d) On 3 December 2003, Erskine Rodan & Associates ("Erskine Rodan"), who acted on behalf of both Mr Chey and Ms Tong, provided further information to the Department, this time asserting that they remained in a genuine spousal relationship and that they had lived apart because Mr Chey could not find work in Sydney. The documentation supplied included statutory declarations made by Mr Chey and Ms Tong. (e) In September 2004, as noted previously, the first respondent's delegate refused to grant Mr Chey a permanent visa and he applied to the Tribunal for review of this decision. (f) On 8 December 2004 and 22 August 2005, Erskine Rodan provided further information to the Tribunal in support of their clients' claim to have a genuine spousal relationship. (g) On 22 September 2005, pursuant to s 359 of the Migration Act 1958 (Cth) ("the Act "), the Tribunal wrote to Mr Chey inviting him to provide additional information, which the Tribunal received on 12 October 2005. (h) On 25 November 2005, an officer of the Tribunal spoke to Ms Tong (at the Tribunal's request) concerning the disclosure to Mr Chey of information she had given the Department about him in 2003. Ms Tong said that she did not want this information disclosed to Mr Chey because she "did not want to ruin their relationship". She also advised that she and Mr Chey had a child. (i) On 2 December 2005, pursuant to s 359A of the Act , the Tribunal wrote to Erskine Rodan as Mr Chey's migration agent inviting Mr Chey to comment on information relevant to the existence of a genuine spousal relationship. This information was the information that Ms Tong had given to the Department in 2003. (j) On 5 December 2005, the Tribunal invited Mr Chey to attend a hearing on 19 January 2006. (k) By letter dated 16 December 2005, received at the Tribunal on 20 December 2005, Erskine Rodan, on behalf of Ms Tong, responded to the Tribunal's letter of 2 December 2005. Amongst other things, Erskine Rodan stated that whilst "there were very serious problems in the marriage from late 2002 until the couple settled together in Melbourne in late 2003", the marriage was "now going well". Further, Ms Tong was "extremely concerned" about the effect of disclosing her communications with the Department on her relationship with her husband and, on this account, the information referred to in the s 359A letter had not been conveyed to him. Erskine Rodan asked the Tribunal to hear Ms Tong's evidence on this issue in the absence of Mr Chey. (l) On 23 December 2005, the Tribunal replied to Erskine Rodan, stating that it no longer regarded the firm as Mr Chey's representative on account of the failure to provide Mr Chey with the Tribunal's s 359A letter; and that it would "be canvassing the material...at the hearing" in Mr Chey's presence. (m) Also on 23 December 2005, Erskine Rodan replied, stating, amongst other things, that the relevant documents had been given to Mr Chey and that their contents had been explained to him. (n) On 11 January 2006, Mr Chey and Ms Tong each lodged further statutory declarations with the Tribunal, in which they responded to the information sent by the Tribunal in its s 359A letter. Mr Chey denied ever threatening Ms Tong or her family and asserted that he did not ever consider the marriage to be over. Ms Tong affirmed that she had not been threatened by Mr Chey, but was angry with him because she believed that the marriage was not working out and that he had a girlfriend in Cambodia. Ms Tong went on to say that things had got better after they settled in Melbourne and after the birth of their son. (o) On 19 January 2006, the Tribunal held a hearing at which Mr Chey, Ms Tong, two of their friends and Mr Chey's mother gave evidence with the assistance of an interpreter and a representative of Erskine Rodan. 7 The Tribunal stated that it was "perplexed by the inconsistencies in the evidence", which it said supported three different versions of events. In summary, these versions, as described by the Tribunal, were: (1) Mr Chey was not committed to a shared life with Ms Tong and was exploiting her for migration purposes; (2) Mr Chey was committed to a shared life with Ms Tong; or (3) Mr Chey was committed to shared life with Ms Tong but at the time of the July 2003 letter to the Department and her telephone conversation in November 2003 with a Departmental officer, she thought, without justification, that Mr Chey was exploiting her for migration purposes. The Tribunal rejected the submission made on behalf of Mr Chey and Ms Tong that Ms Tong made false accusations in July and November 2003 out of anger and jealousy. The Tribunal found that, if they were initially in a genuine spousal relationship, it deteriorated quickly after Mr Chey's arrival in Australia; that Mr Chey and Ms Tong separated in March 2003; and that Ms Tong's conduct in 2003 was the behaviour of a person frightened of Mr Chey. As indicated below this undermines their credibility as witnesses of the history of their relationship and the nature of their relationship at the time of this decision. • Mr Chey and Ms Tong married each other in Cambodia in 2001 and, at the time of decision, remain married under a marriage that is recognised as valid for the purposes of the Act . • Mr Chey and Ms Tong had not accumulated major assets or incurred significant liabilities together but it would be unreasonable to expect them to have done so given limited financial resources. The Tribunal was not satisfied that a joint bank account was "not opened purely to counter the Department's assertion...that the relationship had ceased". The Tribunal was also not satisfied that Mr Chey's nomination for superannuation purposes of Ms Tong as a beneficiary reflected a genuine combination of assets. • The Tribunal was not satisfied that Mr Chey and Ms Tong had resided together since Ms Tong moved to Melbourne in November 2003 to assist him with "stage 2" of his visa application. Even if the Tribunal accepted that they were and are residing together, it was not satisfied that the resumption of cohabitation reflected a genuine relationship and was not the product of ongoing duress by Mr Chey on Ms Tong to see the process culminate in the grant of a visa. • The evidence in relation to the social aspects of the relationship was equivocal. • Mr Chey had intimidated Ms Tong with threats of violence against her and her family in Cambodia should she notify the Department about the end of the relationship in March 2003. Even if Mr Chey and Ms Tong were in a spousal relationship at the time of the application and at the time of Mr Chey's arrival in Australia, it had ceased in March 2003. • From March 2003 until November 2003, Mr Chey and Ms Tong were not in a spousal relationship because elements of that relationship were missing. The Tribunal found that they resumed cohabitation in late 2003 in response to notification from the Department that it had become aware of the end of the relationship. The Tribunal was not satisfied that the "the resumption of cohabitation was entered into voluntarily by [Ms Tong]" and found that Ms Tong was intimidated by threats to move to Melbourne. 9 The Tribunal noted that Mr Chey and Ms Tong had a child together, which it considered was "usually a very strong indicator of commitment" as well as other factors that supported the appellant's case, but said that these matters were "outweighed by the other evidence". In light of the intimidation of [Ms Tong] by [Mr Chey] and the parties' preparedness to make false statements in statutory declarations, the Tribunal is not satisfied that the time of decision evidence is reliable. The Tribunal is not satisfied that [Mr Chey's] continued association with [Ms Tong] reflects his commitment to a shared life with her and is not merely a façade maintained to secure permanent residence. His Honour found that the Tribunal had given Mr Chey a sufficient opportunity to present his case and that there was therefore no breach of s 360 of the Act , as Mr Chey alleged. His Honour rejected the proposition that the Tribunal had not allowed Mr Chey to put his case. There was no indication that it sought to exclude material filed on his behalf. Further, Mr Chey's representative was given an opportunity to clarify or revisit points arising from his evidence, and both Mr Chey and Ms Tong were given the opportunity to make further submissions at the conclusion of the evidence. 11 The Federal Magistrate also held that the Tribunal had dealt adequately with Mr Chey's claims, in particular in relation to the child of the relationship, and that it had correctly identified the task it was undertaking. His Honour noted that the Tribunal expressly referred to the witnesses' evidence and held that, given the inconsistencies in that evidence, it was open to the Tribunal to reach the conclusion that it did on the issue of credit. His Honour found that the Tribunal expressly considered the statutory requirements, and in doing so correctly identified the task that it was required to undertake. Additionally, whilst his Honour agreed that the Tribunal did not give the birth of a son to Mr Chey and Ms Tong "extensive attention", he did not find this a sufficient basis on which to impute error. So far as his Honour was concerned, Mr Chey's complaints in this regard went to weight, which was a matter solely for the Tribunal. 12 In relation to the exchange of letters in December 2005, the Federal Magistrate found that both the Tribunal and Erskine Rodan were seeking to attain an end that could fairly be seen to be reasonable. His Honour also held that, although there appeared to have been some tension between the Tribunal and Mr Chey's representative during the review process, looking at all the material, a fair minded lay observer would not reasonably apprehend that the Tribunal did not bring an impartial mind to the resolution of the matter for decision. 13 Finally, the Federal Magistrate found that the Tribunal expressly referred to the statutory requirements and dealt adequately with reg 1.15A(3) of the Regulations . 1.15A(3)(a) to (d) of [the Regulations ] which matters were relevant considerations that it was bound to take into account. Ground 1 challenges the conduct of the hearing. Grounds 2 and 3 challenge the way the decision was made. Ground 4 alleges reasonable apprehension of bias. Ground 5 requires consideration of what the Tribunal must do in connection with reg 1.15A(3) of the Regulations . This was because the Tribunal did not identify the critical issue upon which its decision turned in order that the appellant might present evidence and argument about it. The appellant's argument accepted that it was proper for the Tribunal to question him and Ms Tong on matters affecting their credit and, in particular, to question them about what had occurred in 2003 and Mr Chey's knowledge of Ms Tong's family. Counsel argued, however, that, examination of the transcript showed that, in the course of the hearing, the Tribunal barely addressed the critical question. This was whether there was a genuine spousal relationship at the time of the decision between Mr Chey and Ms Tong. As a result, Mr Chey was denied the opportunity properly to put his case. In the appellant's submission, at the hearing the Tribunal did not address what had happened to the appellant and Ms Tong over the previous two years (that is, in 2004 and 2005) and the appellant was not challenged about these matters. In the appellant's submission, the fact that, in response to the Tribunal, the appellant said that he had nothing further to add and that he did not make any subsequent application to provide further materials did not cure the essential defect in the hearing. 17 Counsel for the first respondent submitted that there was no breach of s 360(1) , bearing in mind that the Tribunal invited Mr Chey to a hearing, at which he was given the opportunity to give evidence and present any arguments that he considered relevant to his review application. He was given the opportunity to address, at the hearing, the issues that arose in relation to the decision under review. The respondent specifically noted that Mr Chey was asked at the hearing whether he wanted to add anything further and that he made no application for the admission of any more evidence. According to the first respondent, the Tribunal was entitled to focus at the hearing "on those matters it considered of relevance in considering whether the parties were in a spousal relationship as at the date of its decision" (emphasis original). 18 The parties' submissions as to the reach of s 360(1) of the Act require some consideration as to the nature of the obligation that the provision imposes. The Act , in s 360(1) , requires the Tribunal to "invite the applicant to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review". It is convenient to note here that obligations under s 360(1) are equivalent to the obligations imposed on the Refugee Review Tribunal by s 425(1). The Tribunal is not bound to extend an invitation to an applicant under s 360 (cf s 425) , if it considers that "it should decide the review in the applicant's favour on the basis of the material before it": see ss 360(2) and 425 (2). 19 The Tribunal's decision is a "privative clause decision" within the meaning of s 474 of the Act . This Court cannot set the decision aside except for jurisdictional error: see Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2 ; (2003) 211 CLR 476 at 506-508 and 511 per Gaudron, McHugh, Gummow, Kirby and Hayne JJ. A breach of s 360(1) constitutes jurisdictional error: see, for example, Minister for Immigration and Multicultural and Indigenous Affairs v SCAR [2003] FCAFC 126 ; (2003) 128 FCR 553 (" SCAR ") at 561 per Gray, Cooper and Selway JJ. 20 The authorities establish that, where the Tribunal is not minded to make a decision on the papers in favour of an applicant, s 360(1) requires that there not only be an invitation but also the hearing to which the invitation refers, which affords an opportunity to the applicant to present evidence and arguments to the Tribunal. Although s 360(1) focuses on the invitation, as opposed to the subsequent hearing, the hearing that s 360(1) contemplates must take place and, in substance, afford an opportunity to present evidence and arguments on the issues arising in relation to the decision under review. 21 Thus, the Full Court in SCAR dismissed an appeal from a judge who had granted relief by way of certiorari in circumstances in which, unknown to the Tribunal, on account of his father's recent death, at the time of the hearing, the review applicant was suffering from extreme distress. The Full Court had regard to the obligation that s 425(1) (and therefore s 360(1)) imposed and acknowledged, at 560, that the invitation to attend a hearing "must not be a hollow shell or an empty gesture". The statutory obligation upon the Tribunal to provide a 'real and meaningful' invitation exists whether or not the Tribunal is aware of the actual circumstances which would defeat that obligation. In any event SCAR remains binding on me, as on other judges of this Court at first instance: also cf NAQF v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 781 ; (2003) 130 FCR 456 (" NAQF ") at 475-476 per Lindgren J and SZBII v Minister for Immigration and Multicultural Affairs [2006] FCA 1477 at [26] per Cowdroy J. In NAQF , at 476, Lindgren J referred to SCAR and observed, by way of illustration of the nature of the s 360(1) obligation, that there would be a breach of this provision "[i]f, at an MRT hearing, the member were to inform the applicant that it was not necessary for the applicant to give evidence or present arguments on such an issue, which, it transpired, in fact remained alive, and thereby dissuaded the applicant from exercising his or her right to give evidence or to present arguments on that issue". 23 SCAR is consistent with the approach adopted more recently by the High Court in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592 (" SZBEL "). SZBEL confirms that conformity with s 360(1) requires the provision of an in-substance opportunity to give evidence and present submissions. The applicant is to be invited 'to give evidence and present arguments relating to the issues arising in relation to the decision under review'. The reference to 'the issues arising in relation to the decision under review' is important. 24 The issues to which ss 425(1) and 360 (1) refer are to be identified by the tribunal: see SZBEL at 600. That indication may be given in many ways. It is not necessary (and often would be inappropriate) for the tribunal to put to an applicant, in so many words, that he or she is lying, that he or she may not be accepted as a witness of truth, or that he or she may be thought to be embellishing the account that is given of certain events. The proceedings are not adversarial and the tribunal is not, and is not to adopt the position of, a contradictor. But where...there are specific aspects of an applicant's account, that the tribunal considers may be important to the decision and may be open to doubt, the tribunal must at least ask the applicant to expand upon those aspects of the account and ask the applicant to explain why the account should be accepted. It does mean, however, that the Tribunal must conduct itself in a way that takes account of the inquisitorial nature of its review process: cf ss 361(3) , 362 (2) and 363 (3). 25 In the circumstances of SZBEL , the Full Court held that the review applicant was not on notice that two aspects of his account were in issue because the primary decision-maker had not based his decision on them, and the Tribunal did not identify them as important issues: see SZBEL at 602. The Full Court held that the Tribunal did not give the appellant a sufficient opportunity to give evidence, or make submissions, about these issues. 26 I accept, as the first respondent submitted, that there is no scope for the operation of the common law notions of procedural fairness outside the specific provisions of Div 5 of Pt 5 of the Act because s 357A applies in the present case: cf ss 357A and 422B ; see also Minister for Immigration and Multicultural Affairs v Lat [2006] FCAFC 61 ; (2006) 151 FCR 214 at 225-226 per Heerey, Conti and Jacobson JJ and NKBT v Minister for Immigration and Multicultural Affairs [2006] FCAFC 195 at [85] per Young J with whom Gyles and Stone JJ agreed. I also accept, as the first respondent submitted, that the reasoning in the joint judgment in SZBEL refers to general principles of procedural fairness. This is unsurprising because s 422B (which is equivalent to s 357A) did not apply in SZBEL . I do not accept, however, that, on account of this, I should have no regard to SZBEL in this case. As I have sought to show, the reasoning in SZBEL in fact depends on the language of s 425(1) , which was said to define the nature of the opportunity to be heard. 27 In this case, pursuant to s 360(1) , the Tribunal invited Mr Chey to appear before it to give evidence and present arguments. There was a hearing at which Mr Chey, Ms Tong, their friends, and Mr Chey's mother gave evidence. Mr Chey and Ms Tong were accompanied at the hearing by a representative of Erskine Rodan. No-one suggests that the Tribunal actively endeavoured to exclude any material that the appellant sought to present. I accept, however, as the appellant submitted, that the authorities show that these facts, though important, are not necessarily dispositive. 28 Almost the entire focus of the hearing in this case was on the communications made by Ms Tong to the Department in July and November 2003, and the events around this time. The transcript of the hearing, which covers some 73 pages, shows that the Tribunal directed almost all its questions to the events of 2003 and, in particular, Ms Tong's communications with the Department in July and November that year. This was the subject matter of almost all the questions that the Tribunal directed to Mr Chey, although, in the course of this line of questioning, the Tribunal also asked some questions as to how much Mr Chey knew about her family. Virtually all the Tribunal's questions of Ms Tong were also addressed to her communications with the Department and to relevant events in 2003, and to a lesser extent to her relationship with her family. When was your child born? The Tribunal did not ask either Mr Chey or Ms Tong about their relationship in the two years after Ms Tong's 2003 communications with the Department, which preceded the hearing. It did not ask her about their living and working arrangements during this period, or about the effect of significant events, such as the birth of their child, on the relationship. The Tribunal asked very little of the friends who attended to give evidence, although they were both in a position to comment on the relationship over the previous two years. 29 I accept, as the appellant submitted, that critical issues for the Tribunal were whether at the time it came to make its decision (March 2006) it was satisfied that Mr Chey and Ms Tong had a mutual commitment to a shared life together and that their relationship was genuine and continuing. At the time of the primary decision , in September 2004, the first respondent's delegate had determined these issues against them. In a broad sense, the appellant ought to have been aware of the nature of the issues that might arise on review. The Tribunal's s 359 letter ought to have confirmed this for them. Indeed, the documentary material lodged with the Tribunal showed that Mr Chey and Ms Tong appreciated that their financial, household and social arrangements were relevant. Further, given the Tribunal's s 359A letter, they were on notice that Ms Tong's 2003 communications were relevant too. Since, however, almost one and a half years had passed since the delegate's decision, the body of evidence concerning their spousal relationship had necessarily changed (for example a child had been born). Hence, the issues arising in relation to the decision under review (as at the date the Tribunal made its decision) were likely to differ to some extent from the issues that concerned the delegate when the primary decision was made. 30 At the hearing the Tribunal was required to identify the issues arising in relation to the decision under review, in order that the review applicant (here, Mr Chey) might present evidence and argument about them. As it happened, however, the overwhelming focus of the hearing was on the events of over two years earlier. Almost the only matters addressed at the hearing concerned Ms Tong's communications in 2003 and the events relevant to it. Plainly enough, this was not the only issue arising in relation to the decision under review, although, from the Tribunal's perspective, it was an important one. Other issues arose concerning Mr Chey's and Ms Tong's financial and living (including household) arrangements as at the date of the decision, as well as the significance, in terms of commitment, of the birth of their child and other relevant matters. There were also the social aspects of the relationship to be considered as at the date of the decision. This much is made plain by the Tribunal's reasons for decision, in which it made a number of adverse findings against Mr Chey (and Ms Tong) on these matters. At the hearing, the Tribunal did not, however, identify these matters as of potential importance to its decision, in order that the appellant might have the opportunity to expand and explain why his account should be accepted. This was not, moreover, a case in which the Tribunal's statements or questions showed that everything the appellant put forward was in issue. On the contrary, by focusing on one subject only, the appellant (and Ms Tong) might have been led to believe (mistakenly) that if they satisfied the Tribunal about it, then the Tribunal would be satisfied about the remaining issues in the case. Put another way, the appellant and Ms Tong might have been misled to believe that, so far as the Tribunal was concerned, almost the only obstacle in their path was the information given by Ms Tong to the Department in 2003. Save for the matter of Ms Tong's family, the Tribunal did not identify that it had any issue with Mr Chey's or Ms Tong's account of their life together in 2004 and 2005, including their financial, household or social arrangements, such that the Tribunal would reject their "date of decision" evidence, as it did. 31 In this case, the Tribunal did not mislead the appellant in the way contemplated by Lindgren J's example in NAQF (see above at [22]). It has, however, deprived the appellant of an in-substance opportunity to present evidence and argument as effectively as the conduct at issue in SZBEL . The Tribunal in this case identified only one subject as an issue arising in relation to the decision under review. This subject, Ms Tong's communications in 2003, monopolized the Tribunal's attention with the result that it did not identify for the appellant the other issues arising on the review, in order that the appellant might address them by evidence or argument. This constituted a breach of s 360(1) of the Act and jurisdictional error. 32 The fact that the appellant was assisted at the hearing by Erskine Rodan's representative does not diminish the force of the appellant's criticism of the hearing. The representative's participation in the hearing was significantly constrained by the Act and, although the representative protested about the narrow focus of the Tribunal's inquiry, there was little more than the representative could usefully have done. Section 366A(2) denied the representative the right to present arguments or to address the Tribunal "unless the Tribunal [were] satisfied that, because of exceptional circumstances, [she] should be allowed to do so". Bearing this in mind, whether or not a review applicant has assistance, the Tribunal is obliged to provide for a hearing on "the issues arising in relation to the decision under review", which in a case such as this obliged it to identify the issues in order that the review applicant would have an opportunity to present evidence and argument on them. 33 In answer to the representative's criticism of his narrow focus, the Tribunal member referred to the material already in the Tribunal's possession and to the fact that he had previously asked for further information in a letter sent to the appellant under s 359 of the Act . He commented that, "I've received the evidence. So I didn't think that I had to go over that again. " This did not meet the point. The appellant's case was not that he had been stopped before the hearing from lodging material for the Tribunal's consideration. It was that the Tribunal had not identified what it saw at the time of the hearing as the issues arising on the review, in order that the appellant might present evidence and argument about them at the hearing. 34 Further, I accept that appellant's submission that this defect was not cured by the Tribunal's addressing a general invitation to Mr Chey at the conclusion of the hearing to add anything further that might occur to him. The timing and context made it clear enough that the Tribunal was not inviting Mr Chey, through his interpreter, to give any further evidence. Moreover, unless the Tribunal had identified what it saw as the issues arising, there was nothing that the appellant might usefully add, either at or after the hearing. If it matters, I would not regard this submission as a true alternative to the s 360 submission (considered above at [16]-[34]). Counsel argued that the Tribunal did not address all the witnesses' evidence, and submitted that matters relating to the birth of the child to Mr Chey and Ms Tong were not properly considered. The Tribunal's consideration of the appellant's case as regards significant matters such as this was, so counsel argued, so perfunctory that it did not amount to consideration of his claims at all. 36 Counsel for the first respondent argued that the question of whether a person is a "spouse" is essentially a question of fact and evaluation for the decision-maker. The first respondent submitted that the Tribunal's reasons disclosed that it considered the matters required by reg 1.15A(3) before deciding that it was not satisfied that the appellant was in a spousal relationship with Ms Tong at the date of its decision. Counsel for the first respondent characterised the appellant's complaint as being with the Tribunal's process of reasoning on issues of fact, and submitted that the appellant's argument was simply an invitation to review the merits of the Tribunal's decision. Counsel argued that the Tribunal was not overborne by issues going to credit but properly considered matters relevant to the assessment of credit and, in consequence, made adverse credit findings as it was entitled to do. Further, referring to a passage in the judgment of Bennett J in SZBCE v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 697 at [31] , counsel for the first respondent submitted that "there was no particular threshold that was required to be satisfied before the Tribunal was entitled to disbelieve the claims advanced by the appellant". 37 The Tribunal's reasons for decision were detailed. They recited most of the evidence that had been given by Mr Chey and Ms Tong. I accept, as the first respondent submitted, that the question whether Mr Chey was the "spouse" of Ms Tong was essentially a question of fact. There may be errors in the Tribunal's reasoning in finding facts, or errors in the fact-finding, but this will not amount to jurisdictional error (unless there is error in the finding of a jurisdictional fact): see Re Minister for Immigration and Multicultural Affairs; ex parte Cohen [2001] HCA 10 ; (2001) 177 ALR 473 at 481-482 per McHugh J. The appellant's submissions in this part of his case took issue with the Tribunal's process of reasoning on issues of fact. No jurisdictional error is made out under this head. Amongst other things, he referred to the Tribunal's letter of 23 December 2005 and the transcript of the hearing. 39 Counsel for the first respondent submitted that there is nothing in the Tribunal's approach to indicate that it acted with prejudgment. Counsel contended that no conclusion as to an apprehension of bias ought to be drawn based merely on the fact that the transcript of the Tribunal hearing showed some tension between the Tribunal member and the Erskine Rodan representative. 40 The High Court in Re Refugee Review Tribunal; ex parte H [2001] HCA 28 ; (2001) 179 ALR 425 discussed the test for apprehended bias in administrative proceedings. That formulation owes much to the fact that court proceedings are held in public. There is some incongruity in formulating a test in terms of 'a fair-minded lay observer' when, as is the case with the tribunal, proceedings are held in private. Whether or not that be the appropriate formulation, there is, in our view, no reason to depart from the objective test of possibility, as distinct from probability, as to what might have been done. To do otherwise, would be to risk confusion of apprehended bias with actual bias by requiring substantially the same proof. 41 For the reasons I am about to state, no case of apprehended bias is made out. The Tribunal's letter of 23 December 2005 indicated that the Tribunal was dissatisfied with Erskine Rodan's conduct as the appellant's representative, not that it had taken an adverse view of the appellant's claims. I would not regard the Tribunal's direct communication with Ms Tong as amounting to evidence of prejudgment on the Tribunal's part, as the appellant suggested at one stage: cf with s 379G(4) which permits the Tribunal to communicate orally with a review applicant providing it gives the "authorised recipient" notice of the communication. There is no other indication of prejudgment on the Tribunal's part prior to the hearing. 42 At the hearing, the Tribunal member was irritated, even annoyed, by the appellant's representative's conduct, especially in interrupting him. The transcript shows that the Tribunal member and the appellant's representative disagreed about various matters relating to the conduct of the hearing. Relatively early in the hearing, the representative expressed her disquiet about the Tribunal member's questions to Mr Chey concerning Ms Tong's family. The Tribunal member asked her to refrain "from interrupting my questioning. I'm asking those questions for a reason. " When the representative persisted, the member said: "I'm not going to respond to that. I'm in the middle of questioning. Now, I'm not going to be told what questions to ask and what questions not to ask, and I'm not going to be interrupted. Things are difficult enough as it is, I'm going through a number of matters. I would appreciate your cooperation in refraining from interrupting me any further. Now, I'm not going to be told what questions to ask and what questions not to ask, and I'm not going to be interrupted. Things are difficulty enough as it is, I'm going through a number of matters. If you, at the end of the hearing, feel that there's been a jurisdictional error then you would be aware of the avenues open to you. Now, that to me is stepping beyond your role, quite clearly, as a representative. That's not my perception. In fact, my perception is it's hindering me and I'll ask you to refrain from doing that. The member responded "Well, I'm asking --- look, I'm not going to justify every question that I ask". There was a similar exchange between the Tribunal and the representative during Ms Tong's evidence, in the course of which the representative said: "You're misleading the girl...You're going over and over the same thing and misleading her". The Tribunal responded that "I'm revisiting it and you're interrupting me". 44 On the basis of these exchanges, a fair-minded lay observer would doubtless conclude that the Tribunal and the representative were each attempting to discharge their duties in the way they thought proper. Whilst the Tribunal member was irritated, even annoyed, he did no more than seek to confine the representative to what he saw as her proper role. She, on the other hand, sought to do no more that assist the appellant to the best of her ability within the constraints of the Tribunal's statutorily-mandated process. In this context, there is no basis for saying that a fair-minded lay observer might reasonably apprehend that the Tribunal might be biased against the appellant. 45 It might be said that the Tribunal's emphasis on Ms Tong's 2003 communications with the Department, to the exclusion of other matters, might suggest to an observer that the Tribunal might have concluded prior to the hearing that the appellant's claim to a genuine spousal relationship was bogus and he had closed his mind to any other possibility. But I do not think that this would be the view of a fair-minded observer, who was properly informed. I accept that the Tribunal's concentration on the events of 2003 might have left Mr Chey with the sense that he had not been given a fair hearing. I doubt, however, that a fair-minded observer, properly informed, might reasonably apprehend that the Tribunal might not bring an impartial mind to the review, on this account alone or taken with the other matters already mentioned. Such an observer would know that it was to be expected that the Tribunal would question the appellant about such matters, in order that the appellant might have the opportunity to respond. Knowing this, I do not consider that a fair-minded observer might draw any inference that the Tribunal might have a closed mind, notwithstanding the Tribunal did not address any other matters (apart from issues relating to Ms Tong's family). 46 The reasonable apprehension of bias ground is thus not made out. Regulation 1.15A(3) specifies consideration of various other matters under these broad headings. In written submissions, counsel argued that "the Tribunal did not address this as a relevant consideration, rather than as a piece of evidence to be weighed in the balance with other evidence". The appellant submitted that the Tribunal "failed to appreciate the significance of the fact of there being a child of the relationship". In written submissions, expanded on at the hearing of the appeal, the first respondent contended that "[t]he Tribunal was not required to make express findings about each of the matters referred to under each of the subheadings of reg 1.15A(3) or to give express consideration to all material before it, in order to complete its jurisdictional task". 49 The Tribunal is bound to take into account the considerations set out in reg 1.15A(3): see Nassouh v Minister for Immigration and Multicultural Affairs [2000] FCA 788 , cited with approval in Zhang v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 30 (" Zhang ") at [15] per Moore, Mansfield and Dowsett JJ. Failure to do so will amount to jurisdictional error: see Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12 at 24 per Gummow and Hayne JJ. On the other hand, it is important to review the Tribunal's reasons to be satisfied that the Tribunal has in fact had regard to the matters which it must address. The routine citation of statutory provisions or authorities will not necessarily demonstrate that regard. The Tribunal discussed "the evidence and issues" relevant to a spousal relationship under headings appropriate to a discussion relevant to reg 1.15A(3). Under the headings "[t]he social aspects of the relationship" (reg 1.15A(3)(c)) and "[t]he nature of the persons' commitment to each other" (reg 1.15A(3)(d)), the Tribunal referred to the birth of the child to Mr Chey and Ms Tong. The reference in connection with subparagraph (d) is more detailed than in connection with subparagraph (c). In connection with subparagraph (d), the Tribunal made the comment referred to previously that "the parties have had a child together, [which was] usually a very strong indicator of commitment", although not, for the reasons stated by the Tribunal, to be treated as such in the present case. The Tribunal subsequently commented, that "[a]lthough the relationship resumed to the extent that the sponsor has had a child the Tribunal [was] not satisfied that the relationship at the time of this decision has the degree of mutual support and companionship contemplated by regulation 1.15A". 51 The Tribunal made no finding about "any joint responsibility for care and support" of a child, of the kind that might result from a consideration of this particular matter. It does not, however, necessarily follow from this that the Tribunal did not address this specific matter, although the omission may support such a conclusion. As Dowsett J said in Davis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 686 at [35] , reg 1.15A(3) does not require the Tribunal to make specific findings concerning the matters to which it refers. Whether the omission is indicative of jurisdictional error depends very largely on the circumstances of each case. 52 Zhang is illustrative of a case in which the failure to make relevant findings did not lead to a holding that the decision-maker had failed to take into account the requisite matters: see Zhang at [19]-[20]. The decision shows that it is unnecessary for a decision-maker to "laboriously evaluate seriatim each of the considerations in reg 1.15A(3)". In that case, it was enough that the Tribunal considered the relevant evidence under the topics referred to in the regulation (as the Tribunal did in the present case). 53 Examination of the Tribunal's reasons in the present case and, in particular, its consideration of the evidence relevant to reg 1.15A(3), also shows that the requisite matters were considered and are reflected in the Tribunal's findings to the extent they are relevant. Under the heading, "[t]he nature of the household" (the subject of reg 1.15A(3)(b), the Tribunal made its finding that it was not satisfied that the appellant and Ms Tong were residing together in Melbourne (and if they were, then it was not satisfied that the relationship was genuine). This was relevant, amongst other things, to reg 1.15A(3)(b)(ii). In light of this finding, it was open to the Tribunal to determine that it was unnecessary to say anything specifically about either any joint responsibility for care and support of their child (the subject of reg 1.15A(3)(b)(i)) or shared responsibility for housework (the subject of reg 1.15A(3)(b)(iii)). Accordingly, I would not infer from the Tribunal's failure to mention the issue of joint child care and support that the Tribunal did not consider it or any other matter it was bound to consider. 54 Jurisdictional error is not established under this ground. The appeal should therefore be allowed. I would make orders accordingly. | application for partner visa appeal from federal magistrate whether tribunal breached s 360 whether tribunal failed to carry out its statutory task whether reasonable apprehension of bias whether failure to consider relevant considerations immigration |
2 The first application is that I grant leave for the applicants to file and serve written submissions by tomorrow. 3 The second application is that I adjourn the hearing of oral submissions until such time as written submissions have been filed and read by the respondents and the Court. 4 The last sitting day of this matter was 16 May 2007, almost three weeks ago. On 11 May 2007 I ordered the parties to each file and serve written submissions in this matter by 25 May 2007, with a view to the parties returning on 5 June 2007 to make oral submissions to the Court. On 16 May 2007 Mr Perry asked if the filing date for written submissions could be extended to 28 May 2007, to which request I agreed. 5 On 28 May 2007, the solicitors for the respondents filed written submissions as ordered. 6 On 28 May 2007, my associate received a faxed letter from the solicitors for the applicant, Lynch & Company stating that their written submissions were incomplete and unlikely to be completed until 1 June 2007. They therefore sought an extension until 5.00 pm on 1 June 2007 to complete this task. The sheer volume of both exhibits and transcript requiring analysis. 2. The necessity to undertake detailed credit analysis of each witness. 3. The complexity and extent of the legal issues raised and the necessity to refer to relevant and recent case law in the submissions. The resources necessary to undertake the steps 1-3. Informing them that I was not prepared to grant their request for an extension. 2. Pointing out that an indulgence had been granted by the Court to allow the parties time to prepare written submissions. 3. Pointing out that the time granted in this case had been generous. 4. Stating that it was not acceptable for the applicant to remain in breach of the Court's order. 5. Allowing the applicant until 4.00 pm on 29 May 2007 to file written submissions or a written outline of submissions. 6. Stating that any written submissions filed after that time would not be accepted. The only communication from the applicants to the Court was the letter of 28 May 2007 to my associate. The applicants did not seek leave to apply for an extension of time, nor any other directions in this matter. The written submissions were not able to be completed by that time as the Trial Books in the proceeding consist of 24 volumes and many thousands of pages which were not able to be properly incorporated into the Written Submissions by that time. 2. The Further Amended Statement of Claim consists of a large number of separate representations and the evidence in support of each of the representations was not able to be incorporated into the Written Submissions by that time. 3. The interaction of the Further Amended Statement of Claim and the Further Amended Defence is complex and the necessary framework needed to analyse the interaction of proceedings was not able to be incorporated into the Written Submissions by that time. 4. The nature and the complexity of the credit analysis of the witnesses in the trial was not able to be incorporated into the Written Submissions by that time. 5. The requirements of the Court as specified by the Trial Judge concerning the Written Submissions were not able to be incorporated into the Written Submissions by that time. 11 First, as pointed out by the Deputy District Registrar, and as the Counsel and the solicitors in this Court room are aware, it is usual for Counsel to make closing submissions at the end of a hearing. When the additional seven days of hearing in May 2007 were scheduled last year, it was on the basis that Counsel estimated the trial would completely conclude within those seven days. In the normal course of events, Counsel would have been expected to make oral submissions to me at the conclusion of the evidence and file written submissions either contemporaneously or shortly thereafter. 12 Second, the parties were granted an extra 12 days to prepare written submissions. This included an extra three days as requested by the applicants. As Deputy District Registrar Belcher said, this is a generous amount of time. 13 Third, the respondents were able to comply with my orders in this matter. 14 Fourth, the applicant did not seek to come back before the Court to seek a variation of my orders. 15 Fifth, in his letter, Deputy District Registrar Belcher, in giving a 24 hour extension, gave the applicants the option of filing a written outline of submissions. The applicants chose not to do so. Notwithstanding the large volume of material in this case, the applicant's case was concluded last November. 2. The respondent's case was in substance concluded almost three weeks ago. 3. The further amended statement of claim was filed on 16 November 2006, more than six months ago. I can identify from the file no document described as the "Further Amended Defence" to which Lynch & Company refer in correspondence. 4. I have difficulty understanding in what manner the "nature and complexity of the credit analysis of the witnesses in the trial" is such that it could not be incorporated into the written submissions by 28 May 2007. 5. With respect, my requirements for written submissions seek that the parties address the usual type of issues which parties would be expected to address in a trial of this nature. The parties may find those requirements in the transcript p 1373 at ll 4-18. The actions of the applicants have inconvenienced and prejudiced the respondents, who do not have written submissions for their Counsel to consider ahead of today's hearing as was anticipated, and inconvenienced the Court, as a purpose of my order of 11 May 2007 was to allow me sufficient time to read the written submissions of both parties so as to be in a position today to question Counsel on those submissions. 18 I understand from Mr Bell's submission this morning that the respondents served the applicants legal representatives last Friday with the respondents' written submissions. 19 The fact of the matter is that we are here today for closing submissions in this matter. It is unfortunate that valuable Court time is being spent on this issue. 20 Mr Perry has submitted that it is critical that I have the written submissions of the applicants and that I have digested them prior to hearing oral submissions by way of closing address. I disagree. 21 While clearly it would have been convenient to have had the written submissions of the applicant a week prior to today's hearing as envisaged by my directions, in my view the only procedural unfairness that arises from the applicants' failure to file their written submissions has been to the respondents. Mr Bell has already indicated that the respondents are prepared to proceed today notwithstanding the failure of the applicants to file and serve written submissions. 22 It is common practice in this Court, as has already been pointed out, for Counsel to orally address the Court by way of closing submissions at the conclusion of evidence, after which some judges require written submissions. Although it is true that the respondents have already filed their written submissions in accordance with my directions, and that I have had the opportunity to read them, any potential disadvantage or unfairness to the applicants from the fact that I have not read their submissions in advance (which is due to the failure of the applicants to file either submissions or a written outline) can be offset by a detailed and comprehensive oral address by their Counsel today, and by the subsequent filing of written submissions. In this way, in my view, justice can be done to the applicant in line with comments of the High Court in State of Queensland v JL Holdings Pty Ltd [1997] HCA 1 ; (1997) 189 CLR 146. Where I do agree with Mr Perry is in relation to the importance of hearing submissions from the applicants in this case. It is their case, and their case which they have to prove. 23 In the circumstances, notwithstanding their breach of my orders in relation to written submissions, and the concession by Mr Perry that the applicants have even now not completed written submissions (despite having had almost three weeks to do so), I am prepared in the interests of justice to grant leave to the applicants to file and serve written submissions by 9.30 am tomorrow 6 June 2007. 24 I also grant leave to the respondents to file and serve any written submissions in reply by 4.00 pm 13 June 2007. 25 I am not prepared however to adjourn today's hearing. I will hear oral submissions from Counsel by way of closing address today. 26 Mr Bell has indicated that he is prepared to truncate his oral address to one hour to allow Mr Perry sufficient time within the Court day to make his oral submissions. Mr Perry has indicated that he will require more than two hours to make his submissions. It is not fair on the respondents for their Counsel to feel that he needs to limit his address to accommodate either the applicants or the Court. I am prepared to sit today until closing addresses have concluded to the satisfaction of Counsel and the Court. If this takes us beyond close of the official court day, so be it. Leave be granted to the applicants to file and serve written submissions by 9.30 am on 6 June 2007. 2. Leave be granted to the respondents to file and serve written submissions in reply by 4.00 pm on 13 June 2007. | failure to comply with court orders to file and serve written submissions application to seek leave for extension of time to file submissions application for adjournment of hearing of closing submissions evidence concluded almost three weeks prior closing submissions due to be heard written submissions due to have been filed seven days prior practice and procedure |
3 Section 388-55 was inserted into the Administration Act by A New Tax System (Tax Administration) Act (No. 2) 2000 (Cth) (Act No. 91 of 2000). 3) 2001 (Cth) (Act No. 73 of 2001). Section 388-52 also used the expression 'an approved form is required to be given to the Commissioner or to another entity'. For example s 161(1) of the Income Tax Assessment Act 1936 (Cth) ('the 1936 Act') provides for persons who are required by the Commissioner to do so to 'give to the Commissioner' a return for a year of income within a specified period. In relation to returns, notices, statements, applications or other documents that are required to be 'given' to the Commissioner, s 388-50(1)(d) allows the Commissioner to specify the manner in which they are to be given. Notwithstanding the extensive use of 'give' or 'given' throughout the taxation laws, one finds in Explanatory Memoranda referable to the relevant Bills that 'lodge', 'lodged' or 'lodgment' have been used. 6 By virtue of s 3AA(2) of the Administration Act expressions used in Schedule 1 to the Administration Act have the same meanings as they have in the 1997 Act. The definitions in the 1997 Act are to be found in s 995-1, which spans some 180 pages. 7 Apart from the definitions contained in s 995-1 there are expressions that are defined elsewhere in the 1997 Act, which supplement those definitions. 12 Section 388-55 is to be found in Division 388, which is entitled 'Requirements about giving material to the Commissioner', and which itself forms part of 'Part 5-25 - RECORD-KEEPING AND OTHER OBLIGATIONS OF TAXPAYERS'. 13 Sections 388-52 and 388-55 taken together are directed at providing relief from the consequences of fixed time limits. 14 Having regard to the use of the expression 'the time within which an approved form is required to be given' in s 388-55, I have difficulty in seeing how the Commissioner may lawfully 'defer' a time, unless the time was one within which an approved form was 'required to be given' to the Commissioner or to another entity. In my opinion the words 'required to be given' in ss 388-52 and 388-55 are directed at the fulfilment of an obligation, non-compliance with which will put the giver at risk under a provision such as s 284-75(3) of Schedule 1 to the Administration Act. 15 However, this view needs to be tested by reference to what was said about ss 141(1) and 160(2) of the Patents Act 1952 (Cth) ('the Patents Act') in Australian Paper Manufacturers Limited v C.I.L. Inc [1981] HCA 64 ; (1981) 148 CLR 551 (the 'Paper Manufacturers case'). 16 It seems to me that 'defer' where used in s 388-5 means 'extend'. Whilst senior counsel for the applicants generally agreed with this meaning he suggested that the power to 'defer' was in the nature of a power to allow a further period. In my opinion it is not helpful to go beyond the words of the statute and address, as he put it, the 'concept'. 17 In the Revised Explanatory Memorandum circulated by authority of the Treasurer in respect of the Bill which became Act No. This deferral power is the same as the discretion to defer the time for lodgment of an income tax return, an FBT return or a GST return. The general deferral discretion will allow for an extension of the time for notifying the Commissioner of BAS amounts. Currently the discretion only exists for a GST return. [Schedule 2, items 132 and 143, subsection 388-55(1)] 1.167 It is important to note that a deferral of the due date for lodgment does not defer the due date for the payment of tax-related liabilities notified in the approved form. The deferral of payment requires the Commissioner to exercise a separate discretionary power under section 255-10 in Schedule 1 to the TAA 1953. This will allow the Commissioner, if necessary, to defer the due date for lodgment but maintain the due date for payment. For example, a PAYG large withholder is required by section 16-150 in Schedule 1 to notify the Commissioner of amounts it withholds by the due date in the table in subsection 16-75(1). The Commissioner may defer the date of notification, but the payments are still required to be made the date in the table (sic) unless the large withholder has been granted a deferral of payment under section 255-10. [Schedule 2, item 143, subsection 388-55(2)] 1.168 Conversely, the Commissioner may defer the due date for payment but require an approved form to be given by the statutory due date. For example, the Commissioner may defer the due date for payment of a PAYG instalment by annual payers, but still require notification of the election (under subsection 45-140(2) in Schedule 1 to the TAA 1953) to become an annual payer to be made by the original due date for payment. They rely upon the first sentence of 1.166 of the Explanatory Memorandum to contend that s 388-55 should be construed as conferring a power on the Commissioner to defer or extend any time for giving or lodging any approved form, including one which, if it is to be effective under s 703-50 must be given to the Commissioner no later than the end of one or other of the days mentioned in s 703-50(3)(b) of the 1997 Act. I am disinclined to accept the applicants' submission. 20 One cannot read the first sentence of 1.166 out of context. The heading to paragraphs 1.166-1.168 and the two sentences that follow the sentence relied upon by the applicants, make it clear that the purpose of s 388-55 was to allow relief to be granted in respect of a failure to meet a requirement in respect of the giving of an approved form to the Commissioner. The references to 'defer the time for lodgment of an income tax return, an FBT return or a GST return', 'general deferral discretion will allow for an extension of time for notifying the Commissioner of BAS amounts', 'will allow the Commissioner ... to defer the due date for lodgment but maintain the due date for payment' and 'the Commissioner may defer the due date for payment but require an approved form to be given by the statutory due date' all suggest to me that the word 'required' where used in s 388-55(1) should be construed in the sense which I have indicated above. 21 The Revised Explanatory Memorandum circulated by the authority of the Treasurer in respect of the Taxation Laws Amendment Bill (No. 3) 2001 , which became Act No. Where these due dates occur, taxpayers will be permitted to lodge the form and make associated payments on the first day following which is not a Saturday, a Sunday, or a public holiday. The new rule will apply to the due dates for all obligations to lodge approved forms and pay tax debts under the tax law. A tax debt does not include GIC that is already accruing on an existing debt. However, it may be observed that s 388-52 employs the same phrase as appears in s 388-55 namely 'an approved form is required [emphasis added] to be given to the Commissioner or to another entity'. It is clear from the heading to the relevant part in the Revised Explanatory Memorandum and the reference to 'to address due dates for the lodgment of an approved form', 'Where these due dates occur' and 'The new rule will apply to the due dates for all obligations to lodge approved forms' that the word 'required' is again used in respect of the fulfilment of obligations arising under the taxation legislation. 23 Section 15AB of the Acts Interpretation Act 1901 (Cth) permits regard to be had to extrinsic material in the interpretation of an Act. Following a choice [emphasis added] to consolidate, subsidiary members are treated as part of the head company of the group rather than as separate income tax identities. The head company inherits their income tax history when they become subsidiary members of the group. This could have happened if: (a) the choice was not in the approved form (for example because it did not include information the Commissioner required (whether in the form or otherwise)); or (b) the choice was not given to the Commissioner within the period described in subsection (3); or (c) the company was not the head company of a consolidatable group on the day specified in the choice. 29 It is probably unnecessary to set out in detail the provisions of s 719-5 of the 1997 Act and sufficient to simply refer to s 719-4 which addressed ' What this Subdivision is about ' in relation to MEC (Multiple Entry Consolidated) groups. A company that is a first-tier subsidiary of the top company is a tier-1 company. A MEC group cannot be formed unless there are at least 2 tier-1 companies of the top company that are eligible to be members of the group. A MEC group becomes consolidated at a time chosen by the eligible tier-1 companies. One of the eligible tier-1 companies becomes the head company of the group. The remaining members of the group are the subsidiary members. Section 719-50(3) was expressed in similar terms to s 703-50(3). However it was more prescriptive and employed language which was different from that chosen for use in s 703-50(3). 31 It may be observed that both s 703-50 and s 719-50 were inserted into the 1997 Act by the same Act, namely the New Business Tax System (Consolidation) Act (No. 1) 2002 (Cth) (Act No. 68 of 2002). Each of these defined the 'applicable period' for the giving of written notices to the Commissioner in the relevant 'approved form' in the circumstances to which they applied. 1) 2002 which became Act No. The company that makes the choice must have been the head company of the consolidatable group on the day specified in the choice. However, the company that makes the choice need not be the head company of the group when it gives the Commissioner the choice (unless the choice is given to the Commissioner on the day specified in the choice). However, if there is no requirement to lodge this income tax return, the choice can be given to the Commissioner on any day within the period, beginning on the day specified in the choice and ending on the last day within the period that lodgement of such an income tax return would have been required had there been a requirement to lodge this return. The Commissioner may nevertheless give effect to an incorrect choice of this type by giving the head company written notice that the choice is effective. The consolidated group will continue to exist so long as the same head company exists as a head company, unless the head company becomes a member of a MEC group. The eligible tier-1 companies must specify a day in the notice as the day from which the group will begin to exist, which may be any day after 30 June 2002. The conversion of a consolidated group to a MEC group is referred to as a special conversion event. The Commissioner may defer the time within which the notification is to be given under section 388-55 of the TAA 1953. Notification of the replacement provisional head company must be given to the Commissioner within 28 days of the cessation. The Commissioner has a discretion under section 388-55 of the TAA 1953 to defer the time for lodgment of the notification. The notification to the Commissioner must be in writing and in the approved form. Once the choice to form a MEC group takes effect, which will be from the day specified in the notice, it cannot be revoked and the specification of the commencement day cannot be altered. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed. [70] A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. [71] Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. In The Commonwealth v Baume Griffith CJ cited R v Berchet to support the proposition that it was "a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent". (2) Where 2 or more applications have been made for protection in respect of the invention in one or more Convention countries, the period of 12 months referred to in sub-section (1) shall be reckoned from the date on which the earlier or earliest of those applications was made. But the important advantage of a back-dated Australian priority date will be denied to an applicant who fails to observe the time-limit of twelve months. (1) Where, by reason of an error or omission on the part of an officer or person employed in the Patent Office, an act or step in relation to an application for a patent or in proceedings under this Act (not being proceedings in a court) required to be done or taken within a certain time has not been so done or taken, the Commissioner shall extend the time for doing the act or taking the step. (2) Where, by reason of --- (a) an error or omission on the part of the person concerned or of his agent or attorney; or (b) circumstances beyond the control of the person concerned, an act or step in relation to an application for a patent or in proceedings under this Act (not being proceedings in a court) required to be done or taken within a certain time has not been so done or taken, the Commissioner may, upon application by the person concerned, but subject to this section, extend the time for doing the act or taking the step. (3) The time for the doing of an act or the taking of a step may be extended under sub-section (1) or (2) although that time has expired. 44 Brennan J, as his Honour then was, with whom Murphy J agreed, was of the opinion that s 141(1) involved no 'requirement' as to time such as the Commissioner could relieve against. The question is whether the time specified by s. 141 (1) can be extended by the Commissioner in exercise of the powers reposed in him by s. 160 (2). The answer to that question turns on whether the making of a Convention application --- for that is the act in reference to which the time limit is specified --- is "an act or step in relation to an application for a patent ... required to be done or taken within a certain time". I would give a negative answer to that question. Before s. 160 (2) applies, there must be an act which is required to be done or a step which is required to be taken and a time specified within which the act is to be done or the step is to be taken. If the sub-section applies, the power conferred by it is to extend the time for doing the required act or taking the required step. An act is required to be done if the omission to do the act attracts a liability or results in the loss or forfeiture of some right or privilege. If the omission to do the act attracts no liability but merely loses an opportunity of gaining a right or privilege, I find it difficult to predicate of the act that it is "required to be done": the doing of the act in such a case is an exercise by the actor of his entitlement to seek the right or privilege, not a fulfilment of a requirement. A requirement to do an act connotes a person who is required to do it. A person who will incur a liability or who will lose or forfeit a right or privilege if he omits to do the act is the person required to do the act. But where the statute entitles any of a number of persons to do an a act (in this case, to make an application under s. 141) and thereby gain a right or privilege (in this case, to secure a priority date which is earlier than the date of making the application) none of those persons can be said to be required to do the act. Their respective rights, privileges and liabilities are unaffected by an omission to do the act within the time specified, though an opportunity to gain a right or privilege is lost by the omission. ... I do not construe the sub-section as referring to a requirement in respect of time for doing an act or taking a step which is not itself required to be done or taken. As s. 141 does not require an application to be made, either within a certain time or at all, I do not find in s. 160 (2) a power to extend the time for the making of a Convention application. It is a condition precedent to the benefit which the sub-section confers that the application must be made within the time-limit which it imposes. This is a requirement of the sub-section and may accurately be described as being "required" by it. Whenever the doing of some act is linked with a period within which it is to be done it can with perfect accuracy be described as being required to be done within that period; the particular consequence attaching to a failure to do the act within the specified period is irrelevant to the aptness and propriety of the use of the word "required" to link and explain the connexion between the act and the time-limit. Legislation may provide that an act may only be done, if at all, within some prescribed period, the doing of it later being either prohibited or being declared to be ineffective and a nullity; or again, where the provision in question confers a benefit, the doing of the act within the period may be a condition of obtaining the benefit. But in either case the word "required" will aptly describe the nature of the link between the doing of the act and the time for the doing of it. Otherwise the limitations imposed in such clear and emphatic language by s.459G(2) and (3) would be rendered nugatory. In Aussie Vic the period for compliance with a statutory demand had been extended on the hearing of an application under s 459G of the Corporations Act 2001 (Cth) ('the Corporations Act ') to set aside a statutory demand served upon the appellant to 4 July 2006. However the appellant failed to comply with the demand within the extended period for compliance specified in the Court's order. Thereafter the appellant applied for a further order extending the time for compliance with the statutory demand under s 459F(2)(a)(i) of the Corporations Act . 52 Gleeson CJ, Hayne, Crennan and Kiefel JJ held that the period for compliance with the statutory demand could not be extended after the period for compliance had expired notwithstanding the terms of s 70 of the Corporations Act and the definition of 'extend' in s 9 of the Corporations Act . Accordingly, their Honours held that the period for compliance with the statutory demand could not be further extended. Firstly, is there anything in the Administration Act, or s 388-55 of Schedule 1 in particular, which allows the Paper Manufacturers case to be distinguished? Did the use of 'required' in 'Where ... an act or step in relation to an application for a patent or in proceedings under this Act [the Patents Act] ... required to be done or taken within a certain time has not been so done or taken ...' in s 160(2) of the Patents Act, have a wider meaning or field of operation than 'required' as used in 'may defer the time within which an approved form is required to be given to the Commissioner ...' in s 388-55(1)? 55 Secondly, can it be said that, whilst 'required' can aptly be used where a provision is either permissive of the doing of an act or else confers a benefit or right as a result of doing it, being in either case linked with a period within which it is to be done (see [46] above), nevertheless s 703-50 is not such a provision? Is s 703-50 so expressed that it evinces an intention that the 'period for giving the choice' is fixed and not to be expanded by the exercise of a general power such as that contained in s 388-55(1) of Schedule 1 to the Administration Act to 'defer' the time within which the approved form may be given to the Commissioner under s 703-50, as was the case in relation to expanding the time for compliance with statutory demands for which the Corporations Law/Corporations Act provided (see Texcel, David Grant and Aussie Vic ). 56 Later, it will be necessary to consider whether the power, if any, under s 388-55(1) may be invoked nunc pro tunc after the relevant period has ended, or may it only be exercised before the period has ended. Then, assuming the necessary power, there will be administrative law considerations to address in respect of the exercise of the power in the manner in which it was exercised. Unconstrained by authority, I would have preferred the reasoning of Brennan J. However, having concluded that 'defer' where used in s 388-55 simply means 'extend', I cannot see how 'required to be given' as used in s 388-55 could be limited to those cases where an obligation to 'give' has gone unfulfilled and the giver has been put at risk. 60 Under s 703-50(3) a further limitation applied, since a day could not be specified if it fell within an income year for which the head company had, on an earlier day, given its income tax return to the Commissioner. 61 The choice conferred by s 703-50(1) was not simply linked to a calendar period within which it was to be exercised. One could perhaps describe the choice as being a 'pre-lodgment option'. 62 In the present case, no approved form specifying a day on and after which a consolidatable group, comprising the applicants, was taken to be consolidated was ever given by the first applicant, as the relevant head company, to the Commissioner. However, the first applicant now wishes to give the Commissioner an approved form specifying that the consolidatable group is taken to be consolidated on and after 1 July 2003. Whilst 1 July 2003 would satisfy (a) and (b) above, it would not satisfy s 703-50(3), since 1 July 2003 fell within the income year ended 30 June 2004 and the first applicant gave the Commissioner its income tax return for that income year on or about 24 October 2005. Once 24 October 2005 had passed it was no longer open to the first applicant to specify 1 July 2003 as a day on and after which a consolidatable group comprising the applicants was taken to be consolidated. 63 However, on 30 March 2006 the first applicant applied to the Commissioner for an extension of the period described in s 703-50(3) on the assumption that the Commissioner's power under s 388-55(1) of Schedule 1 to the Administration Act permitted the Commissioner to grant the necessary extension. 64 In my opinion, there a number of reasons why the pre-lodgment option should lapse upon the giving by a head company of its income tax return for the income year during which the specified day occurred, to the Commissioner. 68 of 2002 made mention of the Commissioner's power or discretion under s 388-55 of Schedule 1 to the Administration Act, to defer the time within which an approved form was required to be given to the Commissioner under other statutory provisions (see paragraphs 3.102, 4.22, 4.85 and 4.102), no mention was made of s 388-55 having any application to the period described in s 703-50(3) within which a choice in the approved form might be given to the Commissioner. However (ii) does not, in my opinion, relevantly change the position. Taking (i) and (ii) together, it is clear that the legislature's description of an 'end' to the relevant period was by reference to the end of the day on which the first of (i) and (ii) was to occur i.e. 66 I appreciate that paragraph 3.92 of the Explanatory Memorandum for the New Business Tax System (Consolidation) Bill (No. 1) 2002, which became Act No. 68 of 2002, predicated the operation of (ii) upon 'if there is no requirement to lodge this income tax return'. 67 It follows from what I have said above, that the general power to defer the time within which an approved form is required to be given to the Commissioner, contained in s 388-55(1) of Schedule 1 to the Administration Act, has no application to the period described in s 703-50(3) of the 1997 Act. The legislature did not intend that the clearly defined 'period for giving the choice to the Commissioner' could be extended by the exercise of such a general power. 68 One good reason for not allowing such a period to be extended, as now proposed by the applicants, is that, once an income tax return has been given to the Commissioner, it may reasonably be expected that public resources would be brought to bear in considering the return as given, the taxable income of the taxpayer for the income year and the tax payable thereon. There is a public interest in not allowing such productive effort to be wasted. Does s 388-55(1) allow nunc pro tunc applications for deferment of the time within which approved forms are to be given to the Commissioner? Having said that, if, contrary to my conclusion, s 388-55(1) of Schedule 1 to the Administration Act could be invoked to extend the period described in s 703-50(3) of the 1997 Act, it would, in my opinion, be open to the Commissioner to extend the period nunc pro tunc, notwithstanding that the relevant period had ended at the end of the day on which the first applicant gave the Commissioner its income tax return for the income year ending 30 June 2004, on or about 24 October 2005, if it had not already ended earlier than that in accordance with s 703-50(3)(ii). 70 Firstly, there is nothing in s 388-55(1) which expressly precludes the Commissioner from deferring a relevant time unless an application to have the time deferred or extended be made to the Commissioner before the time expired. 71 Secondly, s 388-55(2) makes it clear that the deferral power under s 388-55(1), to 'defer the time within which an approved form is required to be given to the Commissioner' has no application to 'the time for payment of any amount to the Commissioner'. Subsection (2) is followed by a note which provides a cross-reference to s 255-10 of Schedule 1 to the Administration Act. That section allows the Commissioner to defer the time for payment of an amount of a tax-related liability and it includes a note directing attention to the power of the Commissioner under s 388-55 to defer the time for giving an approved form. Clearly, s 255-10 and s 388-55(2) were intended to complement one another. If the Commissioner does so, that time is varied accordingly. Whilst there are no words in s 388-55(1) to mirror 'is or would become' and '(whether or not the liability has already arisen)' in s 255-10(1), the apparent complementary nature of the two provisions leads me to the conclusion that the power to grant a nunc pro tunc extension of time was not intended to be confined to the due time for payment of a tax-related liability alone. Rather, it was to apply to the time within which approved forms were required to be given to the Commissioner, as well. That decision was communicated to the first applicant by a letter dated 21 January 2008 from the Australian Taxation Office to the applicants' tax agents. 77 Given the conclusions which I have reached on the question of power, I do not propose embark upon a consideration of the administrative law aspects of the matter. 78 For the reasons given above I consider that the Further Amended Application should be dismissed. 79 I have been informed by the parties that the respondent has agreed to pay the costs of both parties on the basis that this is a 'test case'. In these circumstances there should be no order as to costs. I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | extent of the commissioner's power under s 388-55(1) of schedule 1 to the taxation administration act 1953 to defer the time within which approved forms are required to be given to the commissioner application, if any, of the commissioner's power under s 388-55(1) to an application for an extension, nunc pro tunc, of the period described in s 703-50(3) of the income tax assessment act 1997 within which a head company may give an approved form to the commissioner specifying a day on and after which a consolidatable group is taken to be consolidated taxation |
The motion had been filed by members of the Suzlon group of companies. The Suzlon companies had filed a second cross-claim in the proceedings. I was informed that Suzlon Energy Limited was incorporated in India and manufactures, or is involved in the manufacture of, wind turbine generating equipment. Suzlon Energy shipped to its Australian associated company, Suzlon Energy Australia Pty Limited, a cargo of wind turbine generating equipment on the vessel MV Beluga Fantastic . When the MV Beluga Fantastic arrived in Port Kembla its owners commenced these proceedings seeking, in effect, to interplead in this court by discharging the cargo so that it would be held by the Court pending resolution of a dispute over payment of freight between the time charterer of the vessel, Headway Shipping Limited and the two above Suzlon companies. 2 That dispute concerned two contracts of affreightments, one between Headway Shipping and Suzlon Energy and a second between them and Headway Shipping's associated company, Headway Chartering (Canada) Limited. The Headway companies claim that over USD 12,900,000 in freight had not been paid for this particular cargo and a number of other cargoes carried for Suzlon companies to Australia and the United States of America on other vessels under arrangements entered into between them and the Headway Shipping companies. 3 The evidence on the motion was partly led yesterday. It involved claims by the Suzlon companies that there may have been irregularities in the negotiation of the contracts of affreightment and some other chartering arrangements, including those for the MV Beluga Fantastic shipment. 4 The arrangement between Suzlon Energy and Headway Shipping for the MV Beluga Fantastic shipment appeared to require the issue of non-negotiable freight prepaid bills of lading, naming Suzlon Energy Australia as consignee. Accordingly, in argument these were referred to as straight bills of lading. The evidence suggested that while the master of the MV Beluga Fantastic or his agent had issued bills of lading for the cargo shipped to Port Kembla, the bills had not been released to the shipper, Suzlon Energy, because Headway Shipping claimed it had not been paid. Since the MV Beluga Fantastic wished to sail to its next port and was at risk of incurring demurrage and substantial holding charges, it sought to discharge the cargo into the custody of the Sheriff. The proceedings were commenced urgently before me on 23 October 2008 and they came before Emmett J the next day. He made orders appointing the Sheriff as custodian of the cargo the subject of the bills of lading. No original bills of lading were produced at that time. The Sheriff took custody of the cargo in accordance with the orders made by his Honour as varied by Buchanan J on 29 October 2008. 5 Part way through the interlocutory hearing before me yesterday, the parties announced that they had come to an agreement in principle for the release of the cargo and then spent some time negotiating its terms. Finally, by consent I made orders and received undertakings later that day. In essence, those orders provided that the Suzlon companies and their associates would pay USD 7,000,000 into court and a further USD 6,500,000 to the Australian agent of the two Headway companies. Upon the confirmation of those payments, the Headway companies would release or deliver or cause to be delivered to the Suzlon companies, first, the original bills of lading for the cargo then held by the Sheriff, secondly, bills of lading for another cargo withheld from Suzlon companies in the United States of America and, thirdly, bills of lading for cargo currently being carried on board the MV Beluga Revolution , which I infer is a sister ship of the plaintiff's ship. 6 Yesterday, all the parties considered that the original bills of lading for the cargo held by the Sheriff would be available to be handed to the Sheriff in accordance with the orders which they had asked the Court to make. They sought that yesterday's orders be varied to permit the Sheriff to deliver the cargo without presentation of the original bills of lading which were said to be in India and would take five or six days to arrive here. The Suzlon companies and Headway companies consented to this proposal but the plaintiff did not, although it did not oppose such a variation. The Suzlon parties have now paid the total of USD 13,500,000 in accordance with the orders made yesterday. 8 The Suzlon companies, with the support of the Headway companies, asked that on their giving undertakings to the plaintiff and to the Court to indemnify and hold harmless the plaintiff and its servants and agents in respect of any losses that they may sustain by reason of delivering the cargo - the subject of the bills of lading - without production of the originals, the Court should vary the orders made yesterday to permit the Sheriff to release the cargo he was currently holding. This was because, they contended, the bills were straight bills of lading claused "freight prepaid". The Suzlon companies argued that the proffered indemnities and proposed amendments to the orders made yesterday would be sufficient to protect the Sheriff from the likelihood of a claim for wrongful delivery of the cargo. 10 Additionally, the Suzlon companies argued that because they were the true owners, and Suzlon Energy Australia was the named consignee, of the cargo, the subject of the bills, they were entitled to receive the bills in India, where they are apparently located. They contended that it followed that there was no practical risk that any intervening third party could acquire some interest in or title to the bills or, indeed, could acquire one or more of the original bills so as to be able to present them to the Sheriff after he had parted with possession of the goods. The bills were claused as freight prepaid and shipped on board. Each copy in evidence is stamped as "copy non-negotiable". Suzlon Energy Australia was named as consignee. 13 I am not at all satisfied that it is appropriate to require the Sheriff, as an officer of the Court, to deliver goods or to act on some other basis than that expressly provided in the bills of lading. The bills require production of an original bill to obtain delivery of the cargo. Whatever assurances the parties may wish to proffer in asking the Sheriff to deliver goods in his custody to a third party or to someone else will be no protection to the Sheriff against a claim by any person who later produces an original bill and seeks delivery of the cargo. 14 The protection offered to a carrier who delivers cargo on production of the bill of lading is the result of centuries of mercantile practice and the development of the law merchant. The usual terms of a bill of lading expressly provide that, on production of an original, the others will be void and the terms of the contract of carriage embodied in the bill will be accomplished. As Lord Bingham of Cornhill stated in JI MacWilliam Co Inc v Mediterranean Shipping Co SA ("The Raphaela S") [2005] 2 AC 423 at 443F-G [4(6)] this endorsement is in the "time honoured form" of a bill of lading (a description he noted had been used by Lord Phillimore over 80 years before in The Malborough Hill v Alex Cowan & Sons Ltd [1921] 1 AC 444, 453). Lord Bingham referred to the decision of the Full Court of this Court in El Greco (Australia) Pty Ltd v Mediterranean Shipping Company SA [2004] FCAFC 202 ; (2004) 140 FCR 296 at 374; [2004] 2 Lloyd's Rep 537 at 593 which reproduced the front of a bill as an example of the now standardised wording of this important mercantile instrument (which, as Lord Bingham said, could have immaterial differences of wording). 15 In The Raphaela S [2005] 2 AC 423 the House of Lords held that a straight bill of lading required delivery of the cargo by the master in the same way as a negotiable bill. In this case, therefore, as in the case of an order bill, the bill is 'a key which in the hands of a rightful owner is intended to unlock the door of the warehouse, floating or fixed, in which the goods may chance to be': Sanders Bros v Maclean & Co 11 QBD 327 , 341, per Bowen LJ. Lord Bingham said that this result followed from the express words in the bill that it had to be presented to obtain delivery of the goods: The Raphaela S [2005] 2 AC at 449 [20]; 457-458 [45]-[47] per Lord Steyn. 17 The House of Lords held in The Raphaela S [2005] 2 AC 423 that a straight bill was "a bill of lading or any similar document of title" because it was a document of title within the meaning and for the purposes of Art I(b) of the Hague-Visby Rules: The Raphaela S [2005] 2 AC at 450 [22] per Lord Bingham, 458 [46] per Lord Steyn, 460-461 [57], 465 [70] and 466 [78] per Lord Rodger of Earlsferry, 451 [26] per Lord Nicholls of Birkenhead and 466 [79] per Lord Brown of Eaton-under-Heywood agreeing. And in BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 222E-F, 223E Hill J appeared to recognise that a straight bill of lading was a document of title giving the right to call for delivery of the cargo at the port of destination. 18 I am of opinion that the same result must follow here. There is no evidence of the provisions on the reverse of the bills of lading for the cargo held by the sheriff. There is also no evidence that India is a party to the Hague Rules or other international conventions referred to in the Carriage of Goods by Sea Act 1991 (Cth). (India appears to have enacted similar provisions to the Hague Rules in The Indian Carriage of Goods by Sea Act 1925 (India) and to have included in the Schedule to that Act Rules Relating to Bills of Lading containing a similar definition of a contract of carriage in Art I(b) of the Hague-Visby Rules. ) For present purposes I assume that Indian law is the same as Australian law in accordance with the presumption that foreign law is the same as that of the law of the forum ( lex fori ): Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54 ; (2005) 223 CLR 331 at 343 [16] per McHugh J, 370 [115], 372 [125] per Gummow and Hayne JJ, 411 [249] per Callinan J and 420 [275] per Heydon J, cf the dissenting view of Kirby J at 396 [202] and Cross on Evidence (7 th Aust ed, Butterworths, 2004) at [41005]. 19 The amended Hague Rules in Schedule 1A of the Carriage of Goods by Sea Act 1991 apply by force of Arts 10(2) and (3) to this cargo unless the original Hague Rules, (referred to in the Act as the "Brussels Convention" ) the Hague-Visby Rules, the SDR protocol or the Hamburg Rules apply by agreement or law. There is no evidence of any provision that ousts the application of the amended Hague Rules. 20 On the material before me, the bills of lading here are documents within the meaning of a "sea carriage document" in the amended Hague Rules. That definition includes both "a bill of lading that, by law, is not negotiable" (Art 1(1)(g)(iii)) and a "non-negotiable document ... that either contains or evidences a contract of carriage of goods by sea": (Art 1(1)(g)(iv)). 21 I have considered a decision which may be to the contrary given by the Supreme People's Court of the People's Republic of China in American President Lines v Guangzhou Feida Electrical Appartus Factory of Wanbao Group (4 th Civil Division, unreported, 25 June 2002 per Chief Judge Wang Yanjun, Judge Lei Xuhui and Associate Judge Zhao Hong). It held that the straight bill of lading in issue was not a document of title because it incorporated contractually the provisions of the Carriage of Goods by Sea Act 1936 and the Federal Bills of Lading Act of the United States of America (which do not apply to the present circumstances). The Supreme People's Court found there that delivery by the carrier was authorised without production of a bill of lading. This was because the Federal Bills of Lading Act had been incorporated into the parties' contract and SS80110(b)(2) expressly permitted a carrier to deliver goods to a consignee named in a non-negotiable bill without production of an original bill of lading. Thus, the contractual incorporation of the statutory regime in the United States of America permitting delivery to a consignee named in a non-negotiable bill of lading without the need for the consignee to produce the original bill supported their Honours' conclusion that the bill there was not a document of title. Accordingly, the Supreme People's Court upheld the American carrier's appeal and entered judgment in its favour on the claim for wrongful delivery to the named consignee. 22 That decision of the Supreme People's Court is entitled to the greatest respect as both the decision of the highest court of a great maritime nation and because of its erudite reasoning. However, I am satisfied that the Supreme People's Court's decision is distinguishable from the present case. First, there is no suggestion, in this case, that the bills of lading here permit the carrier, Beluga, to deliver the cargo except on production of an original. Secondly, that judgment was given prior to the decision in The Raphaela S [2005] 2 AC 423. I do not think that the Supreme People's Court's decision was intended to have a wider operation than dealing with the status of a straight bill of lading, the proper law of which was that of the United States of America. However, if it did, I prefer to follow the reasoning in The Raphaela S [2005] 2 AC 423. And, in any event, the provisions of the Carriage of Goods by Sea Act 1991 (Cth) are binding on me and provide that a straight bill is a sea carriage document for the purposes of the amended Hague Rules. 23 Here, the commercial possibility has not been excluded that an original bill of lading has gone, or may get, into the hands of a third party who is not before the Court. In that situation, I am of opinion that the Sheriff should not be put at risk, nor should the Court itself be put at risk, of committing a conversion of the goods by agreeing to vary orders made on the appropriate and conventional basis that original bills of lading be produced for the discharge of cargo from the Sheriff's custody. 24 I suggested to the parties that one possible solution worthy of their consideration may be that the Court could order redelivery of the cargo to the person from whom it came, namely the master of the MV Beluga Fantastic , by his agents, and that thereafter the master could take such commercial risks, if at all, as he saw fit in causing the cargo to be delivered under whatever commercial arrangements the parties wished to make. However, that suggestion was not taken up by the parties. 25 The fact that the master, who delivered the cargo into the possession of the Court's officer because of the dispute was not, himself, prepared to retake possession of the goods on the suggested basis provides a further reason why the Court should not take commercial risks or impose them on its officer. 26 In my opinion, it is not appropriate to dispense with the time honoured requirement of the law merchant to produce an original bill of lading (whether a straight bill or otherwise) in order to receive cargo at the port of discharge. The consent of some of the parties is an insufficient foundation for any dispensation from the ordinary mercantile practice of centuries. The more is this so in circumstances where there is a real possibility that someone else may have an interest in the goods or may have acquired a copy of an original bill of lading with which they could demand delivery. 27 For these reasons I refuse the application to vary the orders. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | straight bills of lading non-negotiable freight prepaid bill of lading with named consignee claused in traditional manner expressly providing that, on production of an original, others would be void and terms embodied in bill will be accomplished whether document of title whether "sea carriage document" under sch 1a of carriage of goods by sea act 1991 (cth) shipping and navigation bills of lading and carriage of goods by sea generally application to vary court orders to permit delivery of cargo without presentation of original bills of lading whether permissible in circumstances admiralty admiralty |
The present state of the pleadings is that the applicant has filed an amended application and an amended statement of claim. The respondent has been excused from filing a defence pending the determination of its notice of motion. The applicant's amended originating process filed pursuant to leave granted by the Honourable Justice Besanko on 4 December 2008 be set aside for want of jurisdiction. The proceeding be summarily dismissed pursuant to O 20 r 5 of the Federal Court Rules on the basis that [it] is frivolous or vexatious and is an abuse of the process of the Court. In the alternative to Orders 1 and 2, the Amended Statement of Claim filed pursuant to leave granted by the Honourable Justice Besanko on 4 December 2008 be struck out pursuant to O 11 r 16 of the Federal Court Rules on the basis that it discloses no reasonable cause of action, is frivolous and vexatious and is embarrassing. Ms Gitsham is a solicitor employed by the firm of solicitors acting on behalf of the respondent. In the course of submissions on the notice of motion, the respondent tendered that affidavit and a copy of an order made by the Supreme Court of South Australia on 19 April 2005. Paragraph 1 of the respondent's Notice of Motion dated 15 December 2008 be struck out or dismissed on the grounds that the Federal Court's jurisdiction has been enlivened by the Trade Practices Act 1974 (Cth). Paragraph 3 of the respondent's Notice of Motion dated 15 December 2008 be struck out or dismissed on the grounds that the applicant's claims against the respondent are not frivolous or vexatious or an abuse of the process of the Court, however, the Federal Court must not aid wrongdoers like the respondent in this case. Paragraph 4 of the respondent's Notice of Motion dated 15 December 2008 be struck out or dismissed on the grounds that the applicant's claims against the respondent disclose a very good cause of action against the respondent and the claims are not frivolous or vexatious or embarrassing, however, the Federal Court must not aid wrongdoers like the respondent in this case. Costs of and incidental to this Notice of Motion on an indemnity basis because the Federal Court must not aid wrongdoers like the respondent in this case. The affidavits are affidavits sworn by the applicant on 12 November 2008, 17 December 2008, 29 December 2008, 9 February 2009 and 10 March 2009 respectively. Those affidavits were tendered on the hearing of the notices of motion. The applicant also tendered a letter from Medicare Australia to himself dated 11 March 2009. I heard the two notices of motion together. The notice of motion is dated 4 August 2009 and is supported by an affidavit by the applicant sworn on 4 August 2009. It is the second such application in this proceeding. On 12 November 2008, the applicant applied for an order that I disqualify myself from further involvement in this proceeding. On 4 December 2008, I made an order dismissing his application: Kowalski v Mitsubishi Motors Australia Limited [2008] FCA 1873. The grounds upon which the applicant sought such an order and my reasons for refusing his application are set out in my reasons. On 3 February 2009, Mansfield J refused an application by the applicant for leave to appeal from my decision: Kowalski v Mitsubishi Motors Australia Limited [2009] FCA 48. In late 2008 and early 2009, I was also dealing with another proceeding involving the applicant. That proceeding involved an appeal by the applicant under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("AAT Act") against a decision of the Administrative Appeals Tribunal. On 8 December 2008, the applicant made an application that I disqualify myself from further involvement in that proceeding. I refused the application: Kowalski v Repatriation Commission [2008] FCA 1970. The grounds of the application and the reasons I refused it are set out in my reasons. I proceeded to hear his appeal on the substantive proceeding. On 30 January 2009, Mansfield J refused the applicant's application for leave to appeal from my decision: Kowalski v Repatriation Commission [2009] FCA 47. On his present motion, the applicant claims that the fact that I proceeded to hear his appeal in the proceeding involving the Repatriation Commission before his application for leave to appeal was determined was proof of bias. That contention is untenable. Having determined that there were no grounds upon which I should disqualify myself, it was appropriate that I proceed to hear and determine the appeal in the substantive proceeding. I have since delivered judgment in that proceeding in which I dismissed the applicant's appeal: Kowalski v Repatriation Commission [2009] FCA 794. The applicant claims that that is a further ground upon which I should disqualify myself in this proceeding because in dismissing his appeal in the proceeding involving the Repatriation Commission I have "fabricated [my] decision". That contention is also untenable. The two proceedings are quite separate and the issue in the proceeding involving the Repatriation Commission was whether there was a question of law (and error of law) within s 44(1) of the AAT Act. The applicant further asserts that I should disqualify myself because I said in my decision on the appeal in that proceeding that I would hear the parties on the question of costs and yet (he claims) I did not hear him. The applicant's submission is untenable. The applicant was given notice of the date and time at which judgment would be handed down. On that date, I announced that I would dismiss the appeal and hear the parties on the question of costs. The applicant was not in attendance. The respondent applied for what was the usual order for costs and I decided that it was appropriate to make such an order. The applicant claims that when, on 4 December 2008, I dismissed his first application in this proceeding that I disqualify myself for bias, I made an order for costs against him, even though "the respondent did not seek an order for costs against [him]" and by making the order I was assisting a wrongdoer and a party who had committed a criminal offence. The applicant claims that that conduct is indicative of bias. That contention is untenable. I refer to my reasons in Kowalski v Repatriation Commission [2008] FCA 1970 at [4] - [5] which deals with the same contention made in that case. The applicant's application by notice of motion dated 4 August 2009 is dismissed. In the second notice of motion brought by the applicant after I had reserved my decision on the two notices of motion referred to in [2]-[6] above, that being a notice of motion dated 18 July 2009, the applicant seeks various declarations in the proceeding. The declarations he seeks in the notice of motion are as follows, relevantly: On 27 October 1998 the respondent agreed to pay the defendant and his wife compensation, in the sum of $125,308.57, for the defendant's December 1986 eye injury, May 1998 middle finger injury, May 1989 back and or left leg injury, August 1991 stress or mental breakdown and December 1997 heart attack. On 27 October 1998 the defendant entered into Heads of Agreement with the defendant and his wife without the consent of the WorkCover Corporation of South Australia. On 27 October 1998 the defendant did not make a capital payment to the plaintiff or his wife which had redeemed the defendant's statutory liability to the plaintiff, to make weekly payments of compensation to the plaintiff, compensation under section 32 of the Workers Rehabilitation and Compensation Act 1986 (SA) (the Act) or a capital payment for the loss of the plaintiff's future earning capacity. On 27 October 1998 the plaintiff did not receive competent professional advice about the consequences of the plaintiff and his wife entering into the Heads of Agreement with the defendant. On 27 October 1998 the plaintiff did not receive competent financial advice about the investment or use of the money that he and his wife was going to receive from the defendant as a consequences [sic] of entering into the Heads of Agreement. On 27 October 1998, before the defendant entered into the Heads of Agreement with the plaintiff and his wife, the defendant did not consult with the WorkCover Corporation about the terms of the Heads of Agreement. On 27 October 1998 the defendant did not ensure that a recognized medical expert certified that the extent of the plaintiff's incapacity, resulting from his December 1986 eye injury, May 1998 middle finger injury, May 1989 back and or left leg injury, August 1991 stress or mental breakdown and December 1997 heart attack, could be determined with a reasonable degree of confidence. Where an applicant cannot establish a cause of action, a claim for declarations must fail. For reasons which will become apparent, the applicant's amended application and amended statement of claim must be dismissed. Those reasons do not relate to the form of relief claimed where declarations might be seen as overcoming defects in the amended application and amended statement of claim. In those circumstances, the applicant's application by notice of motion dated 18 July 2009 must be dismissed. It is as follows: An order that the respondent pay the applicant his "correct statutory and legally entitled worker's compensation benefits plus compound interest since 16 August 1991, to be determined by the Honourable Federal Court"; and An order that the respondent pay the applicant "compensation and punitive damages for the unwarranted stress and the anxiety that MMAL has deliberately and consciously placed the applicant under from 16 August 1991 up to 4 December 2008, by refusing to pay the applicant his correct statutory and legally entitled Compensation benefits, to be determined by the Honourable Federal Court". It may be observed that it is not apparent on the face of these claims how federal jurisdiction is engaged. The amended application and amended statement of claim refer to sections in the Trade Practices Act 1974 (Cth) (" Trade Practices Act ") (s 51AC and s 52) , the Fair Trading Act 1987 (SA) (" Fair Trading Act ") (s 58(b) and (g)) and the Misrepresentation Act 1972 (SA) (" Misrepresentation Act ") (ss 4 , 6 , 7 and 8 ) and to alleged breaches of contract, misrepresentation, unconscionable conduct, fraud, breach of trust or bad faith, "wilful default", undue influence and negligence. The amended application and amended statement of claim also refer to various sections in Part 5.8A of the Corporations Act 2001 (Cth), but, in the course of his oral submissions, the applicant said that he was not pursuing a claim in relation to these sections. The applicant was an employee of the respondent. He claimed and claims that he suffered a number of injuries in the course of his employment for which the respondent was and is liable to pay compensation. He has been involved in a long-running dispute with the respondent and he has instituted a number of actions against the respondent. An important event in the history of the dispute between the applicant and the respondent is a Heads of Agreement entered into by the parties on 25 October 1998. The applicant's wife also signed the Heads of Agreement. Kazimir Kowalski ('Kowalski') of 26 Nalimba Street Hallett Cove in the State of South Australia and Mitsubishi Motors Australia Limited (MMAL) of Sherriffs Road Lonsdale in the said state have on the 26 th day of October 1998 entered into a mediation. Kowalski and MMAL have entered the mediation with the intent of trying to resolve all issues both current and future in dispute between them. Kowalski and MMAL have reached an agreement in relation to the resolution of all issues and wish to record the terms of settlement. As a result of the parties entering into of the Heads of Agreement, various steps were carried out in relation to those matters. Later, the applicant sought to have those acts or their effects reversed on the ground that the respondent had been guilty of fraud and misrepresentation. His attempts were unsuccessful: Kowalski v Mitsubishi Motors Australia Ltd [2001] SAWCT 93 ; Kowalski v Mitsubishi Motors Australia Ltd [2002] SAWCT 76. There is no dispute that the respondent paid the moneys it was liable to pay under the Heads of Agreement. The defendant be and is hereby prohibited from instituting further proceedings, whether civil or criminal, in a prescribed court as defined in section 39(6) Supreme Court Act 1935 , against the plaintiff or any corporation related to the plaintiff or any present or former employee or agent of the plaintiff, without leave of the Court. 4612 of 2004 referred to in sub-paragraph (a) instituted on 3 August 2004 against the direction of the President of the Workers Compensation Tribunal pursuant to rule 10(1) Workers Compensation Tribunal Rules 2001 to strike out the proceedings referred to in sub-paragraph (a). With that background, I turn to the allegations in the amended statement of claim. I bear in mind that the applicant appeared before me in person and it appears that he prepared the amended application and the amended statement of claim. The first substantive allegation made by the applicant in the amended statement of claim is that under clause 3.4 of the Heads of Agreement, the respondent was required "to prepare and execute all documents necessary to bring into effect this agreement and to make such personal attendances as necessary at any Tribunal, Court or Commission". It is alleged that the respondent "deliberately and consciously" failed (and the failure continues) to prepare and execute a notice of settlement under s 23 of the Health and Other Services (Compensation) Act 1995 (Cth) ("Health and Other Services Act") and a "South Australian Workers Compensation Tribunal Form 5 Standard Minutes of Order". As to the latter document, the applicant claims, as I understand it, that the respondent was required by the Workers Compensation Tribunal Rules 1996 to lodge such a document. The amended statement of claim then contains quotes from the reasons for judgment of Bleby J (previously referred to) and a letter from Medicare Australia to the applicant dated 4 August 2008. $613 WCAT allocatur for costs 1 August 1997. Ms Layton QC and Mr R Bönig represented Mitsubishi at the mediation. The applicant then alleges that the respondent has committed a criminal offence under the Health and Other Services Act. The applicant then sets out a quote from a letter from Senator Joe Ludwig to Mr Simon Birmingham dated 29 September 2008. Medicare Australia has since contacted Mitsubishi Motors Australia Limited in relation to this issue and the company has complied with all requests made to resolve this matter. This document was signed by Mitsubishi Motors Australia Limited and Mr Kowalski and it meets the requirements of section 23(6) of the Act. The document also contains substantively all of the information required by section 23(3) of the Act and therefore can be accepted as a notice to Medicare Australia's Chief Executive Officer pursuant to section 23 of the Act. Medicare Australia accepts the Heads of Agreement document for this purpose. Mr Kowalski has previously advised Ms McCann that he has a copy of this document. Ms McCann advised Mr Kowalski she would write to him again to confirm the outcome of that investigation. In addition, it is said that the respondent has breached s 23 of the Health and Other Services Act. The applicant then alleges that in October and November 1998 and, after that date, the respondent was under a statutory duty to provide the applicant with "his correct statutory and legally entitled compensation benefits, pursuant to s 32, s 35, s 36, s 41, s 42, s 43 and s 47 and the terms, provisions and spirit of the Workers Rehabilitation and Compensation Act (SA)". It is no easy task to discern the real matters raised by the applicant in his amended statement of claim, but I must do the best I can. I have had regard to the pleadings and, in addition, the applicant's affidavits, his written submissions (of which there are a number) and his oral submissions. I put to one side for the present the fact that the pleading of excerpts from the letters and the judgment does not appear to involve the pleading of material facts (O 11 r 2(a) of the Federal Court Rules ). It seems to me that, in essence, the applicant's claims are as follows: The respondent has breached clause 3.4 of the Heads of Agreement; The respondent has breached or contravened s 23 of the Health and Other Services Act; The respondent has breached the various statutory provisions and common law doctrines previously referred to in taking the view it did as to its liability to pay compensation to the applicant when regard is had to events which have transpired in connection with the obligation in s 23 of Health and Other Services Act. The obligation in s 23 of the Health and Other Services Act occupies a central place in the applicant's claims and it is convenient at this point to summarise the effect of that and related sections. For present purposes, the precise terms of the various sections are not relevant. An injured or disabled person may receive benefits from the Commonwealth in respect of their injuries or disabilities. He or she may later receive compensation for those injuries or disabilities. The Commonwealth may wish to seek reimbursement of the expenses it has paid from the compensation payment. At the time of the Heads of Agreement, the Commonwealth could do so under the Health and Other Services Act. Section 23 is a notice provision and it requires the person paying the compensation to give notice of a judgment or settlement to the Health Insurance Commission. The section sets out requirements as to the type of information which is to be contained in the notice and it provides that the notice is to be signed by the person paying the compensation and the person to whom the compensation is payable. The notice must be given within 28 days after the judgment or settlement is made. The notice must be given to the Health Insurance Commission and it is an offence not to do so without reasonable excuse (s 24). It is an offence by a compensation payer or insurer to pay compensation under a judgment or settlement without the procedure under the Act first being followed (s 32). The correspondence, which is referred to in the amended statement of claim or which has been put before me, establishes, at least on an arguable basis, the following: Some time before 4 August 2008, Medicare Australia determined that the moneys the applicant received in November 1998 relating to an ill health benefit and an ex-gratia payment for permanent disability, were compensation for the purposes of the Health and Other Services Act. Medicare Australia stated that the respondent had provided it with the required information relating to the claim. In August 2008, Medicare Australia wrote to the applicant stating that it was investigating "what further action [needed] to be taken to recover any monies owed to the Commonwealth relating to your payment". The respondent did not provide Medicare Australia's chief executive officer with written notice of the settlement reached with the applicant on 27 October 1998 "in accordance with section 23(2) of the Act". Prior to 29 September 2008, the respondent provided Medicare Australia with a copy of the Heads of Agreement and Medicare Australia considered that it met the requirements of a notice pursuant to s 23 of the Act. Some time prior to 17 February 2009, Medicare Australia decided that it would take no further action against the respondent and it said that it took the view that that was a matter between it and the respondent. The respondent's alleged breach of s 23 of the Health and Other Services Act forms the basis of many of the applicant's allegations and he goes so far to say that the respondent has committed a criminal offence. The applicant refers to s 32 of the Health and Other Services Act. I will proceed on the basis that there is at least an arguable case that, in connection with the Heads of Agreement, the respondent failed to comply with s 23 of the Health and Other Services Act. I return to the three matters identified in [30] above. The conclusions I have reached are as follows. First, absent accrued jurisdiction in relation to other federal claims, this claim is a breach of contract claim which does not engage federal jurisdiction. Secondly, in relation to the claim, it is not reasonably arguable that the loss claimed flows from, or was caused by, the alleged breach or breaches of clause 3.4. No other loss has been identified. Thirdly, the pleading is in any event deficient because no material facts relevant to causation are pleaded and it is embarrassing because it contains pleas of evidence and irrelevant material. I will consider that claim. The relief which the applicant claims seems to proceed on the basis (without pleading) that the heads of agreement is not binding and that the applicant is entitled to worker's compensation from 16 August 1991. The conclusions I have reached are as follows. First, it is not reasonably arguable that a failure to comply with s 23 gives rise to a private right of action in a person in the position of the applicant, being the person who is entitled to receive the relevant compensation. The person or entity most likely to suffer loss or damage if the section is not complied with is the Commonwealth. Secondly, it is not reasonably arguable that the loss claimed by the applicant flows from, or was caused by, the alleged failure to comply with s 23. No other loss has been identified. Thirdly, again, the pleading is deficient because no material facts relevant to causation are pleaded and it is embarrassing because it contains pleas of evidence and irrelevant material. That conclusion alone supports an order striking out the relevant pleas. The thrust of the applicant's allegations under this head seems to be that the Heads of Agreement provided for the payments to be made by the respondent with a denial of liability and, in clause 2.2, for an ex gratia payment as compensation for permanent disability impairing the applicant's future earning capacity. As Bleby J's reasons make clear, the respondent's position was that it was not liable to pay compensation to the applicant under the Workers Rehabilitation and Compensation Act 1986 (SA) ("Workers Compensation Act") other than some relatively small amounts with respect to an eye injury and a loss of function to the right middle finger. The respondent's position as to the nature of the payments it was making under the Heads of Agreement was to be contrasted with the conclusion reached by Medicare Australia that the payments under the Heads of Agreement were compensation under the Health and Other Services Act. Leaving aside questions of whether the respondent engaged in conduct in "trade or commerce", of whether, for the purposes of s 51AC of the Trade Practices Act , the conduct was engaged in in connection with the supply or acquisition of goods or services, of whether it is an essential element of any claim by the applicant that an order be made setting aside the Heads of Agreement including an order that the applicant repay the moneys paid thereunder, and of whether the relief claimed is the proper relief and can be granted by this Court, nothing has been put by the applicant in all the material he has put before the Court to suggest the circumstances I have identified could arguably give rise to a characterisation of conduct of the respondent as unconscionable within s 51AC of the Trade Practices Act or misleading or deceptive or likely to mislead or deceive within s 52(1). The respondent had a belief concerning its liability under the Workers Compensation Act. Even if the decision of Medicare Australia that payments made under the Heads of Agreement were compensation for the purposes of the Health and Other Services Act means that the respondent's belief was wrong --- a proposition which is by no means clear --- that does not of itself establish that the respondent's conduct was unconscionable or misleading or deceptive or likely to mislead or deceive. As pleaded, the references to s 51AC and s 52(1) of the Trade Practices Act represent no more than a colourable attempt to engage federal jurisdiction. The difficulty in giving judgment on any of the claims under s 31A of the Federal Court of Australia Act 1976 (Cth) is in discerning precisely what claims are being made. It is very difficult to discern where one "claim" ends and another begins. In my opinion, the appropriate order is an order dismissing the proceeding. There are two possible routes to that conclusion. First, under O 20 r 5 of the Federal Court Rules a proceeding may be dismissed if it is an abuse of the process of the Court. A proceeding is an abuse of process where it is foredoomed to fail: Walton v Gardiner [1992] HCA 12 ; (1993) 177 CLR 378 at 393 per Mason CJ, Deane J and Dawson J. As presently pleaded, the proceeding is doomed to fail. Not only is the proceeding doomed to fail as presently pleaded, but I am satisfied that there is no claim of the type advanced. The applicant has already amended once and he has put forward a number of affidavits and written submissions in respect of his "claims", all of which I have read carefully. There is no suggestion that he has a claim either at all or at least a claim which would engage the jurisdiction of this Court. The other route to the same conclusion is that I have no doubt that the amended statement of claim does not identify an arguable cause of action and is embarrassing under O 11 r 16 of the Federal Court Rules . It must be struck out. A party faced with such conclusions is often given the opportunity to replead his or her case. However, that opportunity is not always given and ultimately, whether it is given, depends on the circumstances of the case. It is not appropriate to afford such an opportunity in this case. The applicant has had ample opportunity to articulate a case and, in all the material he has put forward, there is nothing to suggest that he has a claim. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | application for judgment, for dismissal of proceeding or for striking out statement of claim where applicant and respondent had entered heads of agreement under which respondent agreed to pay moneys to the applicant where applicant claimed he suffered injuries whilst working for respondent where respondent had failed to provide notice of settlement as required under s 23 of health and other services (compensation) act 1995 (cth) and under heads of agreement where statement of claim alleged breach of contract and other common law and equitable doctrines and breach of trade practices act 1974 (cth), fair trading act 1987 (sa) and misrepresentation act 1972 (sa) practice and procedure |
Whether Merrill Lynch has a claim against Lift will depend entirely on whether the applicants succeed in their claims against Merrill Lynch. The motion is supported by an affidavit by Andrew James Hunter Harpur sworn 13 March 2009, a partner in Merrill Lynch's solicitors of record. Leave is sought pursuant to s 471B of the Corporations Act 2001 (Cth) ("the Act") and because the application is made out of time: Order 3 rule 3 of the Federal Court Rules . Lift does not consent to the grant of leave. Lift relies on an affidavit sworn by Joseph David Hayes, one of the joint liquidators of Lift, on 8 April 2009. The applicants neither consent nor object to the filing of the proposed cross-claim on the basis that the proposed cross-claim does not delay the matter proceeding to trial. They have no adduced evidence. These proceedings were commenced by application filed on 11 April 2008 against the first to third respondents. The original statement of claim is dated 7 May 2008. The defendants' original defences were filed on 28 May 2009 (in the case of the first defendant) and 29 May 2009 (in the case of the second to fourth defendants, the fifth to seventh defendants not having then being joined). The fifth, sixth and seventh respondents were joined to the proceedings upon the filing of the applicants' re-substituted application and second further amended statement of claim on 18 September 2008. On 9 May 2008, French J ordered that the applicants be given leave to proceed against Lift pursuant to s 440D of the Act. On 6 August 2008, I made an order that Lift, having given discovery, be excused from participating further in the proceedings on its undertaking to abide by the Court's determination (other than by a consent judgment or order). I also granted the parties liberty to apply in relation to that order. The trial of the main action is unlikely to take place until early next year. On 12 November 2008, Mr Hayes and Mr McGrath were appointed liquidators of Lift. By letter dated 21 November 2008, Merrill Lynch foreshadowed bringing the cross-claim against Lift. A minute of proposed cross-claim was provided to Lift on 23 February 2009. Following an exchange of correspondence between the parties, the present application was filed and served on 13 March 2009. It appears to be common ground between Merrill Lynch and Lift first that the matters in the proposed cross-claim could be dealt with either in these proceedings or by the Merrill Lynch respondents lodging a proof in the liquidation; and second that the liquidation of Lift cannot be completed until the matters already raised in these proceedings are resolved. The claims made and the relief sought by the applicants in the current statement of claim at paras 20 to 23 are premised on an assertion that each of them retain an equity of redemption in their respective "Borrower's mortgaged securities" namely, the securities mortgaged or charged in favour of Lift under the terms and conditions of loan agreements described as the Swaby Agreement, the First Crabb Agreement and the Second Crabb Agreement, entered into in September 2005 and through that equity of redemption, an interest in the securities. The applicants allege that each of third respondent (MLI), the fourth respondent (MLAN) or the fifth respondent (MLIA) allowed or caused some or all of the Borrower's mortgaged securities to be sold to third parties without the applicants' consent and, in doing so, wrongfully extinguished the Borrower's redemption interest as a result of which the applicants have suffered loss and damage for which MLI, MLAN and MLIA are liable to account or pay compensation in equity. The applicants further allege that by this conduct each of MLI, MLAN and MLIA engaged in unconscionable conduct in contravention of s 12CA of the Australian Securities and Investments Commission Act 2001 (Cth) as a result of which each of the applicants is entitled to recover loss or damage under s 12GF of the ASIC Act. The sixth respondent (MLEA) entered into a written agreement with Lift dated 7 June 2005 and entitled "Australian Master Securities Lending Agreement" (June 2005 AMSLA). In February, March and November 2007 Lift entered into International Prime Brokerage Agreements with MLI and MLIA ("IPBA's"). The provision ensures that a company in liquidation does not face a multiplicity of legal proceedings that are expensive, time consuming, and potentially unnecessary: Altinova Nominees Pty Ltd v Leveraged Capital Pty Ltd (Receivers and Managers Appointed) (in liq) [2009] FCA 42 at [17] to [19]. Section 471B of the Corporations Act itself is silent as to the principles pursuant to which leave to proceed will be granted: King v Yurisich [2006] FCA 1369 at [13] . The court's discretion is broad but not absolute, and must be exercised fairly. It can only be exercised if a serious question is shown: King v Yurisch [2006] FCA 1368 ; (2006) 59 ACSR 598 at [9] ---[15]; Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550 at 556. The test which is akin to that of whether there is a "serious question to be tried" as applied in interlocutory injunctions: Vagrand at 556. The authorities have not established an exhaustive list of the circumstances in which it may be appropriate for the Court to grant leave to proceed: Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314 at 317G per McPherson J (with whom the Court agreed). The starting point is that a claimant must lodge a proof of debt unless that person can demonstrate there is good reason to depart from that procedure. The rationale for this approach is that a liquidator's attention and resources should not be diverted by litigation where there is a simpler procedure available, by way of proof of debt, with a right of appeal under s 1321 of the Act: Re Gordon Grant and Grant Pty Ltd at 317; Commonwealth v Davis Samuel Pty Ltd (No 5) [2008] ACTSC 124 at [33]. Claims for unliquidated damages in contract, and for misleading or deceptive conduct, are admissible to proof in a liquidation: Re Gordon Grant and Grant Pty Ltd at 317; Meehan v Stockmans Australian Café (Holdings) Pty Ltd (1996) 22 ACSR 123 at 128. It is evident that from the allegations made in the proposed cross-claim (and from the terms and conditions of the June 2005 AMSLA, the February 2007 IPBA, the March 2007 IPBA and the November 2007 IPBA) that the proposed claim raises serious questions to be tried. Lift does not contend otherwise. Merrill Lynch submits that while it may be accepted that the starting position is that there should be good reason to depart from the proof of debt procedure in favour of Court proceedings ( Re Gordon Grant and Grant Pty Ltd at 317E-F; King v Yurisich at [13], 600), each of the first five factors above weighs heavily in favour of the grant of leave in the circumstances of this matter. The proposed cross-claim is, I accept, not a claim of this type, but rather in effect, a claim for contribution. This is capable of being dealt with by proof of debt: Tyrrell v Tyrrells Building Consultancy Pty Ltd (2008) 66 ACSR 134 at 141. Merrill Lynch submits that it would be unreasonable that they, if unsuccessful in the proceedings commenced by the applicants, and the cross-claim was not determined in the proceedings, be later required to proceed with a separate action against the liquidators by way of a proof of debt. Amongst other things, they say that the risk of inconsistency between findings made by this Court in relation to the applicants' claims against Merrill Lynch and findings made by the liquidators in their adjudication of a proof of debt, gives rise to the potential for significant prejudice to Merrill Lynch if they are not granted leave to file the proposed cross-claim. I will now consider the first five factors set out under para [29] above. This complexity is said to be evident from the pleadings, the proposed cross-claim as well as the brief description of Lift and its dealings with Merrill Lynch at paras 12 to 18 of the Hayes Affidavit. The resolution of these claims will, according to Merrill Lynch, require a careful forensic analysis of the claims, close consideration of the relevant documents, an application of legal principles to the facts once they have been distilled, and legal and factual findings on matters such as causation and the assessment of loss and damage, and may require an assessment of the credit of witnesses. This, they say, renders it more appropriate for this Court in the context of the present proceedings to embark upon that determination than to have those matters adjudicated upon by the liquidators as part of a process that would inevitably be destined for appeal. They submit, however, that the Court should, for the purposes of this application proceed on the basis the amount of Merrill Lynch's claim against Lift as pleaded in the proposed cross-claim will be significant if the applicants succeed against Merrill Lynch. There was no contrary contention. However, I do not think that the breach of warranty claim will turn on the credit of witnesses, or will require the distillation of facts beyond the terms of the relevant agreements. The proposed cross-claim in this respect refers only to the written instruments. There is no mention of any conversations or witnesses. On any view the contractual claim is the primary claim. It is not, it seems to me, an unduly complex claim. Finally, I note that in BHG Nominees Pty Ltd v Ellis Young Investments Pty Ltd, where leave was granted, Weinberg J proceeded on the basis that if leave were to have been refused and a claim pursued, it is likely that it would be rejected by the liquidator and an appeal pursued in any event. That is not this case. The liquidators have said the likelihood is that the Merrill Lynch breach of warranty claim would be admitted to proof as a contingent debt if submitted in the same or similar terms. The likelihood of a proof of debt being admitted is a powerful factor in favour of permitting the proof of debt process to be followed: Rodgers v Schmierer; in the matter of Reader [2002] FCA 717 at [15] - [16] . This would obviate any need for the liquidators to consider the misleading and deceptive conduct claim. These are, together, very significant considerations in the disposition of the motion. There is no suggestion that these proceedings or the proposed cross-claim will delay the completion of the liquidation. Lift has already had a significant degree of involvement in the proceedings. The conduct of Lift and its dealings involving the Borrower's mortgaged securities in accordance with, first, the Swaby Agreement, the First Crabb Agreement and the Second Crabb Agreement and, second, the June 2005 AMSLA, the February 2007 IPBA, the March 2007 IPBA and the November 2007 IPBA, are common to the applicants' claims against Merrill Lynch and Merrill Lynch's claims against Lift. Shares allegedly transferred by the applicants as security for margin loans with Lift, which were then used by Lift to raise funds from certain Merrill Lynch for the margin loans are also common to the applicants' claims and the proposed cross-claim. It is trite that in such circumstances there must, to a degree, be a factual overlap. This is a necessary ingredient in an application to bring proceedings against Lift by way of cross-claim, as opposed to commencing a new action. However, the degree and associated significance of the factual overlap is limited by the fact that not all relevant issues between Lift and Merrill Lynch will be resolved by the cross-claim. The so-called "surplus securities" issue is one of these. During April 2008, Merrill Lynch undertook a sale program by which it sold securities transferred to it from Lift in purported exercise of rights under various agreements with Lift. Merrill Lynch continues to hold securities that remained unsold following the conclusion of the sale process (surplus securities). Merrill Lynch claims to be able to retain the surplus securities, and to sell them and apply the proceeds pursuant to indemnities given by Lift to Merrill Lynch. Lift does not accept Merrill Lynch's claim to be entitled to deal with the surplus securities in this way. Merrill Lynch claims to be able to recover any loss it sustains as a result of these proceedings by selling the surplus securities. The real issue, therefore, is whether Merrill Lynch is entitled to deal with the surplus securities in the manner in which it claims. If it is, Merrill Lynch will be able to meet a judgment against it in favour of the applicants, at least in part, by selling the surplus securities on the basis of the indemnities it claims Lift has given. But, and importantly, the scope of any indemnity, and the status of the surplus securities, will not be resolved by this cross-claim. If these issues cannot be resolved, they may become the subject of yet another application or another set of proceedings. Accordingly, the cross-claim will not meet its stated purpose of avoiding a multiplicity of proceedings to the extent that the issue of indemnities will not be resolved by these proceedings. They argue that there is no certainty that the liquidators, as part of the adjudication process, will accept their contentions as to their contractual claim. It is even less certain, they contend, that the liquidators will accept their contentions as to the misleading and deceptive conduct claim. In that case, they say, their claims would need to be litigated through the appeal process following the rejection of the proof of debt. I have already concluded that this is a minimal risk given the clear indication by the liquidators that Merrill Lynch's contract claim, if it required to be pressed, would be admitted to proof. If this, in due course, is made good then the institution and disposition of the proposed counterclaim will have been a waste of time and costs both for the parties as well as the Court. It is no answer to say, as Merrill Lynch does, that this could be obviated by the liquidator admitting the proposed counterclaim subject to the applicants being successful in the claim. The primary question remains whether good reason has been shown to depart from the statutory proof of debt process. Merrill Lynch submits that there would be a significant risk that the liquidators may make findings inconsistent with findings by this Court in relation to the applicants' claims against them and that it would be unreasonable for Merrill Lynch, having been subjected to findings made by this Court, to remain in a position of uncertainty and to face the prospect of needing to ventilate those matters again as part of the appeal process following the rejection of a proof of debt. Merrill Lynch said that their concern was that there could be findings made in the proceedings, as between the applicant and the Merrill Lynch entities, regarding those issues and they are findings which would not bind Lift. This was later clarified by senior counsel for Merrill Lynch who said that the concern was that there will not be findings that are actually made against Lift and which bind Lift. Lift will not be participating in the proceedings so as to raise particular issues before the Court. The issues to be tried are, therefore, primarily a matter for the applicants and Merrill Lynch. Merrill Lynch has not identified any particular issue on which inconsistent findings are likely to arise. The liquidators acknowledge that Lift is a party to, and bound by, the findings of the Court in this matter. The risk of inconsistent findings in those circumstances, and particularly given the clear indication by the liquidators that the contract claim will be admitted, mean that the risk is remote. Nor, they point out, is evidence offered in relation to an estimate of the liquidators' costs if they were to defend the proposed cross-claim as part of these proceedings or to how that might impact upon the shortfall in the assets and any return to the creditors of Lift. They also contend that participation by Lift in these proceedings would not delay the completion of the liquidation of the Lift Companies. However, lack of prejudice to Lift and absence of delay in the completion of the liquidation, whilst relevant factors, do not, in my opinion, necessarily lead to a conclusion that leave ought be granted. The central question is, as I have said, whether good reason has been shown to depart from the statutory proof process. Merrill Lynch concedes that the causes of action are closely related. In each cause of action, the loss claimed is apparently the same, namely, the loss caused by any judgment obtained against Merrill Lynch by the applicants in this litigation. If the breach of warranty claim failed, the misleading or deceptive conduct claim could not succeed as pleaded. In my view, the proof of debt procedure is more convenient. That emerges particularly from the strong indication by the liquidator of likely admission of the Merrill Lynch claim to proof on its contract claim with the practical consequences that the misleading and deceptive conduct claim will fall away. The risks pointed to by Merrill Lynch are remote. The resolution of the cross-claim in these proceedings will not resolve all of the issues between Merrill Lynch and Lift. Should the applicants fail in the main proceedings there will be no cross-claim by Merrill Lynch. No good reason has been demonstrated why the proof of debt process should not be followed. The motion will be dismissed with costs. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | application for leave to file a cross-claim against a company in liquidation under s 471b of the corporations act 2001 (cth) liquidators excused from participating further in the proceedings proposed cross-claim depends entirely on the success of the primary proceedings liquidators likely to admit a proof of debt whether there is good reason to depart from a proof of debt process application dismissed. practice and procedure |
2 The Appellant's Notice of Appeal recites three grounds which fail to reveal the content or substance of the Appellant's contentions. In those submissions Mr Patel addresses three grounds of appeal. The first ground is that the Tribunal made a jurisdictional error in failing to properly construe and apply a correct understanding of the notion of 'persecution' and the elements of a 'well-founded fear' of persecution for the purposes of Article 1A(2) of the 1951 Convention relating to the Status of Refugees ('the Convention') as amended by the 1967 Protocol relating to the Status of Refugees ('the Refugees Protocol') for the purposes of s 65(1) of the Act. 4 Paragraphs 24 and 25 of the submissions of Mr Patel either raise a further ground or are to be taken as a subset of the first ground. It is submitted that at the previous hearing the applicant's claims and evidence given by the applicant were accepted by the Tribunal member. The Tribunal in essence accepted that the applicant was a truthful witness. The Tribunal member in the later hearing rejected all of the claims made by the [applicant] on the ground that the claims were fabricated. The Tribunal erred in seeking the applicant to satisfy him [the Tribunal member] beyond reasonable doubt and in failing to give him the benefit of any doubt. It is submitted that the matter was referred to the Tribunal to consider the issues that were not considered in accordance with the law. The Tribunal erred in not confining its attention to the matters that were required to be considered. In any event, the Tribunal erred in holding that all claims advanced by the applicant were fabricated simply because the applicant did not produce at the hearing the documents which the Tribunal expected would have been produced at the hearing by the applicant. The Tribunal imposed a burden of strict proof and did not give the benefit of reasonable doubt. The Appellant contends that the earlier findings of the Tribunal by which the Tribunal accepted the truthfulness of the contentions of the Appellant ought not to have been the subject of reconsideration. The Appellant further contends that in embarking upon a reconsideration of the substratum of fact going to each of the Appellant's contentions, the Tribunal fell into error in making adverse findings as to both the creditworthiness of the Appellant and the Appellant's fabrication of particular matters, in reliance upon a failure by the Appellant to produce documents evidencing his marriage in India and documents evidencing the Appellant's alleged divorce proceedings in India. 6 The second ground relied upon by the Appellant is that the Tribunal made a jurisdictional error by failing to apply the correct test of a 'well-founded fear' of persecution for a Convention reason by failing to assess whether the Appellant 'subjectively' held a fear of persecution for a Convention reason and whether 'objectively' that fear was a well-founded fear. The second ground seems to me to be a further articulation of elements of the first ground of appeal. The Tribunal erred in failing to examine the facts and circumstances existing at the time the applicant applied for a protection visa and whether he had a well-founded fear of persecution at that time. The Tribunal also erred in application of the test of well-founded fear in so far as the Tribunal failed to speculate about the possibility that the applicant may suffer persecution in the reasonably foreseeable future . The Tribunal erred in as much as it considered the application in the context of the change in the political climate in India and it erred in failing to consider the application in the entire context of the time when the applicant applied for a protection visa and the change in circumstances since the date he made his application for a protection visa. First, the Tribunal must assess all of the facts and circumstances going to the question of whether the Appellant held a well-founded fear of persecution for a Convention reason at the date the Appellant applied for a protection visa (having regard to reasonably foreseeable future events). Secondly, the Tribunal must then consider whether there has been any change in circumstances since the date of application for the visa which might inform whether the Tribunal can reach the required state of satisfaction as to the relevant matters. 8 In other words, the methodological approach adopted by the Tribunal is said by the Appellant to be flawed. 9 The third ground relied upon by the Appellant in paragraph 29 of Mr Patel's submissions is that the Appellant was 'disadvantaged by the double jeopardy he was put to' . Were such matters to be the subject of reconsideration by the Tribunal or had the Appellant been advised that adverse credit inferences might be drawn by the Tribunal in reliance upon a failure to produce documents going to either of the two events, the Appellant would have produced documents going to each matter. However, the Appellant did not do so and contends that he was thus disadvantaged. 11 The Appellant contends that the error of law on the part of Federal Magistrate Lloyd-Jones is his Honour's failure to recognise and properly characterise these contended errors on the part of the Tribunal, as jurisdictional errors. 13 The Appellant is a citizen of India. 14 He was born on 10 August 1968 in the City of Bangalore in the State of Karnataka in India. The Appellant arrived in Australia on 3 April 2001 having been issued in Dubai with a short stay visa on 31 March 2001. The Appellant speaks English, Tamil and Hindi and is a member of the Roman Catholic faith. The Appellant attended St Joseph's Commerce University in Bangalore and obtained a Bachelor of Commerce Degree. The Appellant worked in Saudi Arabia in various marketing positions between 1997 and 2000 and worked in the aviation industry between 2000 and 2001. 15 In July 1998 whilst on a short holiday from the Middle East the Appellant met his future wife at a party for Christian friends of the Appellant in Bangalore. The Appellant's future wife was then completing pre-tertiary studies in the City of Madras. The Appellant's wife-to-be was 19 years of age and the Appellant was 30 years of age. His future wife's family lived in the City of Salem in the Indian State of Tamil Nadu. His future wife was born into a strict Hindu family in Salem and his wife's father enjoyed a particular position described as a 'high caste Brahmin businessman'. On 22 August 1998, the Appellant left India for Saudi Arabia. Following the brief meeting in July 1998, the Appellant and his future wife decided to marry. The Appellant maintained contact by telephone and proposed to his wife by telephone. Notwithstanding the Appellant's commitment to the doctrinal values, beliefs and practices of the Roman Catholic faith and his fiancé's strict commitment to the values, beliefs, practices and philosophy of the Hindu faith (and that of her family), his future wife's parents agreed to the marriage. 16 The Appellant returned to India in June 1999. There was to be a temple wedding at the 'Hanumah Temple' in Bangalore rather than a temple wedding in Salem, followed by a Christian function of spiritual commitment. The temple wedding took place. However, none of the Appellant's wife's relatives attended the church function. The Appellant attended his wife's family home in Salem and was told that neither his wife nor her family wanted to participate in any Christian function or service. A Hindu Priest was called to the home to administer religious Hindu rituals to the Appellant. His wife told him that she had made a mistake by marrying a Christian. The Appellant was disappointed and returned to Bangalore. On 28 July 1999, the Appellant returned to Saudi Arabia. 17 In 2000, the Appellant moved to the United Arab Emirates to work and returned to India for a short time. The Appellant was in India from 17 February 2000 to 26 February 2000. On 21 January 2001, the Appellant returned to India to see his wife in Salem. A Hindu Priest was called to the house and administered certain rituals to the Appellant. The Appellant then stayed with relatives from his own family who lived in the local area. Members of an organisation described as 'Rashtriya Swayamsevak Sangh' ('RSS'), a group formed in 1925 and described as the guiding force of Hindu nationalism in India since that time and the central group of a family of Hindu nationalist organisations described as the 'Sangh Parviar' 'picked up' the Appellant and took him to a local temple. The RSS members asked the Appellant whether he had links with Christian organisations overseas, told him that he should convert to Hinduism and that if he was not willing to so convert, he would be killed. The Appellant was beaten and released in front of his wife's family home. The Appellant was warned not to complain to the police about the event. 18 The Appellant complained to the police. Police officers asserted that nothing could be done involving members of RSS. Members of the RSS went to the Appellant's relative's home in Salem to look for him. Members of the RSS learnt of the Appellant's complaint to the police and then sought out the Appellant. The Appellant contended that the RSS was 'networked' throughout India and would find him if he returned to India notwithstanding that he might leave the State of Tamil Nadu. The Appellant decided to leave India and departed for Dubai on 1 February 2001. He has not returned to India since. Notwithstanding that the population of India is approximately one billion people, the Appellant contended in oral evidence at a hearing on 27 November 2003 that if one person saw him it might well be sufficient so as to identify and locate him especially since members of his wife's family might possibly identify him. The Appellant contended that his 'fear' was not simply a regional fear and that should he return to India and live in places other than Salem or Bangalore, his wife's relatives might, by some means, obtain information that he had returned to India. 19 The Appellant contended that after leaving India on 1 February 2001 and returning to the Middle East, the Appellant retained a lawyer to commence divorce proceedings against his wife in India. The Appellant contended that at the time of the application for a protection visa, the divorce had not been finalised and that he then expected to be divorced very soon. The Appellant had not returned to India because he feared for his life by reason of the threats made to him by members of the RSS and, in particular, members of a group described as 'Shiva Sena', a Hindu nationalist party based in Maharashtra which is part of the Sangh Parviar and aligned with the ruling 'Bharatiya Janata Party' ('BJP'). A further Hindu nationalist organisation forming part of the Sangh Parviar is a group described as the 'Vishwa Hindu Parishad' ('VHP'). Consequent upon the hearing on 27 November 2003, the Appellant sent further submissions on 4 December 2003 to the Tribunal. In those submissions, the Appellant reiterated the factual matters recited in these Reasons and contended that the Shiva Sena, RSS and VHP formed part of the ruling BJP government and that these groups had been responsible for many anti-social and anti-communal activities and, in particular, the persecution of Christians. The Appellant contended that he feared persecution by these groups. The Appellant contended that the government historically had failed to take action against these groups and that government authorities would not provide protection for followers of the Christian faith. The Appellant further contended that the Shiva Sena, RSS and affiliated Hindu groups have networks throughout India. The Appellant contended that there is no area within India (that is, within the borders of the nation State of India) to which he might relocate so as to avoid a 'real chance' of persecution by any of the nominated groups. How did the Tribunal address the Appellant's contentions and methodologically discharge the review function? 21 On 30 July 2003, Federal Magistrate Scarlett made an order remitting the Appellant's application for a protection visa to the Tribunal for 're-hearing'. The re-hearing of the application was conducted afresh by Mrs L Nicholls. Mrs Nicholls did not approach a reconsideration of the Appellant's Application for Review of the decision of the First Respondent's Delegate by assuming any fact as an established fact or by limiting the field of contentions or issues to be considered by the Tribunal in determining whether the Tribunal could be affirmatively satisfied of the relevant matters. 22 The statutory obligation of the Tribunal upon a reconsideration is to assess the scope and content of the Appellant's claims to determine, on all the material properly before the Tribunal, whether the Tribunal can be affirmatively satisfied that the Appellant holds a well-founded fear of persecution for a Convention reason. Notwithstanding that the Tribunal constituted by a Tribunal member other than Mrs Nicholls previously accepted aspects of the version of events asserted by the Appellant, Mrs Nicholls was obliged to discharge the statutory jurisdiction by examining the claims and reaching or failing to reach, the required degree of satisfaction. If not satisfied of the relevant matters, Mrs Nicholls was bound to 'refuse to grant the visa' (s 65(1)(b)) of the Act). In so approaching the matter, the Tribunal acted correctly and within jurisdiction and in a manner consistent with the observations of their Honours in SJSB v Minister for Immigration & Multicultural Affairs [2004] FCAFC 255 at [15] , per Ryan, Jacobson and Lander JJ; Minister for Immigration & Multicultural Affairs v VSAF of 2003 [2005] FCAFC 73 at [17] , per Black CJ, Sundberg and Bennett JJ and Minister for Immigration & Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259. 23 In considering the substratum of fact going to the claim of a well-founded fear of persecution, the Tribunal did not test the degree to which it could be satisfied by imposing an evidential burden upon the Appellant of proof 'beyond reasonable doubt', as contended. The question addressed by the Tribunal was whether it could be affirmatively satisfied that the Appellant is a non-citizen of Australia to whom Australia has protection obligations under the Convention. In order to determine whether the Tribunal might be so satisfied, the Tribunal examined the chronology of events recounted by the Appellant and formed a view about the probability of certain events occurring. 24 In particular, the Tribunal found the Appellant's contention of a marriage to a Hindu woman arising out of a brief meeting (and subsequent telephone contact), with the approval of the parents of the contended bride, in circumstances where the bride (and her family) embraced the cultural traditions of Hinduism and passionately opposed the beliefs and practices of the Christian faith, improbable. The Tribunal considered that if the father of the contended bride embraced a commitment to Hinduism that accommodated no tolerance of Christianity on the part of the contended son-in-law, or otherwise, it is unlikely that he would have agreed to a marriage of the two faiths in one union and one household. 25 The forensic analysis of the facts and contentions of the Appellant was not foreclosed in whole or in part by any earlier decision of the Tribunal and the findings as to the probability of events occurring was a finding open on the material. 26 The Tribunal reached these conclusions. The Appellant is an adherent of the Roman Catholic faith. (b) The Tribunal did not accept the Appellant's contention that he met and married a woman from a high caste Brahmin Hindu family in 1999. (c) The Tribunal found the Appellant's evidence concerning his meeting with his contended wife and their subsequent marriage implausible. The Tribunal observed that the Appellant was unable to provide the Tribunal with documents evidencing the contended marriage and nor was the Appellant in a position to provide documents evidencing the steps taken by the Appellant to institute proceedings in India for a divorce from his contended wife. Moreover, the Tribunal noted that the Appellant was unable to provide the Tribunal with the full name of his lawyer in India conducting the divorce proceedings and unable to identify the grounds of divorce. (d) The Tribunal found the Appellant's evidence concerning the divorce to be vague and generalised and that the Appellant lacked any detailed knowledge of the divorce proceedings. (e) Since the Tribunal was unable to be satisfied that the Appellant had met his contended wife in the manner alleged or at all, the Tribunal was unable to be satisfied that the Appellant was engaged in divorce proceedings in India. (f) Having determined those matters, the Tribunal was not able to accept that upon return to India, the Appellant had visited the home of his contended spouse and had been forced to undergo Hindu ceremonies or threatened in the manner alleged. (g) The Tribunal found that although a significant proportion of the population of India embrace the culture and traditions of the Hindu faith, the Appellant would not face a real chance of persecution in India by reason of his commitment to the values, beliefs and practices of Roman Catholicism. The Tribunal had regard to 'independent country information' not for the purpose of informing itself of matters specifically related to the Appellant but rather for the purpose of determining the nature of the Indian democracy, the constitutional guarantees of freedom of worship, the constitutional secularism adopted by the nation State of India, aspects of the legislative regime which prohibits acts of discrimination based upon race and religious beliefs and the state of the evidence as to whether the Indian Federal or National government, or alternatively, provincial governments engaged in conduct that might be described as persecution of Christians. (h) The Tribunal found that having regard to the legislative regimes prohibiting violence, institutions of government asserting the rule of law, an independent judiciary and government support for inter-faith tolerance, relations between religious groups are generally on a sound and amicable footing notwithstanding reported events of occasional violence between particular faith-based groups. (i) The Tribunal accepted that a number of extremist Hindu organisations have been involved in such events including Shiva Sena and the RSS. (j) The Tribunal determined that should the Appellant return to Bangalore in the State of Karnataka, the Appellant would not face any risk of harm by reason of his commitment to and practice of the Roman Catholic faith having regard to the constitutional position in India, its State institutions, its legislative regimes, its democratic traditions and the prevailing social and political climate in India. (k) The Tribunal further determined that if, contrary to such a view, the Appellant faced threats of harm from extremist organisations and, in particular, Hindu organisations making up the Sang Parviar, the Appellant would be able to secure access to reasonable and effective State protection through the institutions of the nation State in India. Accordingly, in the Tribunal's view, the nation State does not engage in the persecution of individuals by reason of their adherence to Christian doctrines and nor does the State tolerate the persecution of individuals by extremist organisations acting outside the authority of the nation State. In addition, the Tribunal rejected the Appellant's contention that should he return to India he was at risk of detection, identification and consequential persecution by members of a networked group of local members of the RSS connected with members of the provincial RSS in Salem. The Tribunal found it improbable and implausible that in the nation State of India, local members of the Salem RSS would seek out the Appellant wherever he might be notwithstanding that the issue of particular contention involved domestic regional issues going to an individual marriage and notwithstanding that the Appellant, in any event, had been away from India for a very long period of time when the Tribunal made its assessment. 28 These findings were open to the Tribunal. 29 In reaching these findings and particularly those going to the credibility of the Appellant's version of events, the Tribunal in part relied upon the failure of the Appellant to produce documents evidencing his contended marriage and the subsequent contended divorce. The finding of fabrication of the central events was based upon an overall assessment of the Appellant's claims and evidence and not simply an inference drawn from a failure to produce documents relevant to the contended marriage and divorce. In thus weighing the assessment of 'affirmative satisfaction', the Tribunal did not fall into error as contended by the Appellant ([4] and [5]). 30 In assessing the question of whether the Appellant held a fear of persecution (that is, subjectively held a fear) and whether, if held, that fear was well-founded as an objective assessment of the facts and contentions, the Tribunal assessed both the plausibility of the Appellant's contentions having regard to the claims made in the Appellant's statement lodged with the application (that is, at the date of the application) and evidence given orally at a subsequent hearing before the Tribunal (that is, at the date the Tribunal conducted the review). The Tribunal was not satisfied of the truth of the central contentions of the Appellant and did not accept that the Appellant held a fear of persecution as claimed. Once the Tribunal was unable to accept the Appellant's central contention, both limbs of the test of whether the Appellant held a fear which was well-founded necessarily failed. The Tribunal then considered whether the accepted fact of the Appellant's adherence to the values, beliefs and practices of Roman Catholicism in India demonstrated a basis for a well-founded fear of persecution for a Convention reason should the Appellant return to India. In undertaking that assessment, the Tribunal looked to the circumstances at the date of application, the circumstances at the date of hearing and the prevailing structural, institutional and cultural circumstances in India in a forward looking way to determine whether either the Government or radical Hindu organisations, independent of Government, engage in, sponsor or tolerate acts of persecution towards those persons holding and practising the beliefs of the Christian faith. On this second footing, the Tribunal was unable to be satisfied that the Appellant held a well-founded fear of persecution. In undertaking this analysis, the Tribunal did not fall into error as to findings open to the Tribunal or as to the method of testing and determining the various questions before the Tribunal, as contended in the grounds of appeal ([6] and [7]). 31 The final ground of appeal is that the Appellant was placed in a position of 'disadvantage' by being put to 'double jeopardy' by reason of a second consideration of the entire substratum of fact in circumstances where the Tribunal failed to give any notice to the Appellant to produce documents which might be relied upon, in part, as the foundation for inferences as to the credibility or the plausibility of the Appellant's contentions. 32 The Tribunal undertook a 'reconsideration' of the matter at large or 'afresh'. The Tribunal did not fall into error by so doing ([21] --- [25]). The Appellant elected to attend a hearing before the Tribunal and advance an oral version of the events and support in any way, by reference to any material, the veracity of his contentions. Notwithstanding the Appellant's contentions ([9] and [10]), all matters were alive before the Tribunal and no notice to produce documents was required of the Tribunal in properly exercising the statutory jurisdiction under the Act to determine whether it could be affirmatively satisfied of the relevant matters. The Appellant was not disadvantaged by reason of the reconsideration of matters about which documentary evidence might have been produced by the Appellant to the Tribunal to support any aspect or all aspects of the claims. In any event, the Tribunal did not reach adverse findings concerning the credibility of the Appellant's version of events simply as a matter of inference drawn from a failure to produce documents going to the contended marriage and divorce ([24] and [26]). 33 Accordingly, the Tribunal did not fall into error as contended and Federal Magistrate Lloyd-Jones did not err by failing to find jurisdictional error on the part of the Tribunal as contended. 34 The appeal must be dismissed with costs. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of whether the refugee review tribunal properly considered the notion of a subjective fear of persecution and whether such a fear was objectively a well-founded fear consideration of whether an order remitting a review of the minister's delegate to the tribunal for reconsideration had the effect of limiting a consideration of particular facts and contentions to only those matters giving rise to the order for reconsideration consideration of the tribunal's approach to the resolution of the substratum of fact in determining questions of credibility. migration |
orders against the 1 st to 4 th Respondents (collectively The Tseng interests) that all the agreements between Tseng and the Garretts be set aside and that the 1 st to 4 th Respondents pay unspecified damages to the applicant in respect of the Chattels, Loss of Possession of Springwood Park, The Bankruptcy of Andrew Garrett and Averil Gay Garrett, The Boats "Dragon" & "Kelam", Theft, Sale of stolen Goods & others. I seek that the 5 th & 6 th Respondents in this action be prevented from paying any further consideration to the account of Shu Mu Tseng in accordance with the Orders of Lander J in SAD29 of 2005. I seek and order that the assets & Accounts of Blexam Pty Ltd, Shu Mu Tseng, Robert Richards, Richards Commercial Lawyers, David Koo be frozen pending a hearing as to damages. That the First to 6 th Respondents be joined to this action. 4 The applicant is bankrupt by virtue of a sequestration order made by Registrar Christie on 24 September 2004. His wife, Averil, is also bankrupt by virtue of a sequestration order made on 22 December 2004. He says he is the trustee of three discretionary trusts, the Andrew Garrett Family Trust, the Andrew Garrett Family Trust No 2 and the Andrew Garrett Family Trust No 3. 5 The first respondent is a commercial person who is a lender of money. The second and third respondents are his solicitors. The fourth respondent is associated with the first respondent. The fifth respondent is the applicant's trustee in bankruptcy. The sixth respondent is the applicant's wife's trustee in bankruptcy. 6 The matter was called on for a directions hearing on 21 December 2005. Mr Garrett represented himself. Five of the six respondents were represented by counsel or solicitors engaged by them. At that hearing the applicant explained the basis of the application and sought undertakings or, alternatively, orders of the Court, that the fifth and sixth respondents refrain from dealing with any assets 'of which the ownership was being challenged'. I declined to make such orders. 7 All of the respondents foreshadowed an application to have the statement of claim struck out. The applicant said he would be filing an amended statement of claim. In those circumstances, the matter was adjourned with a direction that the applicant file an amended statement of claim. 8 During that hearing there was additional argument about documents that had been requested by the second and third respondents. The second and third respondents submitted that the complaints in the statement of claim related to dealings between them or their clients and the applicant, in relation to the Andrew Garrett Family Trust and the Andrew Garrett Family Trust No 2. They argued that the applicant had brought this application as trustee for the Andrew Garrett Family Trust No 3. It was therefore submitted by those respondents that there must be some transfer of the underlying cause of action from the Andrew Garrett Family Trust and the Andrew Garrett Family Trust No 2, to the Andrew Garrett Family Trust No 3, to found any action against the second and third respondents. For those reasons, the second and third respondents requested the applicant to produce the assignments of the cause of action to the Andrew Garrett Family Trust No 3. I directed the applicant to produce the requested documents within 14 days. 9 The matter was called on again on 31 January 2006. The applicant had not complied with the orders from the previous hearing. The requested documents had not been produced, nor had the amended statement of claim been filed. 10 In the meantime, on 24 January 2006 the first respondent filed a notice of motion supported by an affidavit to have the statement of claim struck out, on the basis that it disclosed no reasonable cause of action against him. In relation to that motion the applicant sought an adjournment to file an amended statement of claim. That adjournment was denied because the applicant had no ability to pay the respondent's costs, occasioned by reason of the adjournment. 11 The first respondent argued the application to strike out. He submitted that it was not clear that any orders were sought against the first respondent. Further, the allegation of unconscionable conduct was unsupported by any pleaded facts and there were no factual allegations in the statement of claim against the first respondent. I reserved my decision on that application. 12 At the hearing on 31 January 2006 the second, third and fifth respondents, foreshadowed that they would be seeking to strike out the statement of claim. The sixth respondent indicated that he would be seeking to summarily dismiss the statement of claim, or in the alternative seek to have it struck out. The applicant provide the second and third respondents with the documents called for by Mr Brown, counsel for those respondents, on the hearing on 21 December 2005 within 14 days. Each of the respondents, except the first respondent, give notice to the applicant of any interlocutory application they seek to make in relation to the statement of claim in these proceeding by letter within 28 days. The respondents, if so advised, file any affidavits in support of any such application within 28 days. Reserve for consideration the first respondent's application for striking out the statement of claim as it applies to him. The matter be adjourned for further directions until Wednesday 22 March 2006 at 9 am and for the hearing of any interlocutory applications advised in relation to the directions already given. The applicant pay the second to sixth respondent's costs. By doing so the first respondent's application, which had been argued and judgment reserved, became otiose. 14 Because I became unavailable on 22 March the matter was called on again on 31 March 2006 when the respondents brought their various interlocutory applications. The second and third respondents sought an order striking out the amended statement of claim, or in the alternative, summary dismissal of the proceeding against them. The fifth respondent also sought to have the amended statement of claim struck out on the basis that it did not disclose a reasonable cause of action against him. 15 The sixth respondent sought to have the amended statement of claim dismissed, or in the alternative struck out. The first respondent relied on the arguments advanced by the second and third respondents. All of the applications were listed for hearing on 5 April 2006. At that time I made an order that the applicant pay the first respondent's costs of the initial application to have the statement of claim struck out, which had been rendered otiose by the applicant filing the amended statement of claim. 16 On 5 April 2006 the applications for strike out and summary dismissal were called on. The applicant sought an adjournment to enable him to seek to obtain legal advice. The application for an adjournment was opposed by the second and third respondents who were prepared to argue the application, which had been on notice for some time. I inquired into the applicant's ability to pay the respondent's costs should the matter be adjourned. The applicant said that he was not in a position to pay costs, but was entitled to an indemnity as trustee of the trust who was a party to the action. 17 I decided to deal with the application to strike out only, and made an order striking out the amended statement of claim filed on 20 February 2006. The respondent's application for summary dismissal was adjourned to allow Mr Garrett to seek further advice. The matter was called on again on 3 May 2006. The second and third respondents sought to press their application for summary dismissal of the proceedings pursuant to O 20 r 2. 18 They submitted that the applicant did not have standing to bring the action. It was their argument that the causes of action, if any accrued to the Andrew Garrett Family Trust and Andrew Garrett Family Trust No 2, and because the applicant brought his application as the trustee of the Andrew Garrett Family Trust No 3, there must be a plea of a valid assignment of the cause of action to the trustee of that trust. 19 It was contended there was no such assignment for three reasons. First, on the evidence before the Court there was nothing that could amount to an assignment of a cause of action. Secondly, the assignments were champertous and failed by reason of public policy and, thirdly, the documents on their face purport to assign a bare right of action, which is impermissible as a matter of law. 20 The evidence seemed to support the second and third respondents' argument that there was no assignment to the trustee of the Andrew Garrett Family Trust No 3 to support the cause of action pleaded against the second and third respondents. If this proceeding were only brought by the applicant in his capacity as trustee of the Andrew Garrett Family Trust No 3, the proceeding would have to be dismissed against the second and third respondents. 21 The second and third respondents argued in the alternative that, in any event, the assignment of a cause of action should be struck down as against public policy. It was submitted that the deed purported to sell a cause of action which was against public policy and amounted to champerty: Magic Menu Systems Pty Ltd v AFI Facilitation Pty Ltd (1997) 72 FCR 261. 22 It was submitted that the present situation differs from that of a litigation funder who would provide funds for the action in exchange for a percentage of the proceeds, because in this case the cause of action was being transferred and was being pursued by someone other than the person to whom the cause of action originally accrued. It was alleged that this was a case of buying and selling causes of action. 23 The tort of champerty was abolished in this State in 1995. It would therefore be inappropriate to strike out a proceeding because there had been an assignment of a cause of action from one trust to another. It may be, as was suggested in Gore v Justice Corporation [2002] FCA 354 ; (2002) 119 FCR 429, that a particular agreement might be still contrary to public policy, but that would not be decided on an application of this kind and in the absence of evidence. 24 In relation to their third argument, the second and third respondents submitted, relying on Chapman v Luminis (No 5) [2001] FCA 1106 ; (2001) 123 FCR 62, that as a matter of law it is not permissible to assign a bare cause of action under the Trade Practices Act. That is probably so: Pritchard v Racecage (1997) 72 FCR 203. Further, it was contended, relying on Poulton v The Commonwealth [1952] HCA 70 ; (1953) 89 CLR 540 at 602, that a right to litigate at common law cannot be assigned. It was contended that the wording of the assignment purported to assign a bare right to sue, which is not an assignable interest. That is less clear and, in my opinion, may not be decided, again without evidence, on an application of this kind. 25 A further argument was put by the second and third respondents that as there was no statement of claim in the action and there was no application for leave to file a statement of claim, the proceeding should be dismissed. 26 The first, fifth and sixth respondents adopted the submissions of the second and third respondents in relation to each of the second and third respondents' arguments, although counsel for the first respondent conceded that the first argument could not apply to his client as his client was named in the second assignment of the causes of action of 23 November 2005. Counsel for the fifth respondent made the same concession as counsel for the first respondent. She put an additional argument relying on Cirillo v Grieves, Bankrupt Estate of, Ex parte Official Trustee in Bankruptcy (1996) 65 FCR 576, contending that there was a difference between the assignment of a right of action and a chose in action. 27 In reply, at the outset, the applicant sought to have his standing amended to recognise him as trustee of the Andrew Garrett Family Trust and the Andrew Garrett Family Trust No 2, in addition to his claim as trustee for the Andrew Garrett Family Trust No 3. Clearly, he was trying to meet the first respondent's argument in that respect. He then addressed the further arguments and addressed the issues generally, rather than specifically. 28 When pressed, the applicant stated that it was his position that the application was valid and he wished to stand by it. He said that the intent of the assignments was clear. In relation to the second and third respondents first argument, the applicant adduced no evidence that there were additional assignments not before the Court. There was no evidence before the Court that there were causes of actions assigned in relation to the second, third and sixth respondents. 29 The applicant made no submissions as to the respondent's second argument. The applicant claimed that the assignment was not against public policy. He submitted that he was a related party and because the beneficiaries of the three trusts were the same, the agreement could not be against public policy. 30 I would not dismiss a proceeding under O 20 r 2, unless of course I was satisfied that the proceeding was not tenable. Usually, if the statement of claim is struck out, the Court would allow the applicant to file a further statement of claim before dismissing the proceeding as untenable. In this case, Mr Garrett did not at that time, seek to file a statement of claim. I reserved my judgment. 31 The applicant has now filed a further notice of motion. First, he sought an order that Evajade Pty Ltd be joined as a second applicant. Secondly, he has sought orders that Stan Gerovasilis be joined as the seventh respondent and Blexam Pty Ltd be joined as an eighth respondent. He has also sought an order that he be granted leave to represent the interests of Evajade Pty Ltd. Lastly, he has sought an order that the Court record be altered to reflect his standing as applicant as managing trustee of the Andrew Group of Trusts. 32 The notice of motion was supported by a document entitled 'Submissions of Andrew Morton Garrett ATF The Andrew Garrett Family Trust No 3'. The matter came on for hearing some weeks ago and it was pointed out to Mr Garrett that the respondents' application to strike out the proceeding was under consideration, and there was presently no statement of claim on file; the statement of claim having previously been struck out. That an order be made that Andrew Morton Garrett (c)® be granted leave to represent the interests of Evajade Pty Ltd in its capacities as joint trustee of the Andrew Garrett Family trust, The Andrew Garrett Family Trust No 2 a (sic) The Springwood Park Unit Trust as the 2 nd Applicant. That an order be made granting leave to amend the Form 5 Application in accordance with that received by registry on the 17 th December 2006. That an order be made granting leave to file the amended pleadings of the Applicants in accordance with those received by Registry on the 17 th December 2006. That an order be made to rehear the submissions of the parties in respect of the application to strike out the action based on the Statement of Claim and amended Form 5 Application as received by Registry on the 17 th December 2006. Such other orders as this honourable court deems fit. The proposed amended application asserts that the application is brought by the applicants in their capacities as sole trustee of the Andrew Garrett Family Trust No 3 and in their capacities as Joint Trustees of the Andrew Garrett Family Trust and the Andrew Garrett Family Trust No 2 and the Springwood Park Unit Trust. 36 The effect of Mr Garrett's application is to bring before the Court a further proposed amended statement of claim which allows him to show this Court that there are reasonable causes of action disclosed in that document. 37 Mr Garrett is not able to sue in his own right in relation to these matters because he is a bankrupt: s 60 Bankruptcy Act 1966 (Cth). He is not entitled to be a director of Evajade Pty Ltd: s 201B and s 206B Corporations Act 2001 (Cth). Exhibit AMG1 of that affidavit dated, 11 September is a copy of an affidavit of Corporate Denial sworn in the Adelaide Magistrates Court and exhibited in all Garrett matters. One, as a corporate legal entity and the other as a sovereign sentient being. The argument, with the greatest of respect to Mr Garrett, is a nonsense. 40 I do not intend to discuss the proposed amended statement of claim. One of the losses claimed is an inability to fund 31 separate legal actions in which the trusts are involved. Most of these have been commenced by Mr Garrett as trustee of the trusts; in the Supreme Court of South Australia (13); this Court (5); the Federal Magistrates Court (3); and the Magistrates Court of South Australia (8). 41 The document is almost impossible to understand. It does not identify, with the precision necessary for a respondent to answer the statement of claim, the causes of action alleged against each of the respondents recognisable at law. The statement of claim is, with the greatest respect, incoherent. The claim for damages is that the action to the parties has caused damage to the trust and related entities. The related entities are not identified. 42 The document is so confused, it is impossible to discuss the content in any meaningful or sensible way. I decline to make any of the orders sought by Mr Garrett in the two notices of motion. 43 I am now satisfied, having regard to the proposed amended application and the proposed amended statement of claim, that the original application does not disclose any reasonable cause of action. I am satisfied that the applicant cannot articulate any coherent pleading to support the proceeding. There will be an order that the applicant pay the respondent's costs of the proceeding. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for summary dismissal pursuant to o 20 r 2 of federal court rules no reasonable cause of action disclosed application allowed proceeding dismissed. practice and procedure |
He came to Australia on 28 July 1994 with his mother and two younger sisters. 3 In order to understand the facts upon which the applicant's case rests, it is necessary to have some regard to the applicant's parents' history. 4 The applicant's father, Mr Hong Hoan Lam was born on 18 April 1948 in Vietnam. He served with the army of South Vietnam and at the end of the Vietnamese war in 1975 he was detained in a "re-education" camp by the communists. He was detained in the camp for five years and during that time, was starved, beaten, tortured and humiliated. As a result of the torture he experienced whilst in the camp, he suffered severe physical pain after his release. In particular, he suffered frequent blinding headaches, together with stomach cramps which left him virtually paralysed and helpless. No medical attention was either available or offered. 5 After his release from the camp, Hong Hoan Lam was not able to live with his wife, the applicant's mother. He lived on his family's farm. His family were considered well to do. 6 When the applicant was nine years old, he was sent to stay with his father and his father's relations for about twelve months. Prior to this, the applicant had had very little contact with his father. The applicant had a difficult relationship with his father. His father constantly criticised him and would often physically punish him for failing to meet his expectations. The applicant was "very fearful" of his father and was made to feel "pretty useless and not up to standard". The father's attitude towards his son was no doubt affected by his experience in the camp, his poor health and his concern that he might die at an early age, leaving his son with the responsibility of taking care of his wife and family. After about twelve months, the applicant returned to live with his mother and sisters until the family was reunited again in 1986. However, whenever he saw his father he was subjected to criticism, and was physically punished. His parents argued about the way his father treated him. 7 The applicant's father escaped from Vietnam in March 1989 and, after remaining in a refugee camp in Indonesia, arrived in Australia in March 1993. 8 The applicant, his mother and his two sisters entered Australia on 28 July 1994 and joined the applicant's father. The applicant was nearly 22 years of age when he arrived in Australia. He had completed his secondary education and was in his second year of a five year mechanical engineering course when he left Vietnam. 9 A third daughter, Hao Lam, was born to the applicant's parents after the applicant's mother came to Australia. His three sisters are aged 22, 20 and 6. 10 The applicant went to a school to learn English but he found it very difficult to learn to speak and write English. His two sisters who were born in Vietnam were more successful in that regard. The applicant's father was apparently disappointed with the applicant's progress, repeatedly telling the applicant that he was letting the family down. The applicant said that he remained frightened of his father. He dreaded going home in the afternoons after his English classes. 11 The applicant began associating with other Vietnamese males who were also not progressing in their English classes, and who were also the subjects of criticism by their parents. That group, including the applicant, arranged to rent a house. They received a living away from home allowance for study purposes. 12 As a result of his changed living arrangements, the applicant came into contact with people who smoked marijuana and used heroin. The applicant became addicted to heroin. He sold heroin in order to repay the person who was supplying heroin to him. The applicant was later caught by police and charged. ● On 24 November 1995, he was convicted by the District Court of South Australia of possessing a controlled substance, namely heroin, for sale. He was sentenced to be imprisoned for a period of five years with a non-parole period of one year. ● On 21 February 1996 he was convicted of selling a controlled substance and discharged without penalty. ● On 15 January 1998, he was convicted of receiving and fined $650. ● On 2 March 2000, he was convicted of five counts of breach of bail, with estreatment of $1,000. ● On 15 June 2000, he was convicted of two counts of possessing a nominate control substance, and was fined $75 on both counts. ● On 2 May 2001, he was convicted of unlawful possession and was ordered to perform 280 hours of community service within the following twelve months. ● On 2 July 2001, he was convicted of possessing a dangerous article, namely a stun-gun, and was convicted without penalty. ● On 10 July 2001, the applicant was convicted for a second time of possessing heroin for sale and was sentenced to be imprisoned for a period of seven years three months and 26 days with a non-parole period of three years and six months. The sentence of imprisonment included a period of three months and 26 days still unserved in relation to the previous sentence of imprisonment. 16 On 29 March 2005 a delegate of the Minister decided to cancel Mr Lam's visa on the grounds that Mr Lam did not pass the character test under s 501 of the Migration Act 1958 (Cth) ('the Act'). The delegate also refused to exercise the discretion pursuant to the Act not to cancel the visa. 17 On 5 April 2005 the applicant applied to the AAT for a review of the delegate's decision. 18 On 8 June 2005 Deputy President Jarvis handed down his decision affirming the delegate's decision. 19 On 6 July 2005 the applicant filed an application for review of the decision of Deputy President Jarvis in this Court. On 9 September 2005, the applicant filed an 'Amended Application under Judiciary Act 1903 and Migration Act 1958 '. The body of the application stated that the application was 'made under s 39B of the Judiciary Act 1903 (and see s 475A of the Migration Act 1958 )'. A writ of prohibition issue directed to the First Respondent prohibiting her from acting upon, giving effect to or proceeding further upon the decision of the Second Respondent made on 8 June 2005 in Action Number S2005/84. A writ of certiorari issue quashing the decision of the Second Respondent made on 8 June 2005 in Action Numb [sic] S2005/84. A writ of mandamus issue requiring the Second Respondent to consider and determine the application according to law. An order that the first respondent pay the applicants' costs of the application. Such further or other orders as this Honourable Court deems fit. I raised with the applicant's counsel whether the procedure which had been adopted by the applicant was appropriate having regard to the provisions of s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ('AAT Act'). Subsection (1) of s 44 of the AAT Act provides that an appeal lies to this Court on a question of law from any decision of the AAT. 22 Both the applicant and the respondents sought the adjournment of the application to consider their respective positions. Of course, in doing so, the applicant was thereby confined to an appeal on a question of law: s 44(1) of the AAT Act. Moreover, he was confined to a question of law which involved jurisdictional error: Plaintiff S157/2002 v The Commonwealth of Australia [2003] HCA 2 ; (2003) 211 CLR 476. If there were an error of law which was not jurisdictional in character it could not be challenged or appealed against, reviewed, quashed or called into question in this Court: s 474(1) of the Act. The appellant's counsel accepted the burden of establishing jurisdictional error as a prerequisite to success on this appeal. 27 The respondent did not contend that the appeal was out of time: s 44(2A)(a) of the AAT Act. Indeed, the respondent expressly conceded that the appeal was brought within time. 28 The Act empowers the Minister or the Minister's delegate to cancel a visa that has been granted to a person if the Minister or the delegate reasonably suspects that the person has not passed the character test and the person does not satisfy the Minister or the delegate that the person passes the character test: s 501(2) of the Act. 29 Section 499 of the Act empowers the Minister to give written directions 'to a person or body having functions or powers under this Act ... about: (1) the performance of those functions; or (2) the exercise of those powers': s 499(1) of the Act. 30 The Minister has power to delegate any of the Minister's powers under the Act to any person: s 496(1) of the Act. The person, when exercising the delegated power, is subject to the directions of the Minister: s 496(1A) of the Act. 31 Section 499 does not confine the Minister to giving directions only to a delegate. As can be seen, the power is wider and allows the Minister to give directions to a person or body having functions or powers under the Act. 32 The AAT is empowered to review decisions of a delegate of the Minister under s 501: s 500(1)(b) of the Act. 33 In those circumstances, any directions given by the Minister about the performance of functions under the Act or exercise of powers under the Act apply not only to the Minister's delegate but also to the AAT which exercises a function or power under the Act. 34 The Minister has given directions to the persons referred to in s 499 of the Act in relation to the discharge of their duties under s 501 of the Act. Those directions relate to the performance of those functions and the exercise of those powers by those persons. 35 As the amended Notice of Appeal refers, the direction is Ministerial Direction No. 21 provides guidance to decision makers including, in this case, the Deputy President of the AAT. 39 Section 501(2) of the Act requires the Minister's delegate to determine whether the person under consideration has satisfied the delegate that the person has passed the character test. The character test is defined in s 501(6) of the Act and, relevantly, for the purpose of this appeal, a person does not pass the character test if the person has a substantial criminal record: s 501(6) of the Act. 40 For the purposes of the section, a person has a substantial criminal record if the person has been sentenced to a term of imprisonment of 12 months or more, or the person has been sentenced to two or more terms of imprisonment (whether on one or more occasions), where the total of those terms is two years or more: s 501(7)(c) and s 501(7)(d) of the Act. 41 If the Minister's delegate is not satisfied that the person under consideration has passed the character test, the Minister's delegate must then consider whether, in the circumstances, the visa that has been granted to that person should be cancelled: s 501(2) of the Act. In doing so, the Minister's delegate must exercise that delegate's discretion. 42 Section 501 does not prescribe the matters which the Minister or the delegate must take into account in determining whether or not to cancel a visa of a person who has not passed the character test. 43 However, Ministerial Direction No. 21 identifies the decision maker's responsibilities when considering their task under s 501. Part 1 provides directions on the application of the Character Test. Non-citizens who are being considered under section 501 must satisfy the decision-maker that they pass the Character Test. If the non-citizen does not pass the Character Test, decision-makers are to exercise the discretion to consider whether to refuse or cancel a visa, taking into account primary and other considerations. Part 2 provides directions on what these considerations are and the weight to be given to them. 21 identifies three primary considerations for consideration by the decision maker in deciding whether to cancel a visa. In particular, they were bound to take into account any 'close relationship between a child and the person under consideration and the best interests of that child'. Ministerial Direction No. 21 has imported that obligation into the exercise by the delegate and the AAT of the discretion to cancel a visa under s 501. 46 The applicant argued that in making his decision pursuant to s 501 of the Act the Deputy President made an error of law by failing to take into account a relevant consideration or by asking a wrong question in the manner in which he dealt with the issue of the best interests of the child. 47 The applicant argued that the Deputy President failed to take into account the adverse effect the deportation would have on the interests of the applicant's youngest sister, Hao Lam. The applicant submitted that the delegate and the Deputy President had failed to take into account the relationship between Hao Lam and the applicant, and thereby the best interests of that child. 48 The applicant's contentions on this appeal are at odds with the way in which the applicant asked the AAT to approach the matter. This consideration is not relevant to the matter of the Applicant insofar as he is a single man and without children. Whilst the applicant conceded that there was no direct relationship between the applicant and Hao, the applicant's claim was made upon the basis that there was an indirect relationship through their parents and that any adverse effect on the parents would have an adverse effect on Hao. In support of this contention, the applicant relied on evidence put before the AAT. 51 It was the applicant's case before the AAT that he knew both of his parents were unwell and that he was uncertain whether they would cope emotionally with the deportation, given their state of health and the tragedies they had suffered in the past. 52 Before the AAT, the applicant's mother's evidence was that the deportation of her son would be likely to cause a 'rift' in the applicant's family. He is the only surviving male offspring and is very important to us, both as a member of our family and having regard to our heritage and the Vietnamese traditions. If he was to be returned to Vietnam we would be absolutely devastated. I suspect that it would cause a rift in our family that would never heal. My husband says that I should have given Thanh greater guidance whilst he away [sic] and not able to be there to supervise Thanh's upbringing. On the other hand, I say that whatever contact my husband has had with my son has not been a good example as my husband has been too harsh in his treatment of him. This latest event (the cancellation of our son's right to remain in Australia) has been a severe blow and, to us, represents the loss of all our hopes and dreams. I do not know what the future holds for both of us at this time --- in terms of our health and in terms or [sic] our ability to maintain a proper marriage. She said that when the applicant re-offended and was imprisoned for the second time her parents' physical complaints worsened, as did their relationship because arguments between them increased. Tien Lam's evidence was that the family home became a difficult place to live because of tension in the atmosphere and a general feeling of great sadness. I am absolutely sure that their health would deteriorate dramatically. The psychological blow would be immense --- coming as it would upon the earlier disappointment suffered and the expectation (before the notice of visa cancellation) that Thahn was about to come out into the community and at last would have a chance to prove himself to redeem his past behaviour. I don't know how often they could possibly go --- perhaps once every 4 --- 5 years. Both of them are getting older and given their state of health, I would expect that this will mean that they will rarely see their son, if ever. I suspect this will occur even if they are having treatment, which would hopefully limit the degree. Certainly the deportation would stress their marriage and it would have to be wondered whether, considering how things are now, their marriage would survive. They have both emphasised how this is focussed especially on their son. He has crushed their hopes and they feel let down, embarrassed, and ashamed, but the loss of their son would remove the main point to their existence (as emphasised by Mr Lam) and their lives (especially for Mrs Lam) would be pointless. Further, the applicant conceded that the Deputy President was not asked to draw such an inference from the evidence. However, on this appeal the applicant, notwithstanding the way in which the applicant asked the AAT to approach the matter, argued that the Deputy President ought to have drawn such an inference in any event. It was argued that he was obliged to do so because he had to consider whether the best interests of a child (Hao Lam) would be served by the deportation of the applicant. 56 The first respondent took issue with the applicant's contentions on the construction of Ministerial Direction No. 21. The first respondent submitted that it could not be argued that Ministerial Direction No. 21 required a decision maker to have regard to the indirect effect on a child by reason of distress caused to parents. The first respondent contended that paragraph 2.3(c) of Ministerial Direction No. 21 required a direct close relationship between a child and the person whose visa was under consideration, rather than an indirect relationship between them through their parents. The first respondent submitted that even if Ministerial Direction No. 21 were capable of the construction contended for by the applicant there was simply no evidence before the AAT directed to this issue and in those circumstances, the Deputy President could not have committed a jurisdictional error by failing to consider it. 57 In my opinion, the first respondent's contentions are correct. Ministerial Direction No. 21 directs the decision maker's attention to a 'close relationship between a child and the person under consideration'. It is not possible, in my view, to construe a 'close relationship' as extending to an indirect relationship between a child and the person under consideration that may exist through third parties, such as their parents. I accept the first respondent's submission that paragraph 2.3(c) of Ministerial Direction No. 21 does not permit a construction that contemplates that an indirect effect on a child by reason of distress caused to parents is a matter which the decision maker ought to consider in determining whether to cancel a visa. 58 Putting the applicant's submissions at their highest, the applicant's removal from Australia, consequent upon the cancellation of his visa pursuant to s 501 of the Act, will affect the relationship between the applicant's parents and the applicant. That is not a primary consideration in Ministerial Direction No. 21. Again, putting the applicant's contentions at their highest, his removal from Australia, consequent upon the cancellation of his visa pursuant to s 501 of the Act, will affect the relationship between his parents and his younger sister because of their reduced capacity to parent their daughter. The relationship between the applicant's parents and the applicant's sister is not one of the relationships referred to in Ministerial Direction No. 21. 59 The relationship which needs to be examined for the purpose of determining whether the cancellation of the visa might affect the best interests of the child must be the relationship between the child and the person under consideration. 60 In this case, there is a relationship of brother and sister. As I have mentioned, however, there is no evidence that they have ever met each other. There is no direct evidence that that relationship, if interrupted or ended by the applicant's removal from Australia, would affect the best interests of the child. 61 In the circumstances of this case, where there was no evidence that the applicant had even met his youngest sister, it can not be said that the Deputy President fell into error in not finding that a close relationship existed between the child and the person under consideration. 62 The applicant contended that the Deputy President had failed to identify the child Hao Lam's interests. That failure, it was contended, necessarily meant that he did not address the question of that child's best interests. Whilst paragraphs 2.14 and 2.15 in this part of the Direction deal with the relationship between the non-citizen and that person's children, this consideration can also extend to other children under eighteen years of age, because paragraph 2.3(c) refers to the best interests of the child or children in all cases involving a " parental or other close relationship " between the child or children and the person under consideration. The only child under eighteen years of age who might be relevant to this consideration is the applicant's younger sister, Hao Lam, who is six years old. Paragraph 2.16 requires decision-makers to have regard to various factors, and this paragraph does not contemplate that the non-citizen is the parent of the child or children concerned. The considerations in paragraph 2.16 include the nature of the relationship between the child and the non-citizen, and the hypothetical prospect of developing a better/stronger relationship in the future. Because the applicant has been in prison since August 2000, and before that had not lived with his parents for some years, Hao has had virtually no opportunity to get to know the applicant. No doubt she has a close and loving relationship with her parents and two solder (sic) sisters. In this case, I attach very little weight to the hypothetical possibility that she may develop a better or stronger relationship with the applicant in the future. 21 was to reject the foundation upon which the argument was built. That is to say, he did not accept that there was any close relationship between the child and the applicant. For the reasons I have already given, he was right to do so. 65 In those circumstances, the Deputy President did not need to address the child's interests because, whatever those interests were and however they might be affected, this was not a case, as paragraph 2.3(c) requires, which involves a close relationship between a child and the person under consideration. 66 In his written submissions to this Court the applicant's counsel submitted that paragraph 2.3(c) of Ministerial Direction No. 21 'incorporates Australia's obligations under the United Nations Convention of the Rights of the Child: see the decision in Minister for Immigration & Ethnic Affairs v Teoh [1995] HCA 20 ; (1995) 183 CLR 273'. 67 However, in his oral submission the applicant's counsel contended that there was a wider obligation imposed upon the AAT than that contained in paragraph 2.3(c) of Ministerial Direction No. 21. The wider obligation arises because Australia is a party to the Convention on the Rights of the Child and, it was submitted, bound to treat the best interests of the child as a primary consideration in all cases concerning children. Thus it was put because of that international obligation the decision maker has to have regard to the interests of any child whether or not there is a parental or close relationship as required in paragraph 2.3(c) of Ministerial Direction No. 21. For that submission, the applicant's counsel again relied upon Minister of State for Immigration and Ethnic Affairs v Teoh [1995] HCA 20 ; (1995) 183 CLR 273 (' Teoh '). 68 In that regard, his oral submissions contradicted his written submissions. Nevertheless, I will deal with the submission. In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration. Whilst he was in Australia, the respondent married his deceased brother's former de facto spouse who had four children. Three further children were born to the respondent and his wife. The respondent applied for a permanent entry permit whilst in this country but, before his residence status was addressed, was convicted of six counts of being knowingly concerned in the importation of heroin and of three counts of being in possession of heroin. He was sentenced to six years imprisonment with a non-parole period of two years and eight months. Some few months later he was informed that his application for grant of resident status had been refused because he did not meet the character requirements. 71 The respondent sought a review of that decision before the Immigration Review Panel. The Panel accepted that the respondent's wife and children faced a bleak future if the respondent's application was refused but that 'the compassionate claims were not compelling enough for the waiver of the character requirement in view of (the respondent's) criminal record': Teoh at 281. An order was made for his deportation. 72 At that time the statutory discretion to grant or refuse an applicant resident status in s 6(2) of the Act did not address the interests of the applicant's children. In the Full Court of the Federal Court ( Teoh v Minister for Immigration and Ethnic Affairs (1994) 49 FCR 409), the Court held that although the Convention on the Rights of the Child was not part of the Australian Municipal Law, ratification of the Convention by Australia was a statement to the community of acceptance of its provisions by Australia. It therefore provided parents and children with a legitimate expectation that actions by the Commonwealth affecting or concerning children would be conducted in a manner which adhered to the relevant principles of the Convention. 73 The Court held that where a decision involved the exercise of a discretion which concerned the best interests of children, the decision maker, in the exercise of that discretionary power, would need to consider the best interests of those children. 74 The Minister appealed to the High Court contending that the Full Court had raised the doctrine of legitimate expectation to a question of substantive fairness. The Minister argued that no executive Act, including accession to a Convention, could confine the otherwise unconfined discretion by establishing criteria which are bound to be applied. Nor has it been suggested that there is anything in the scope or purpose of the statute which would have that effect. It follows that the Immigration Review Panel and the Minister's delegate who accepted the recommendation of the Panel were entitled to have regard to the provisions of the Convention so long as they were a legitimate subject matter for consideration and were relevant to the issues for determination. Where a statute or subordinate legislation is ambiguous, the courts should favour that construction which accords with Australia's obligations under a treaty or international convention to which Australia is a party, at least in those cases in which the legislation is enacted after, or in contemplation of, entry into, or ratification of, the relevant international instrument. That is because Parliament, prima facie, intends to give effect to Australia's obligations under international law. ' (Footnote omitted. What the Court was considering was whether the provisions of the Convention were relevant to the exercise of a statutory discretion. No persuasive reason was offered to support this far-reaching proposition. The fact that the provisions of the Convention do not form part of our law is a less than compelling reason --- legitimate expectations are not equated to rules or principles of law. Moreover, ratification by Australia of an international convention is not to be dismissed as a merely platitudinous or ineffectual act, particularly when the instrument evidences internationally accepted standards to be applied by courts and administrative authorities in dealing with basic human rights affecting the family and children. Rather, ratification of a Convention is a positive statement by the executive government of this country to the world and to the Australian people that the executive government and its agencies will act in accordance with the Convention. That positive statement is an adequate foundation for a legitimate expectation, absent statutory or executive indications to the contrary, that administrative decision-makers will act in conformity with the Convention and treat the best interests of the children as "a primary consideration". ' (Footnotes omitted. Their Honours found that there had been a want of procedural fairness as the Panel and the Minister's delegate failed to have regard to the Convention in that they failed to have regard to the best interests of the children as a primary consideration. 80 Toohey J held that Australia's ratification of the Convention did give rise to an expectation that those making administrative decisions in actions concerning children would have regard to the children's best interests as a primary consideration or, if they did not intend to do so, they would allow the persons affected to argue against such a course. Toohey J was of the opinion that the appeal should be dismissed because the Minister's delegate had not met the respondent's legitimate expectation, either that she would give consideration to the best interests of the children or, in the alternative, that she inform the respondent of her intention not to do so. 81 Gaudron J agreed with Mason CJ and Deane J that procedural fairness dictated that the respondent should have an opportunity to be heard on a matter as important as the children's best interests. In that regard, procedural fairness required the delegate to advise the respondent that if the delegate was not taking the best interests of the children into account as a primary consideration so that the respondent could have an opportunity to persuade the delegate otherwise. 82 Teoh's case was decided prior to Ministerial Direction No. 21. Ministerial Direction No. 21 requires the delegate to have regard to the best interests of the child or children defined in paragraph 2.3(c) as a primary consideration. In that regard it takes up Article 3.1, at least insofar as any child who has a parental or close relationship with the person under consideration. 83 Because Ministerial Direction No. 21 identifies the class of children whose best interests are required to be a primary consideration in the decision making process, an applicant cannot have a legitimate expectation that the best interests of any other child or children not within that class would be the subject of an assessment by the decision maker considering the application generally. No such legitimate expectation can arise when the Ministerial Direction identifies precisely those children whose best interests must be assessed in the decision making process. 84 Therefore, the decision maker does not fail to accord an applicant procedural fairness by not considering the best interests of a child who is not within the class of children identified in Ministerial Direction No. 21 because the applicant could not have a legitimate expectation that such child's best interests would be considered. 85 Teoh's case is concerned with legitimate expectations. It does not stand for the proposition that because Australia has acceded to the Convention on the Right of the Child that a decision maker would comply with Article 3 of that Convention. The Convention is not part of the municipal law. In the absence of any executive instruction to the contrary, it merely serves to create a legitimate expectation on the part of an applicant who has children whose best interests may be adversely affected. Teoh's case, in those circumstances, cannot be seen, in my opinion, to require the decision maker to have regard to the best interests of a child who does not enjoy a parental or close relationship with the person affected. 86 However, Mr Ower argued that that was the effect of two decisions of Allsop J; first, in Perez v Minister for Immigration & Multicultural Affairs [2002] FCA 450 ; (2002) 119 FCR 454 (' Perez '); and, secondly, in Navarrete v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 1723 (' Navarrete '). 87 In Perez the applicant, who was a Cuban national, was ordered to be deported. The Minister refused to revoke the deportation order and refused to release the applicant from immigration detention. He applied under the Administrative Decisions (Judicial Review) Act and under s 39B of the Judiciary Act 1903 (Cth) for a review of those decisions. One of the grounds was that there had been a failure to take into account as a primary consideration Mr Perez' children's best interests and that 'there was a failure to tell Mr Perez that this failure had occurred, leading to a failure to accord him natural justice'. 88 It was put to Allsop J that there was an obligation on the Minister in order to accord procedural fairness to the applicant, that if he were proposing to make a decision adverse to the best interests of the children, who might be affected by the decision, to inform the applicant and to give the applicant an adequate opportunity of presenting a case against taking such a course. No such notice was given by the Minister or the department to Mr Perez. Therefore, if the interests of Mr Perez's three children and one step-child were not treated as a primary consideration in the making of the decision, that is that the decision was made on a basis other than that their best interests to be affected by the decision were a primary consideration, the decision was flawed and liable to be set aside under the AD(JR) Act . I should add that Mason CJ and Deane J had expressed their views in Teoh , supra at 291-2, on the basis of the existence of a legitimate expectation, absent statutory or executive indications to the contrary. No such contrary indications were pointed to here. That decision was relevant because there were no statutory or executive indications contrary to the proposition that the best interests of Mr Perez' children ought to be a primary consideration. 91 Allsop J concluded that there was sufficient material before the Minister to enable him to take into account as a primary consideration the best interests of the children who might be affected and there was no evidence that the Minister had not done so. That part of the application failed. 92 Later, in his reasons, Allsop J dealt with a submission that the interests of Mr Perez' children were not taken into account as a primary consideration in respect of a further decision. Allsop J reasoned that where a delegate was obliged to take into account as a primary consideration the interests of children, the delegate should first identify for himself or herself those interests. There can be no doubt that logically that must be so but, as his Honour said, this is not some inflexible rule of law, or requirement for mechanical incantation. In my opinion, Perez is not authority for the proposition advanced by the applicant's counsel. As I have already mentioned, Perez was decided in circumstances where the decision maker did not have the executive instruction contained in Ministerial Direction No. 21. 93 In Navarrete , a citizen of Chile had his visa cancelled under s 501 of the Migration Act . In that case, Ministerial Direction No. 21 was provided to the applicant who was advised that the Minister would 'have regard to ... and the attached Minister's Direction No. 21 titled (Directions under Section 499) '. The applicant responded. The Department wrote again to the applicant advising the applicant that he had 'failed to clearly address paragraphs 2.13-2.17 of Direction 21, which relates to "the best interests of the child" and "other considerations"'. The applicant was provided with a further copy of Direction No. 21. The applicant responded again and addressed 'the best interests of the child' and 'other considerations' in some detail. 94 The applicant contended that there had been a failure to afford procedural fairness relying on Teoh's case. Also, Section C of the submission had set out relevant parts of the applicant's second letter. However, a number of decisions of this Court have explained the importance of identifying what the interests of the children are, see in particular Wan v The Minister for Immigration and Multicultural Affairs [2001] FCA 568 ; (2001) 107 FCR 133, 140. Before one can take the interests of the children into account as a primary consideration, one needs to appreciate what those interests are. The submission referred to paragraph 2.16 of Direction 21. That was a good beginning. But there was no real application by the Minister to the circumstances, such as they were known, of these three young Australian citizens aged 8, 6 and 4. The Minister stated that she concluded that the applicant's removal from Australia leaving behind, as was anticipated, his three small children "would cause some hardship on the children". The "difficulties" that they would suffer were not identified. It should be said at the outset that this is not some inflexible rule of law, or requirement for mechanical incantation. It is a logical and appropriate starting point if the task is to be essayed reliably. The interests of the children are considerations in respect of their human development - their health including their psychological health and happiness, their social and educational development as balanced nurtured young citizens of this country. This is not a check list but an illustration of the kinds of considerations relevant to these young people which form their best interests in connection with a decision whether to keep their father away from them in gaol save for visits or whether to release him on appropriate conditions if thought necessary. It is difficult to understand what this means given the inquiry is as to the effect in the future of expelling the applicant from this country. I do not propose to pursue this difficulty. Given that I am of the view that the content of the draft reasons was otherwise such as to lead to a denial of procedural fairness, it is unnecessary to base my decision on Teoh . It is sufficient to say that the paucity of the Minister's reasoning in respect of the interest of the children provides a strong foundation to say that the application of the views of the Full Court in Wan would lead to the decision being set aside also. Both cases stand for the proposition that, before addressing the question of the best interests of the children, it is necessary to determine what those interests are. I have already dealt with that in relation to an earlier contention. 97 In this case, the delegate and the AAT were obliged to consider the primary considerations of the children identified in Ministerial Direction No. 21. Therefore, the delegate and the AAT were under an obligation to have regard to the best interests of any of the children who were either in a parental or close relationship with the person under consideration. In my opinion, they were not obliged to identify the interests of the child Hao Lam or whether those interests would be affected by the cancellation of the applicant's visa and the consequential removal of the applicant from Australia because, in this case, there was no close relationship between the child and the applicant. 98 The applicant could not have had a legitimate expectation that either the delegate or the AAT would consider the best interests of any children other than the class identified in Ministerial Direction No. 21 itself. 99 In those circumstances, and for the reasons already given, the applicant cannot rely on Teoh's case to claim a lack of procedural fairness. 100 In my opinion, the application must be dismissed. The applicant must pay the first respondent's costs. I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | appeal from administrative appeals tribunal upholding minister's delegate's decision to cancel visa whether jurisdictional error because of failure to consider interests of applicant's sister no close relationship between applicant and child child's interests not a necessary consideration no jurisdictional error application dismissed. migration |
On 14 January 1999 he left Bangladesh and moved to South Africa. On or about 2 February 2002 he left South Africa travelling on a South African passport and with an Australian visa. He arrived in Australia on or about 3 February 2002. On 11 March 2002 he applied for a protection (Class XA) visa. That application was supported by a statutory declaration made by the Appellant bearing date 7 March 2002. On 31 July 2003 the application for a protection visa was refused by the Minister's delegate. 2 In August 2003 the Appellant applied to the Refugee Review Tribunal ('the Tribunal') for review of the Minister's delegate's decision. It would appear that the Appellant lodged his application for review with the Tribunal in two different ways, that is to say, by facsimile on 12 August 2003 and by some other means on or about 14 August 2003. 3 A 31 page facsimile containing the Appellant's application for review was forwarded to the Tribunal by the Appellant's agent, Kazi and Associates, on 12 August 2003. 4 That facsimile included not only a formal four page application for review signed by the Appellant and bearing date 12 August 2003, but also a number of other documents including a copy of the Minister's delegate's determination of the Appellant's application for a protection (Class XA) visa dated 31 July 2003. Other documents were included with the application including, most importantly, a statutory declaration made by the Appellant bearing date 9 March 2002. 5 The Appellant's application for a protection (Class XA) visa incorporated a statutory declaration made by the Appellant on 7 March 2002. This application had been lodged with the Department on behalf of the appellant by his agent, Kazi and Associates. 6 It is somewhat curious that the statutory declaration which formed part of the original protection visa application bears a different date from the copy of the statutory declaration which was included as part of the Appellant's application for review to the Tribunal as contained in the facsimile dated 12 August 2003 to which reference has been made. The statutory declaration made 7 March 2002 appears to be identical in terms with the statutory declaration made 9 March 2002 and I am assured by counsel for the parties that in terms of content the statutory declarations are the same. 7 Another copy of the application for review to the Tribunal signed by the Appellant and dated 12 August 2003 appears to have been received by the Tribunal on 14 August 2003. I am a genuine refugee, DIMIA did not look my claim properly. 9 On 24 November 2003 the Tribunal affirmed the decision of the Minister's delegate not to grant the Appellant a protection visa. That decision was handed down on 18 December 2003. 10 On 6 January 2004 the Appellant filed an Application for constitutional writ relief in respect of the Tribunal's decision in the Federal Magistrates Court of Australia. On 19 April 2004 an Amended Application was filed in that Court and, upon the matter being called on for hearing on 13 December 2005, a Further Amended Application was filed in the Federal Magistrates Court. 11 The matter was both heard and decided in the Federal Magistrates Court on 13 December 2005, the Application being dismissed with costs. Application be dismissed. Applicant to pay the respondent's costs in the sum of $4,500.00 pursuant to Part 21 Rule 21.02(2)(a) of the Federal Magistrates Court Rules. On 21 March 2006 an Amended Notice of Appeal was filed in this Court and it is that Notice of Appeal which has come before the Court for hearing. 13 When the matter was called on for hearing counsel for the Appellant, appearing pro bono, indicated that his client wished to rely upon an additional ground of appeal. That ground is said to have sprung from a reconsideration of the Tribunal's decision in the light of the decision of the Full Court in SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs ('SZEEU') [2006] FCAFC 2 which was handed down on 24 February 2006. That decision was one of Moore, Weinberg and Allsop JJ. 14 Counsel for the Respondent Minister opposed leave being granted to the Appellant to rely upon the proposed additional ground. After a short adjournment a document entitled 'Additional Ground for Review' was produced by counsel for the Appellant recording the precise terms of the ground upon which the Appellant wished to rely. 15 The hearing of the appeal has proceeded on the premise that the Court will both decide the application for the amendment and the appeal itself at the one time. To that end the Respondent Minister read the affidavit of Catherine Jane Gray sworn 13 April 2006 which, amongst other things, attached the 31 page facsimile which had not been reproduced in the appeal book. 16 The Appellant submits that the Tribunal, whilst espousing reliance upon the correct test, failed to apply the correct test as to a well-founded fear of persecution in deciding the application before it. The Appellant further submits that the Tribunal fell into jurisdictional error by failing to comply with the requirements of s 424A of the Migration Act 1958 (Cth) ('the Act') in that it failed to give the Appellant particulars of information it considered would be the reason or part of the reason for affirming the decision of the Minister's delegate that was under review and inviting the Appellant to comment upon that information. The Tribunal notes that the applicant has changed his claims significantly in the process of his applications at the primary and review stages. In his original application dated 11 March 2002, the applicant made no mention of any harm he had suffered as a Hindu and only mentioned the BJP as his political opponent. He also made no mention of having had "false cases" filed against him. This was a claim only introduced by his adviser in his submission. At the time of the review, he had revised his evidence with regard to the harm he had suffered before leaving Bangladesh to make the Jamaat-e-Islami the primary source of harm he had suffered. The Tribunal notes that in his primary application, there was no mention of "false charges" having been laid. In the light of the fact that he had not mentioned this claim in his primary application, and the fact that he was able to depart Bangladesh using his own passport, the Tribunal finds that his claim with regard to false charges having been laid is a fabrication designed to strengthen his claim. The Tribunal has considered the particular circumstances of the applicant and finds on the basis of the fact that the applicant was able to gain high school education, that any such generalised societal discrimination the applicant may have suffered did not constitute serious harm. The Tribunal also accepts the independent evidence that the government has sometimes failed to criticise, investigate, and prosecute the perpetrators of attacks on members of religious minorities. However, the Tribunal finds that the evidence before it indicates that these attacks are in general on prominent Hindus or are in the nature of random and non-selective attacks. The Tribunal is not satisfied that the applicant has been active politically as he claims, and hence does not have a profile such that there is a real chance he would be targeted by those engaged in such activities. It is submitted that whilst the Tribunal espoused a consideration of the matter by reference to whether there was a 'real chance' that the Appellant would suffer serious harm were he to return, it did not apply a 'real chance' approach but rather looked at the matter on a 'balance of probabilities' approach. 19 Under s 65(1)(a)(ii) of the Act, the Minister is to grant a visa to an applicant if satisfied that 'the other criteria for it prescribed by this Act or the regulations have been satisfied'. If not so satisfied, then under s 65(1)(b) of the Act, the Minister is to refuse to grant the visa. As Chan shows, a substantial basis for a fear may exist even though there is far less than a 50 per cent chance that the object of the fear will eventuate. But no fear can be well-founded for the purpose of the Convention unless the evidence indicates a real ground for believing that the applicant for refugee status is at risk of persecution. A fear of persecution is not well-founded if it is merely assumed or if it is mere speculation. In this and other cases, the Tribunal and the Federal Court have used the term "real chance" not as epexegetic of "well-founded", but as a replacement or substitution for it. Those tribunals will be on safer ground, however, and less likely to fall into error if in future they apply the language of the Convention while bearing in mind that a fear of persecution may be well-founded even though the evidence does not show that persecution is more likely than not to eventuate. . 26 The ground of appeal upon which the Appellant relies, referrable to the question of whether the Tribunal applied the correct test, focuses attention upon the findings of the Tribunal that there are attacks on Hindus in Bangladesh which are random , isolated , unsystematic and non-selective . Counsel for the Appellant argues that such findings in respect of attacks on Hindus compel a conclusion that there was a real chance that the Appellant would suffer serious harm were he to return to Bangladesh or, expressed in Convention terms, that he would have a well-founded fear of persecution were he to return. 27 Like the learned Federal Magistrate, I am unable to accept this submission. It is clear that the Tribunal has addressed the question in the manner required by the Act and the Convention and has not approached the matter by reference to a balance of probabilities test to determine whether there was a chance that the Appellant would suffer serious harm for a Convention reason were he to return to Bangladesh. 28 In support of the Appellant's argument, the Appellant relied upon an illustration provided by Deane J, then a member of this Court, in Tillmanns Butcheries Pty Limited v Australasian Meat Industry Employees' Union (1979) 27 ALR 367 at 381. His Honour was at that stage considering the meaning to be given to the words 'likely' and 'substantial' in s 45D of the Trade Practices Act 1974 (Cth). It would, however, be difficult to deny that there was a real chance or possibility (or likelihood in that sense) that an occasional passer-by would be wounded by the bullet. Plainly, the act of firing a rifle through drawn curtains into a lane used by pedestrians would be an act which was, in the circumstances, prone or liable (likely in that sense) to cause injury to a passing pedestrian. Whilst one can accept, as his Honour indicated, that there would also be a real chance that a pedestrian who may be travelling along the road adjacent to the place from which the rifle is fired might be injured, such a real chance would be one which would affect persons walking along the particular street rather than persons inhabiting the country in which the street happened to be located. 30 Given, especially, the use of the word 'isolated' and the other words to which attention has been drawn, I am unable to conclude that the Tribunal applied the wrong test to determine whether or not the Appellant had a well-founded fear of persecution in reaching the conclusion which it did. In the circumstances ground of appeal 1, as recorded in the Amended Notice of Appeal, fails. 31 In relation to the foreshadowed second ground of appeal, counsel for the Respondent Minister submits that leave to rely upon it should be refused for the reason that it would inevitably fail. Even if that be the case, given the circumstances in which the Appellant has come to consider the possibility of raising the ground, namely, the recent publication by the Court of its reasons for decision in SZEEU , I am of the opinion that leave ought to be granted to the Appellant to amend the Amended Notice of Appeal filed 21 March 2006 by adding Ground 2 as recorded in the sheet of paper handed up by counsel for the Appellant which I will initial and date this day and place with the papers. 32 Turning to a consideration of that ground it is conceded, and in my view correctly, by counsel for the Respondent Minister that but for the application to the circumstances of the case of s 424A(3)(b) of the Act, there would have been a failure by the Tribunal to comply with the requirements of s 424A(1) of the Act. Plainly the Tribunal had regard to the Appellant's 'original application dated 11 March 2002' and also to what was referred to as 'his primary application'. In my opinion, the expression 'his primary application' was intended as a reference to what was earlier described as 'his original application dated 11 March 2002'. In particular, the material which the Tribunal had regard to was the information contained or perhaps more accurately not contained in the statutory declaration of the Appellant made on 7 March 2002 which was included in the application for a protection (Class XA) visa lodged on 11 March 2002. 33 The problem for the Appellant is that s 424A(1) does not apply to 'information ... that the applicant gave for the purpose of the application', within the meaning of section 424A(3)(b) of the Act. Accepting that the words 'the application' mean the application for review made to the Tribunal, a question arises as to whether or not the information to which the Tribunal had regard was information that the Appellant gave to the Tribunal. 34 In my opinion the inescapable conclusion is that all of the information contained in the 31 page facsimile, which constituted the application for review as submitted to the Tribunal by the Appellant's agent, Kazi and Associates, on 12 August 2003, constituted information that the Appellant gave for the purpose of the application within the meaning of s 424A(3)(b) of the Act. Accordingly, s 424A has no application in the circumstances of the case. The Tribunal thereby gained knowledge of what the appellant had said at that time about his experiences in Bangladesh. It was knowledge used by the Tribunal in assessing the credibility of the appellant and assessing the veracity of the account given by the appellant to the Tribunal. I do not accept that, by adopting the statement at the hearing before the Tribunal, that information was transformed into information provided by the appellant in his application for review. ... If the Tribunal comes to know of what was said by an applicant at a point before any application for review was made, and views what was said at that time as material to its assessment of what was later said by an applicant, then the mere adoption of the earlier statement during the review process would not result in the knowledge (and relevantly information in the present appeal) being comprehended by s 424A(3)(b). In this instance the information to which the Tribunal referred in its reasons was information derived from the documents which the Appellant gave to the Tribunal for the purpose of the review application. 38 In the circumstances, ground of appeal 2 fails. 39 Accordingly, the appeal should be dismissed with costs. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | well-founded fear of persecution test application of s 424a of the act migration |
The parties to the Distributorship Agreement, which remains on foot, are the first applicant, Hume Computers Pty Ltd (Hume), and the first respondent, Exact International BV (Exact). ESA is a wholly owned subsidiary of Exact. Mr Urand is the managing director of ESA. 2 The urgency arises because in about late September 2006, after the commencement of these proceedings, Hume became aware that ESA had invited the applicants' customers to attend a marketing event to take place on 18 October 2006. One of the purposes of the event is for ESA to seek to persuade Hume's customers to leave it and obtain from ESA the services presently provided by Hume (or the second applicant, Hume Business Solutions Pty Ltd, which I will call HBS). 3 The essential issue which separates the parties is whether, while the Distributorship Agreement remains on foot, ESA is entitled to approach Hume's customers and seek to persuade them to remove their custom from Hume to ESA. The causes of action pleaded in the statement of claim include breach of contract, breach of an implied duty of good faith, breach of confidence, misleading and deceptive conduct, fraud and conspiracy. 4 Although the application for injunctive relief was listed before me with an estimate of a half day, it became apparent in the course of the hearing that it would occupy more than that time. Approximately twenty affidavits were read, and a large number of exhibits were tendered. Due to the urgency of the matter and the need to reduce the subject matter of the interlocutory dispute in the way discussed with the parties during the hearing, my reasons will not set out the evidence in great detail. 5 The substance of the relevant evidence and of my reasons for judgment can be stated fairly briefly. The Distributorship Agreement was entered into on 18 June 1997. It provided for the appointment of Hume as Exact's non-exclusive distributor in Australia. The products which are the subject of the Distributorship Agreement are computer software programs written or designed by Exact and licensed by it in Australia. 6 Exact is a multinational company incorporated in the Netherlands. It has significant worldwide operations run through its international group of companies. Its operations in the Asia-Pacific region are conducted through a company called Exact Malaysia. 7 Before entering into the Distributorship Agreement, Hume expressed concerns to Exact about the requirement that the Distributorship Agreement be non-exclusive. This was because of the fact that Hume had an existing business which it would have to cease and because of the substantial investment that it would have to make in establishing and building up its new distributorship. To overcome Hume's objections about the lack of exclusivity, Exact provided Hume with a letter of comfort dated 5 June 1997. In case the market situation or business environment changes and forces Exact to open its own office, Exact will discuss these new developments and expansion plans on forehand [sic] with Hume. Hume's reward for this is an entitlement to 50 percent of the proceeds of sale and 50 percent of the maintenance fees paid by customers. 9 The exact relationship between Hume and the licensees is not spelled out clearly in the Distributorship Agreement. This is because Hume is bound to sign up the end users of the products as licensees to a contract made directly between Exact and the licensee. The terms of the contract between Exact and the licensees are set out in Exhibit C to the Distributorship Agreement. Article 11 of that document provides that Exact shall itself maintain the software under the terms of the contract with the end user. 10 However, Article 7 of the Distributorship Agreement provides that Hume is responsible for all support to be provided to the licensee under the licence agreement or the maintenance agreement and that Exact will provide Hume with the support reasonably required in order for Hume to meet those obligations. In my opinion, the effect of Article 7 is that Exact appoints Hume as its agent to maintain and support the software sold by it to the licensees or end users. 11 Under Article 14 of the Distributorship Agreement, Hume is required to use its best endeavours to promote and extend sales of Exact's products in Australia to potential licensees. It is bound not to conduct the business of selling or distributing any similar products to those of Exact. Article 20 provides for the agreement to continue for an indefinite period subject to Articles 20(2) and (3). Article 20(2) provides for termination by Exact for cause. Article 20(3) provides that the Distributorship Agreement may be terminated without cause by either party on 31 December 1999 or at the end of any calendar quarter thereafter on 90 days' prior written notice. 12 Importantly, upon termination by either party, Hume is to be paid compensation equal to 50 percent of all maintenance fees for a period of three years; see Article 21(1)(a). This clause, though not entirely clear in its meaning, plainly enough entitles Hume to substantial compensation on termination of the Distributorship Agreement. The effect of it seems to be to entitle Hume to what amounts to compensation equal to three years' notice of termination. This arises from the terms of Article 3(2), Article 21 and Exhibit A of the Distributorship Agreement. 13 Article 25 is an entire agreement clause and provides that any variation of the Distributorship Agreement shall not be binding unless made in writing and signed by the parties. Article 27 provides that the Distributorship Agreement is to be governed by the laws of The Netherlands, and all disputes concerning the validity, interpretation or performance of the agreement are to be submitted to the courts of The Hague. 14 From the inception of the Distributorship Agreement Hume ordered its software from Exact Malaysia. As of January 2000, apparently in accordance with procedures established by Exact, Hume began to log the identity of all its customers onto an internet portal system. Whilst this gave Exact access to the identity of those customers, the purpose of doing so seems to have been a limited one. Consistent with the contractual arrangements in the Distributorship Agreement, the purpose of Hume's entry of data onto the portal seems to have been to enable Exact to provide what may be called "second-line support" for those customers. That is to say, first-line support as Exact's agent is provided by Hume, with backup or second-line support coming from Exact, notwithstanding the fact that Exact has a direct contractual relationship with the end users. 15 On 17 January 2002, Mr Aidan Leathem of Hume was informed by Exact that it intended to set up a subsidiary in Australia. Whilst this was done without the consultation required by the letter of comfort, the effect of the communications between the parties appears to have been that the Australian subsidiary of Exact would only provide closer after-sales support service to Hume. This is described in the statement of claim as the '2002 ESA Representation'. 16 ESA was established on or shortly after 8 May 2002 and has conducted business in Australia since that time. There is evidence of a further representation in similar terms made in 2003. This was that ESA had no intention of selling directly to the Australian market other than in exceptional circumstances and only to established international customers of Exact. This is called the '2003 ESA Representation'. 17 As early as January 2004, Hume began to complain about direct sales made by ESA in apparent breach of earlier assurances. Mr Aidan Leathem said in an email of 21 January 2004 that this was placing a strain on the relationship between Exact and HBS. 18 In June 2004 Exact proposed to Hume that it acquire Hume's business, which would be merged with that of ESA. Mr Leathem has given evidence that in the course of the discussions, Mr Patel of Exact assured him that even if a deal was not reached, ESA would only pursue clients who had offices in "multiple countries". No agreement was reached between Exact and Hume for the purchase of the business, and the relationship between the parties continued to deteriorate. 19 In June 2005, Hume threatened legal action, apparently as a result of ESA entrenching upon what Hume considered to be its market. A "code of conduct" was apparently established between the parties, regulating the basis upon which ESA could make direct sales. Mr Urand gave evidence in cross-examination that ESA adhered to the code of conduct until January 2006. However, in January of this year ESA approached 10 of Hume's customers. Hume then sent a letter of demand to ESA and the approaches to customers seemed to cease temporarily. Nevertheless, I have evidence of access to the portal which was obtained by ESA during the ensuing period. I infer from this, and from concessions made by Mr Urand in cross---examination, that by at least August 2006, ESA decided to approach Hume's customers directly. This was done by obtaining details of Hume's customers on the portal. 20 The effect of Mr Urand's evidence in cross-examination was that ESA obtained details of Hume's customers, that is, those who were not obtaining software or maintenance directly from ESA, from the portal. This information was used by ESA to target those customers to come across from Hume to ESA. 21 Mr Urand conceded that one of the purposes of the marketing event of 18 October 2006 is to try to move customers away from Hume to ESA. Indeed, on 11 October 2006, Mr Urand sent an email to invitees for the marketing event informing them of the hearing of the present notice of motion. Mr Urand stated that ESA opposes the orders sought by Hume. He said that ESA believes that this will prevent ESA from ensuring that Exact's obligations under the licensing and maintenance agreement are met, and from ensuring that customers get the best possible experience from their software. 22 The background to this approach by ESA appears to be that ESA alleges that it has received complaints from customers about Hume's maintenance of Exact's software. Nevertheless, despite the provisions of the Distributorship Agreement, which would require Exact to give notice of these complaints to Hume, no such notice has been given. Instead, Exact appears to have taken the view that self-help is the better course. 23 Mr Urand could not explain why he did not tell Hume of the complaints. He conceded that ESA saw complaints from customers as an opportunity to transfer their custom from Hume to ESA, but he denied that this was the reason for the direct approach. Mr Urand also conceded that ESA has made repeated contact with customers to enquire whether they have complaints about Hume's service. 24 The case which Hume seeks to bring against Exact and the other respondents is a serious one. It alleges that what Exact and ESA have done is part of a deliberate and planned worldwide expansion strategy. Under the alleged strategy, Exact is said to establish a distributor in a particular territory, thereby avoiding the need to expend its own resources in establishing a market. Where the distributorship becomes successful, according to Hume's case, Exact moves in after a three-to-five-year establishment period and takes over the distributorship. 25 Hume has obtained evidence of this from Mr Kampen, who was formerly a senior executive with the Exact group of companies. Indeed, he negotiated the Distributorship Agreement for Exact and was a signatory to the letter of comfort. According to Mr Kampen's evidence, Mr Hagens, the then CEO of Exact, told him that the plan is to buy "jewels for scrap-metal prices". Hume contends that this and other evidence points to the fraud and conspiracy alleged in the statement of claim. The assurances as to non-competition and eventual breaches are said to be part of a plan to erode the value of Hume's business, which is to be found in the ongoing payment of maintenance fees payable under the Distributorship Agreement. 26 The conspiracy and fraud cases are complex. Hume has established a serious question to be tried on these counts, but it is unnecessary for me to determine the strength of the serious question for the reasons stated below. In any event, it seems to me that quite apart from the claims of breach of s 52 of the Trade Practices Act 1974 (Cth), fraud and conspiracy, there is certainly a serious question which can be seen to have been established on the evidence that I have set out. 27 In my opinion, there is a serious question to be tried at a final hearing as to whether Exact (and through it ESA) have breached an implied obligation of good faith to cooperate in achieving the contractual objects found in the Distributorship Agreement. The principle embodied in this implied obligation was stated by the NSW Court of Appeal in Burger King Corporation v Hungry Jack's Pty Limited [2001] NSWCA 187 at [169] and following. The obligation includes an implied covenant not to prevent the performance of the contract or to withhold its benefits. 28 By keeping the Distributorship Agreement on foot and thereby obliging Hume to perform its obligations to locate and service customers, whilst at the same time asserting a right to entice those customers away from Hume, Exact appears to be acting in breach of its implied obligation. This is a sufficient basis to warrant the grant of interlocutory injunctive relief subject to considerations of the balance of convenience. 29 An alternative basis available at this stage of the proceedings is that the information about customers supplied by Hume through the portal is given to Exact for a limited purpose and is otherwise confidential. Exact's assertion that it is entitled to use this information to target Hume's customers during the course of the existing Distributorship Agreement seems to me to raise a serious question of misuse of the information. 30 In deciding the issue of serious question, I do not need to consider the strength of such a question, because this decision will not effectively resolve the final hearing; Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533; Walker v ANZ Banking Group Ltd (No 2) (2001) 39 ACSR 557. Nor does the entire agreement clause in Article 25 of the Distributorship Agreement persuade me that there is no serious question to go to a final hearing; see for example, Lawson Hill Estate Pty Ltd v Tovegold Pty Ltd (2004) 214 ALR 478 at [82]---[83]. 31 In my opinion the balance of convenience favours the grant of interlocutory relief. It is true that Hume has had the benefit of the Distributorship Agreement for a period of nine years. It is also true that the claims it makes sound in damages. However, it seems to me that the approach that ESA wishes to take to the Distributorship Agreement would be to substantially erode the value of Hume's business. This is of importance in any consideration of balance of convenience, but it is even more pointed in the present case, where, upon termination of the distributorship, Hume is entitled to compensation based on the value of the customers whom Exact wishes to entice away. 32 What is striking about this entire proceeding is that neither side has sought to terminate the Distributorship Agreement, notwithstanding that all trust and confidence between the parties seems, at least from the evidence put before me thus far, to have evaporated. 33 ESA pointed to a number of discretionary considerations against the grant of relief. One of these was delay, however counsel for ESA and Mr Urand quite fairly said that he could not point to any prejudice in this regard. In any event, the matter has been brought to a head by the recent decision of ESA to seek to entice away almost all of Hume's customers. 34 Whether or not there is, as ESA contends, dissatisfaction amongst Hume's customers, I do not see that the balance of convenience favours allowing ESA to directly approach and entice those customers away from Hume while at the same time leaving the Distributorship Agreement on foot. Nor does the evidence that Hume has written additional modules to the Exact programs incline me in ESA's favour on the balance of convenience. This is a matter which can be sorted out contractually, either in the course of agreement or upon termination of the Distributorship Agreement. ESA also pointed to the sale, in about July 2005, of the business of Hume to its related company HBS. I do not see that this goes against the grant of interlocutory relief. 35 ESA also placed some store on the choice of law clause in Article 27 of the Distributorship Agreement. It was submitted for ESA that the exclusive jurisdiction clause found in Article 27 would point strongly against the grant of leave to serve Exact outside the jurisdiction. Leave has not yet been granted, but ESA argues at this stage that there are strong prospects that it will be refused when that application is heard. In my view, this argument fails to have regard to the decision of the Full Court in Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1 at 24---25. The claims which Hume makes against Exact include claims under the Trade Practices Act which do not ordinarily fall within the purview of this type of clause. 36 There was debate about the form of any interlocutory relief. Counsel for Hume relied upon Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia No 3 [1998] HCA 30 ; (1998) 195 CLR 1 at [33] for the proposition that relief in wide terms should be granted, and said that this should extend to mandatory injunctive relief if necessary. However, it seems to me that the proper exercise of my discretion is that interlocutory injunctive relief should be limited to the prevention of enticement of Hume's customers. This can be stated in sufficiently clear terms to prevent the actions which ESA has sought to achieve, in particular at the 18 October 2006 marketing event. The precise steps which ESA must take to comply with the injunction will be up to it, but clearly enough ESA and Mr Urand should be restrained from soliciting the business of Hume's existing customers in the manner sought to be achieved by ESA. 37 I will make orders in terms of paragraphs 2(a)(A) and 2(a)(B) of the notice of motion. The terms "Relevant Person" and "Distributorship Agreement" will be defined as set out in the notice of motion. I do not consider that any of the other orders sought in paragraphs 2 and 3 of the notice of motion should be made. 38 The orders that I will make are upon the applicants by their counsel giving the usual undertaking as to damages. I will order the second and fourth respondents to pay the costs of the applicants of the day of 13 October 2006. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson J. | application for interlocutory injunction injunction to restrain respondents from enticing applicants' customers serious question to be tried implied obligation of good faith balance of convenience interlocutory relief granted practice and procedure |
The respondents applied for the costs of the application and other costs. They also applied for an order that they have leave to tax those costs forthwith pursuant to O 62 r 3 of the Federal Court Rules 1979 (Cth) (the Rules). 2 The application seeking leave to amend had its genesis in a notice of motion which was filed on 12 June 2007 in which the applicant sought leave to amend its third further amended statement of claim. That notice of motion was listed for mention on 9 July 2007 and was heard on 12 July 2007. The applicant lodge and serve the applicant's proposed fourth further amended statement of claim within 28 days. 2. The hearing of the applicant's notice of motion dated 12 June 2007 to amend its further amended statement of claim be adjourned to 9.30am on 4 September 2007. 3. The applicant pay the respondent's costs of the applicant's notice of motion dated 12 June 2007 to date. 4. The respondent's notice of motion dated 26 April 2007 be adjourned to 9.30am on 4 September 2007. The hearing of the application was adjourned again by consent to 20 September 2007. 4 On 19 September 2007 the applicant filed a notice of motion seeking an adjournment of the hearing of the notice of motion filed on 12 June 2007 to amend the applicant's third further amended statement of claim. The applicant pay the respondents' costs of and incidental to the notice of motion. 3. The respondents' oral application for an order that the costs be paid forthwith be reserved. The applicant's oral application for leave to file a further amended statement of claim be adjourned to the same date and time for hearing. The applicant lodge with the Court and deliver to the respondents any further proposed amended statement of claim by Wednesday, 10 October 2007. The respondents advise any objections to the proposed amended statement of claim by Monday, 29 October 2007. The applicant respond to any notice of objection by Friday, 2 November 2007. 8 On 9 October 2007 the applicant's solicitors wrote to my associate and advised that a notice of motion seeking leave to amend the applicant's third further amended statement of claim would be filed and served by 19 October 2007, together with an affidavit annexing a copy of the proposed fourth further amended statement of claim. 9 The applicant's solicitors were advised that an oral application had already been made for leave to amend the applicant's statement of claim. They were also advised that the orders so far made required the applicant to "lodge" with the Court any proposed amended statement of claim rather than file and serve that document. 10 On 19 October 2007 the applicant's solicitors again wrote to my associate advising that the proposed fourth further amended statement of claim would not be ready until the following week. 11 On 24 October 2007 the applicant sent to my chambers the proposed fourth further amended statement of claim advising that the applicant remained ready to argue its application for leave to amend its statement of claim on 7 November 2007. 12 On 31 October 2007 the applicant wrote again to my Chambers and stated that the parties proposed that the respondent provide any objections to the proposed fourth amended statement of claim by Monday, 5 November 2007. It was also proposed that the matter proceed by way of a directions hearing on 7 November 2007, instead of for the purpose of hearing the substantive application. The parties are to confer in relation to the respondents' objections to the proposed fourth further amended statement of claim dated 24 October 2007. The applicant is to deliver to the respondents and to the Court any revised proposed fourth further amended statement of claim on or before 12 November 2007. 3. The proceeding be stood over to 27 November 2007 at 10.15am before Lander J. 6. The question of costs be reserved. 7. All outstanding notices of motion be adjourned to the same date and time for mention. The respondents' responded to the revised proposed fourth amended statement of claim by filing affidavits in opposition. 16 On 22 November 2007 the applicant's forwarded another proposed further fourth amended statement of claim in substitution of the proposed further fourth amended statement of claim which had been lodged on 13 November 2007. 17 On 23 November 2007 the respondents wrote to my chambers advising that the proposed further fourth amended statement of claim which had been lodged on 22 November 2007 was substantially different to that which had been lodged on 13 November 2007. 18 The applicant's application to file and serve a fourth further amended statement of claim did not proceed on 27 November 2007 because the respondents had not had sufficient time to address the proposed fourth further amended statement of claim which had been lodged on 22 November 2007. The applicant lodge with the Court and serve the respondents with the applicant's proposed statement of claim by 10 December 2007. 2. The applicant provide Lander J's associate and the respondents' solicitors with the applicant's written submissions by 14 December 2007. 3. The respondents provide Lander J's associate and the applicant's solicitors with the respondents' written submissions by 25 January 2008. 4. The applicant provide Lander J's associate and the respondents' solicitors with the applicant's written submissions in reply by 12 February 2008. 5. The applicant's application for leave to amend the applicant's statement of claim be adjourned until 9.00am on Wednesday, 20 February 2008. 6. The applicant pay the respondents' costs of the application for leave to amend up to and including today. 7. The questions as to the scale of costs and as to whether there is a further order that costs be paid forthwith be reserved. Moreover, an order was made that the applicant pay the respondents' costs of the applicant's notice of motion of 12 June 2007 which I dismissed on 20 September 2007. 21 The question of costs of the hearing of 7 November 2007 was reserved. To avoid any doubt, there will be an order that the applicant pay the respondents' costs of that hearing. 22 The applicant's application was heard and determined on 20 February 2008. The applicant file and serve with the FFASOC proper particulars of the fiduciary duty pleading (paragraphs 21 to 53) and of the misleading and deceptive conduct pleading (paragraphs 113 to 116). 3. The time from which the amendments the subject of paragraph 1 take effect shall be reserved for trial, and for that purpose this order is a contrary order within the meaning of Order 13 rule 3A. 4. The questions of costs the subject of the parties' submissions on 20 February 2008 be reserved. The costs which have been thrown away will be, in due course, a matter for the taxing officer. The applicant pay the respondents' costs of the applicant's application for leave to amend subsequent to 27 November 2007 up to and including the costs of the hearing on 20 February 2008, on a party and party basis as agreed or taxed. 5. The orders sought in subparagraphs 3.1, 3.2, 3.4 and 3.6 are orders for costs thrown away by reason of amendments made to the applicant's statement of claim from time to time since June 2004. There is no reason why the respondents should not have their costs in relation to those amendments. There will be an order that the applicant pay the respondents' costs including costs thrown away in relation to the amendments referred to in those subparagraphs. 26 Subparagraphs 3.3 and 3.5, which were applications heard by Lee J, must be dealt with separately. In relation to the application referred to in paragraph 3.3, Lee J made an order on that application that costs be in the cause. I am not prepared to revisit his order and that order must stand. 27 The application referred to in paragraph 3.5 was adjourned "sine die". Justice Lee reserved the question of costs. I am not sure why he reserved the question of costs and would need further information before making an order in the respondents' favour. 28 I am not prepared to make the orders in subparagraphs 3.7 and 3.8. An order that the applicant pay the respondents' costs thrown away by reason of the amendments to the various statements of claim contained in subparagraphs 3.1, 3.2, 3.4 and 3.6, and the orders made today for costs in respect of the applicant having been given leave to file a fourth further amended statement of claim, will protect the respondents insofar as the respondents have been occasioned costs by reason of those amendments. If those costs include costs thrown away by reason of the preparation of a list of documents for example, which contains documents not relevant to issues now raised on the pleadings, then the respondents can seek to have those costs included in the taxed costs. 29 I think there ought to be an order made in favour of the respondents in the terms of subparagraph 3.9. It was the respondents' notice of motion of 26 April 2007 to strike out the applicant's reply which precipitated the applicant into making its application for leave to file the fourth further amended statement of claim. I have already foreshadowed I am prepared to make the costs orders sought by the respondents in paragraph 4. The remaining question is whether or not an order should be made pursuant to O 62 r 3(3) entitling the respondents to have their bill of costs taxed in respect of previous costs orders made by other judges and me, and the costs orders made today. 30 The general rule in O 62 is that any costs awarded on any interlocutory application shall not be subject to taxation or payable until the principal proceeding is finalised. 31 The respondents accepted that the making of an order under O 62 r 3 is exceptional. There must be a reason consistent with the dictates of justice to depart from the usual rule: Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297. In determining whether it would be in the interests of justice to make such an order, regard must be had to at least the following matters. First, whether there has been any fault on the party seeking an order under O 62 r 3. Secondly, whether it would be fair, in all the circumstances, to require a party in whose favour an order for costs has been made in relation to an interlocutory application to await the hearing of the principal proceeding. Thirdly, the conduct of the party against whom the order for costs has been made and, in particular, whether that party has been guilty of delay such as to cause a significant postponement of the final determination of the proceeding. Fourthly, where the costs relate to amendments to pleadings, whether the party against whom the order is sought has also been unable to articulate its claim or its defence in accordance with its obligations under the pleading rules, which has put the opposing party to significant costs. The rule should not be used to punish a party to the litigation. Costs orders are made to compensate, not to punish: Latoudis v Casey (1990) 170 CLR 534. See also Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ; Kingscote District Council v Kangaroo Island Eco Action Inc (No 2) (1996) 67 SASR 422 at 426. 32 There are a number of examples in the authorities to which I was referred as to when the Court would exercise its discretion in favour of a party seeking an order under O 62 r 3. They are but examples. None of the authorities could fetter the discretion arising under the rule. In all of those cases, the party against whom the orders have been sought was not able to prosecute the party's claim or to advance its defence appropriately and in accordance with the Rules. The conduct was such that, in some of those cases, the Court concluded that it would be appropriate to make such an order. 33 In All Services Australia Pty Ltd v Telstra Corporation Ltd [2000] FCA 375 ; (2000) 171 ALR 330 , the Court was concerned with a claim under s 52 of the Trade Practices Act 1974 (Cth). The applicant had difficulty in particularising the applicant's case and was ordered to pay the respondent's costs thrown away in relation to applications to amend its pleading. The applicant also sought to strike out the respondent's defence. This may be so where, through no fault of that party, there has been substantial delay in the proceedings, having the effect of substantially postponing a final determination in the matter. This most commonly arises where an applicant has attempted a number of versions of the statement of claim with the result that additional directions hearings were necessary, which should not have been; interlocutory applications had to be brought; and, moreover, substantial delays were incurred in the attempt to plead a case: see Life Airbag Company (NZ) Ltd (Fed C of A, Branson J, 22 May 1998, unreported); Harris v Cigna Insurance Australia Ltd (1995) ATPR 41-445 ; Batten v CTMS Ltd [1999] FCA 1576 and generally McKellar v Container Terminal Management Services Ltd [1999] FCA 1639. In Batten, the effect of the delay was that the matter could not advance, since the respondent could not be required to plead to the statement of claim in its earlier forms. That there has been some delay in a proceeding does not itself suggest an order for payment, in the interim, of costs is appropriate. 35 Her Honour found that whilst there had been some delay by reason of the amendments, not every delay is relevant to an order under O 62 r 3(2). In the case before her, the respondent was able to file a defence notwithstanding the state of the pleadings. Justice Kiefel concluded that it was a complex action and the delay in the respondent taxing its costs would not amount to much. She said to hold otherwise would be to visit a punishment on the applicant. 36 In Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd [2000] FCA 1732 ; (2000) 191 ALR 579 , Mansfield J considered an application under this rule. In the proceeding before him, three separate versions of the statement of claim had been struck out and other proposed statements of claim withdrawn. Considerable time had elapsed before a satisfactory version of the statement of claim had been settled upon. Here, the respondents have been put to significant expense which, as the costs orders indicate, has been expense which they are entitled to recover from the applicants. 38 In this case it is right, as the respondents contend, that the applicant has taken nearly four years to articulate its statement of claim in its final form (if the fourth further amended statement of claim is its final form) for reasons which are not entirely apparent. A significant problem for the applicant in its pleading has been the applicant's inability to express its claim tightly. From time to time, the looseness of expression by the applicant in its pleading has caused the applicant significant embarrassment. 39 However, the thrust of the applicant's case against the respondents has not significantly changed and the respondents have been on notice since the proceeding was commenced of that claim. 40 The respondents filed their first defence in response to the applicant's statement of claim on 31 October 2005. It filed a further defence on 23 January 2006. The respondents have not been called upon to amend its pleadings whilst the applicant has sought to put its pleading in order. In those circumstances, the respondents have not been put to the considerable costs associated with having to re-plead the matter from time to time. 41 The respondents' costs have been occasioned by needing to have considered the various proposed amendments and the hearings of the applications to amend the statement of claim. They will recover those costs in due course whatever the result of the principal proceeding. 42 The applicant's case against the respondents arises out of transactions entered into between the applicant and the respondents which, the applicant claims, gives rise to a very significant claim for damages in the hundreds of millions of dollars. If the applicant were to be successful, or even partly successful in the claim, the amount of costs which would be payable by reason of the orders already made would be an insignificant amount in the scheme of things. 43 There is no evidence that the respondents will suffer any serious disadvantage by not recovering their costs until the principal proceeding is determined. On the other hand, if the order were to be made, both parties would be put to the added expense of considering bills of costs in relation to the separate orders for costs to which reference has already been made. The applicant would need to find funds to pay those costs in advance of the hearing of the principal proceeding. It is desirable that the principal proceeding go forward as soon as possible because the principal proceeding raises important issues which need to be determined. Furthermore, this is not a proceeding where final judgment is "far away" and thus the eventuality of payment is remote: Australian Securities and Investments Commission v Mining Projects Group Limited (No 3) [2008] FCA 952 at [24] per Gordon J and the cases cited therein. 44 On balance, I do not think that this matter calls for an order under O 62 r 3. I think, on balance, the parties would be better served by proceeding with the action rather than being delayed or distracted by the taxation of costs of interlocutory proceedings. 45 There will be no order under O 62 r 3. The applicant pay the respondents' costs of the hearing of 7 November 2007. 2. The applicant pay the respondents' costs of the applicant's application for leave to amend subsequent to 27 November 2007 up to and including the costs of the hearing on 20 February 2008, on a party and party basis as agreed or taxed. 4. The respondents' application for leave to have costs taxed forthwith pursuant to O 62 r 3 be dismissed. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | where application by the respondents for leave to have costs taxed forthwith pursuant to o 62 r 3 where making of such an order is exceptional whether in the interests of justice to make such an order where applicant has filed a fourth further amended statement of claim where the thrust of the applicant's case has not significantly changed application dismissed. practice and procedure |
Most of the contraventions are said to have occurred at a building site located in Woodhill Street, Fairy Meadow ('the Fairy Meadow site'). The others are said to have occurred in the first and/or second respondents' Wollongong office ('the CFMEU office'). The head contractor at that site was Lanskey Constructions Pty Limited ABN 66 010 636 512 ('Lanskey'). Mr David Rowland, who served as site manager for Lanskey, was Lanskey's senior representative on the site. His general foreman or '2IC' was a Mr Chris Taylor (referred to in some diary notes as 'C.T. ') The building being constructed at the Fairy Meadow site was known as the 'Northgate Apartments' building. It consisted of four separate blocks - A, B, C and D. All four blocks shared a common car parking area at ground floor level. Blocks A and D had five upper floors including a loft or penthouse level. Blocks B and C were similar, but they had six upper floors including a loft or penthouse level. Approximately ten units per floor were being constructed on the upper floors of each block with approximately eight units on each loft or penthouse level. The total value of the construction was approximately $23 million. The building under construction on that site was known as 'The Pavilions, City Beach Apartments --- Stage 2'. It was a 52 unit development of about ten storeys in height. By February 2004 the main concrete structure at the Wollongong site was substantially complete and the façade with windows etc was being added to the lower floors. Once again the relevant work was gyprock plastering. 5 In the course of both building projects the contractors had dealings with Pro Finish Interiors Pty Limited ABN 16 096 811 059 ('Pro Finish Interiors'), which in March 2005 became known as AAA Interiors Pty Limited. In January/February 2004 it traded as 'Pro Finish Interiors'. Its principal director was Mr Spiro Repas. Its site foreman at the time was Mr Glenn Suter. 6 Lanskey also had dealings with Innovation Interiors Pty Limited ABN 89 104 518 989 ('Innovation Interiors'). That company entered into external administration on 24 February 2005. In January/February 2004 its principal director was Mr Nenad (also known as 'Ned') Djukic. Its site foreman at the Fairy Meadow site was its leading hand, Mr Graham Boyd. 7 In turn, Innovation Interiors also had dealings with some of Pro Finish Interiors' workers in respect of work at the Fairy Meadow site. 8 Innovation Interiors had a contract to carry out plastering work in respect of Blocks A, B, C and D at the Fairy Meadow site. As it was running behind with its work it had part of the work on Block A taken off it and, at the same time, all of the plastering work in respect of Block C. The work that was taken off Innovation Interiors in respect of Block A was plastering work in respect of the loft or penthouse level of that block. All the sheeting had been done. The majority of the outstanding work was to finish the setting of the sheeting --- putting a coating over the gyprock --- and to attend to defects. Both Innovation Interiors and Pro Finish Interiors submitted prices for the completion of Fast Track's work but the job was awarded to Pro Finish Interiors. An order, signed by Ian Herd, a Lanskey foreman, was formally placed by Lanskey on 'Pro Finnish (sic) Interiors' on Monday 19 January 2004 to 'Finnish (sic) works to block A' --- 'A block level 4'. A day rate of $55 per hour was specified. The relevant work commenced on that day and was substantially completed on Friday 30 January 2004. Lanskey's site foreman for Blocks A and B, Mr Andrew Green, recorded in his site diary for 30 January 2004 that Pro Finish Interiors had 5 men on site who 'Completed A4 + Hall'. No charge was imposed for the work of Pro Finish Interiors' site foreman, Glenn Suter. In respect of the other workers charges were imposed for the work of Barry Sindel --- 24 hours, Norm Philipp --- 30 hours, Norman Philipp [Mr Norm Philipp's son] --- 32 hours, Paul Philipp [Mr Norm Philipp's brother, Reinhard Philipp also known as 'Paul'] --- 30 hours, Anthony Summer (sic) [Anthony Summers] --- 30 hours and Jimmy Gontas [Dimitrios Gontas] --- 16 hours. Each of the men, whose time was charged out by Pro Finish Interiors at $55 per hour plus GST, charged Pro Finish Interiors $35 per hour plus GST for their services. 10 Notwithstanding the apparent completion of Pro Finish Interiors' work on 30 January 2004, Mr Anthony Summers returned to carry out further work for Pro Finish Interiors at the Fairy Meadow site on Thursday 5 February 2004 and Friday 6 February 2004. 11 After Pro Finish Interiors finally completed its plastering work on the Northgate Apartments building, it left the Fairy Meadow site. However, a number of its men returned on Wednesday 18 February 2004 to carry out work on Block D after Innovation Interiors, which had the contract for that Block, sought to engage extra gyprock plasterers to enable the work on that Block to be carried out more expeditiously. 12 In relation to the Wollongong site Pro Finish Interiors was awarded the job of carrying out the plastering work for Hansen Yuncken subject to certain matters being resolved (which, in the result, were never satisfactorily resolved). On 5 February 2004 Pro Finish Interiors had submitted a quotation to Hansen Yuncken for 'Plasterboard Fit-out works to be carried out to the above-mentioned project [THE PAVILIONS, CITY BEACH STAGE 2- WOLLONGONG]. As per plans & specifications supplied'. Under the heading ' Lump Sum Tender Price ' the quotation recorded a ' TOTAL PRICE ' of $1,031,236.50 which with GST produced a ' TOTAL PRICE INCLUDING GST ' of $1,134,360.15. Part of the price was allocated to ' Linings and Partition Works ' and the balance to ' Ceilings and Partition Works '. The quotation was accompanied by a priced bill of quantities for the works. 13 On Monday 9 February 2004 Mr Repas of Pro Finish Interiors met with Mr Michael McEwan, Hansen Yuncken's Project Manager for the Pavilions project to consider Pro Finish Interiors' quotation. Mr McEwan produced a 12 page set of minutes on a standard Hansen Yuncken form headed ' Trade Contractor Pre-Award/Induction Meeting '. Those minutes included the words 'THESE MINUTES HAVE BEEN PREPARED IN CONSULTATION AND ARE AGREED AND ACCEPTED FOR IMPLEMENTATION BY BOTH PARTIES'. The minutes were signed for the 'Trade Contractor' [Pro Finish Interiors] by Mr Repas and for Hansen Yuncken by Mr McEwan. It represents a risk to the builder so I asked for him to confirm his price based on the drawings only and that the bill of quantities was issued for information only. That was the first condition and the others were that safe work method statements and safety plans were forwarded and also certificates of currency for public liability and workers' compensation. They were ss 170NC, 298S(2)(a) and 298SC(c). Section 170NC is to be found in Part VIB of the Act and ss 298S and 298SC in Part XA. By virtue of s 298C, Part XA applied only to the extent provided in Division 2 of that Part. Those definitions are not necessarily applicable to expressions or words as used in Part VIB and Part XA. In s 4(1) 'organisation' was defined to mean 'an organisation registered under the Registration and Accountability of Organisations Schedule' i.e. Schedule 1B to the Act. Section 298T, which also fell within Division 6, provided for the making of applications to the Court for orders under s 298U in respect of conduct in contravention of Part XA. 33 As mentioned above Mr Rowland served as Lanskey's site manager at the Fairy Meadow site and his general foreman or '2IC' was Mr Taylor. Lanskey's contracts administrator was Mr John Miller, the foreman in charge of finishing trades for Blocks A and B was Mr Andrew Green and the foreman in charge of finishing trades for blocks C and D was Mr Ian Herd. Other employees working for Lanskey, from time to time, included Matt Reynolds, Anthony Tate, Andrew Fox and Edmond Erwin Casper, also known as 'Skip' Casper. 34 Whilst Lanskey itself only employed a small number of people to work for it at the Fairy Meadow site, there were as many as 180 workers on site at any given point in time. 35 Mr Casper, who is the third respondent, served as a storeman and site safety officer for Lanskey. He was described at times as a 'first aid officer', as a 'gofor' and as a 'labourer'. 36 In relation to the Wollongong site, as mentioned above, Mr McEwan served as Hansen Yuncken's project manager. The site manager was Mr Lance Bowman and the site safety officer was Mr Graham Clinton. 37 It is common ground that the first respondent is, and at all material times was, an organisation of employees registered under Schedule 1B to the Act and, as such, liable to be sued in its registered name, and also an industrial association within the meaning of s 298B(1) of the Act. 38 It is also common ground that the second respondent is, and at all material times was, an industrial association within the meaning of s 298B(1) of the Act. 39 In 2003 --- 4 the standard CFMEU membership application form made provision for an applicant to record his or her names, address, telephone numbers, date of birth, gender, first language and trade/job. It also made provision for the relevant work area to be identified be it 'construction', 'manufacturing/joinery', 'government' or 'elsewhere'. Further, I request and authorise the CFMEU to represent my interests in relation to any agreement relating to my employment which is proposed to be negotiated under the Workplace Relations Act 1996 or the Industrial Relations Act 1996 (NSW). In the event that such agreement is negotiated under part VI D of the former Act I hereby appoint the CFMEU as my bargaining agent. 42 The Construction, Forestry, Mining and Energy Union operates on a divisional basis, the relevant division for present purposes being the 'Construction and General Division'. 43 In 2003 --- 4 the practice of the Union was to issue receipts for Union dues in the name of the NSW Divisional Branch endorsed 'RECEIVED ON BEHALF OF CFMEU'. 44 In January --- February 2004 the CFMEU office in Wollongong was a green coloured building opposite the Wollongong railway station. It was manned at the time by three persons being two organisers and an office assistant. The organisers were Michael Richard Lane, also known as 'Mick' Lane, and Peter Primmer. As at 18 February 2004 the position of office assistant was filled by Janet McIntosh. Her predecessor had been a lady known as Tanya. 45 Mr Lane, who is the fourth respondent, worked as an organiser of the CFMEU in the Wollongong area. He represented members of the Federal Union and the State Union in that area amongst others. Mr Lane was an elected representative of the New South Wales branch to the Federal Divisional Conference of the CFMEU. According to his PAYG payment summaries his employer was the body identified with the Australian Business Number of Withholder Payer Number 17 524 350 156 which would appear to have been the ABN for the Construction and General Division of the second respondent. 46 Mr Lane carries a Federal right of entry in respect of Federal Industrial Relations and a State right of entry in respect of NSW Industrial Relations. In his role as an organiser Mr Lane negotiates and agrees enterprise bargaining agreements which are certified under the Act. Part of his function as an organiser was to sign up members into the Federal and State organisations. Part of his role was to approve delegates of the Union as representatives of the CFMEU at particular workplaces and to supervise such delegates. I'm not sure that that's really the right word but basically delegates are elected by the members on a job site to carry out something by way of a contact point with the official that may be primarily responsible for the supervising or overseeing that particular worksite. 48 Mr Lane answered to Mr Peter Zeboyak, one of the Assistant State Secretaries of the CFMEU. At the Fairy Meadow site the Union Delegate was Mr Skip Casper and at the Wollongong site the Union delegate was Mr Graham Clinton. 49 Work commenced at the Fairy Meadow site in late 2002. In about December 2002 Mr Rowland moved from Queensland, where Lanskey is based, to New South Wales to take up his appointment as site manager at the Fairy Meadow site. 50 In early 2003 Mr Lane contacted Mr Rowland to enquire whether Lanskey would consider hiring Mr Casper on the understanding that he would also serve as the CFMEU site delegate. Mr Rowland proceeded to employ Mr Casper as a storeman on the basis that he would also carry out site induction including occupational health and safety on the Fairy Meadow site. 51 In relation to the Wollongong site new workers were inducted by Mr Clinton on behalf of Hansen Yuncken. Unionism is voluntary. You can't throw people off site just because they don't want to be in the union. There's freedom of association laws and there will be legal problems if you try to force people to be in the union. The form made provision for a name, address, telephone numbers and union number to be inserted in it together with an indication as to whether the relevant registrant worked in 'Construction', 'Manufacturing', 'Government' or 'other'. Mr Casper inserted his details and nominated his employer as 'Lanskey'. The form also made provision for one of ten odd awards to be ticked as the relevant award. In Mr Casper's case he ticked 'National Construction Award'. 55 One purpose of the delegates registration form was to deal with commissions payable on union fees that a delegate may collect. However you must pay in all fees collected and your commission will be processed by the union office. 56 Rule 57 of the rules of the Construction and General Division and Construction and General Divisional Branches of the first respondent made provision for the appointment of job delegates. They shall receive proper credentials from the Divisional Branch Management Committee. To ensure that all workers on site are financial members of the relevant union, and to receipt all monies received from members in the appropriate receipt book, and paid to the union office on a regular basis. To contact the CFMEU area organiser in respect of any major problem and/or dispute and/or stoppage that has or may arise and to advise him/her of the progress of results of that dispute if they cannot attend. 59 Innovation Interiors' engagement to carry out plastering work at the Fairy Meadow site dated back to May 2003. It appears to have had well over 30 men working for it at one time or another. 60 When Pro Finish Interiors was carrying out work for Lanskey at the Fairy Meadow site it would appear to have had about ten men working for it at one time or another. They included Glenn Suter, Barry Sindel, Norm Philipp (Norman Philipp Snr), Norman Philipp Jnr, Reinhard ('Paul') Philipp, Anthony Summers and Dimitrios Gontas. 61 On Wednesday 18 February 2004 Barry Sindel, Norm Philipp, Reinhard Philipp and Anthony Summers returned to work on the Fairy Meadow site but this time for Innovation Interiors. On this occasion they were joined by Tony Morgan, Geoff Harnett and Albert Lilley. 62 Barry Sindel, Norm Philipp, Reinhard Philipp, Anthony Summers, Tony Morgan, Geoff Harnett and Albert Lilley had all been working together for Pro Finish Interiors at the Wollongong site on the previous Monday. 63 It was Lanskey's practice to record the names of newly inducted workers at the Fairy Meadow site on forms, printed in landscape, which made provision for the nomination of a 'Company' and for the insertion of details of 'Sub-contractor Employee'. 64 In the case of Lanskey, induction was effected first thing in the morning by having newly arriving workers complete a form entitled 'SITE PERSONELL (sic) REGISTER', later 'NEW EMPLOYEE DETAILS', which made provision for a number of particulars to be inserted. For Lanskey the form was one page in length. In relation to Hansen Yuncken newly arriving workers were required to complete a similar form. In the Hansen Yuncken case the form was two pages in length and entitled 'SITE INDUCTION FORM'. In the case of Hansen Yuncken there was no procedure for recording the names of individual workers on a progressive list in respect of each sub-contractor. 65 When Barry Sindel, Norm Philipp, Reinhard Philipp and Anthony Summers returned to the Fairy Meadow site on 18 February 2004 they were not then recorded as Innovation Interiors' workers. Rather, Lanskey's list of Pro Finish Interiors workers was updated by Mr Casper, with the addition of the names of Tony Morgan, Geoff Harnett and Albert Lilley, and then copied and adapted by him by the addition of asterisks on the copy, which he had made, against the names of Barry Sindel, Norm Philipp, Reinhard Philipp, Tony Morgan, Geoff Harnett and Albert Lilley. 66 In point of fact, Pro Finish Interiors had no involvement at all in the work undertaken by these men upon their return to or arrival at the Fairy Meadow site on 18 February 2004. Each of the men, apart from Barry Sindel, appears to have invoiced Innovation Interiors for the work performed by them on 18 February 2004 at the rate of $33 per hour plus GST (cf the rate of $35 per hour plus GST previously charged to Pro Finish Interiors for work at the Fairy Meadow site). Barry Sindel only charged $32 per hour plus GST. Bryan Harnett, Geoff Harnett's son, who commenced working for Innovation Interiors at the Fairy Meadow site on 19 February 2004, also charged $33 per hour plus GST. 67 Under s 8 of A New Tax System (Australian Business Number) Act 1999 (Cth) it was possible for entities that carried on enterprises in Australia to be provided with an Australian Business Number ('ABN'). 'Enterprise' covered all business and trading activities. However, activities in a person's capacity as an employee were excluded from those of an enterprise. 68 Each of Norm Philipp, Reinhard Philipp, Anthony Summers, Barry Sindel, Tony Morgan, Albert Lilley, Geoff Harnett and Bryan Harnett, carried on business as part of entities registered with their own ABNs. Norm Philipp carried on business in partnership with his wife as N & M Philipp under ABN 19736995679, Reinhard Philipp carried on business in partnership with his wife as R & M M Philipp under ABN 26940466534 and Anthony Summers carried on business in partnership with Hua Ping as Ruse Linings under ABN 52589917303. Barry Sindel carried on business on his own account under ABN 48687228924. For reasons which will become clear, neither Norm Philipp nor Reinhard Philipp returned to the Fairy Meadow site after Wednesday 18 February 2004. Norm Philipp claims that he was, as a result of 'incidents' at the Fairy Meadow site on Wednesday 18 February 2004 out of work from and including Thursday 19 February 2004 until Tuesday 2 March 2004. He claims that his loss in respect of the period when he was out of work was approximately $2,740. I am satisfied that Norm Philipp sought, but was unable to obtain any, work for his business in the period 19 February 2004 --- 2 March 2004. 70 The late Mr Reinhard Philipp's evidence was that he was also out of work from and including Thursday 19 February 2004 to Tuesday 2 March 2004. He says that he lost a total of $3,850 in income excluding GST on the basis that he would have otherwise been working eight hours per day at $35 per hour for six days a week. He claims that after allowing for the cost of fuel at $11.66 per day he suffered a loss of approximately $2,275. 73 When senior counsel for the applicant opened the applicant's case on 17 July 2006 he indicated that injunctive relief was no longer sought. In addition, in the course of his submissions on 6 September 2006 he informed the Court that allegations in respect of contraventions of s 298S(2)(a), as a result of conduct of the fourth respondent said to have taken place on or about 18 February 2004, were no longer pressed. (c) On Wednesday 18 February 2004 the fourth respondent made a false or misleading representation to Norm Philipp and Reinhard Philipp that each of Norm Philipp and Reinhard Philipp was obliged to join the first respondent and/or the second respondent in order to continue working on the Fairy Meadow site, or to work on the Wollongong site or any other site in Wollongong (see Application para 3(b)). (d) On Wednesday 18 February 2004 the fourth respondent made a false or misleading representation to Anthony Summers that he was obliged to join the first respondent and/or the second respondent in order to continue working on the Fairy Meadow site, or to work on the Wollongong site (see Application para 3(c)). (f) On Tuesday 17 February 2004, by the action of the fourth respondent referred to in (b) above, the first respondent made a false or misleading representation to Glenn Suter about the obligation of each of Norm Philipp, Reinhard Phillip, Anthony Summers and Barry Sindel to join the first respondent and/or the second respondent (see Application para 1(b)). (g) On Wednesday 18 February 2004, by the action of the fourth respondent referred to in (c) above, the first respondent made a false or misleading representation about the obligation of each of Norm Philipp and Reinhard Philipp to join the first respondent and/or the second respondent (see Application para 1(c)). (h) On Wednesday 18 February 2004, by the action of the fourth respondent referred to in (d) above the first respondent made a false or misleading representation about the obligation of Anthony Summers to join the first respondent and/or the second respondent (see Application para 1(d)). (j) On Tuesday 17 February 2004, by the action of the fourth respondent referred to in (b) above, the second respondent made a false or misleading representation to Glenn Suter about the obligation of each of Norm Philipp, Reinhard Phillip, Anthony Summers and Barry Sindel to join the first respondent and/or the second respondent (see Application para 1(b)). (k) On Wednesday 18 February 2004, by the action of the fourth respondent referred to in (c) above, the second respondent made a false or misleading representation about the obligation of each of Norm Philipp and Reinhard Philipp to join the first respondent and/or the second respondent (see Application para 1(c)). (l) On Wednesday 18 February 2004, by the action of the fourth respondent referred to in (d) above the second respondent made a false or misleading representation about the obligation of Anthony Summers to join the first respondent and/or the second respondent (see Application para 1(d)). 76 In relation to the claimed contraventions by the first and second respondents, the applicant's case is that the relevant contraventions occurred by virtue of conduct engaged in by the third respondent or the fourth respondent as the case may be. Whilst no formal concession was made that any conduct engaged in by the third or fourth respondent in contravention of the Act would give rise to contraventions by the first and second respondents, no argument was advanced by counsel for the respondents that liability on a representational basis could be visited on one only of the Union bodies. The only distinction to which attention was drawn related to the alleged contraventions of s 170 NC of the Act in respect of which counsel for the respondents submitted that it would be 'hard to think that the State organisation would have an interest in coercing anybody to make a Federal agreement'. The printed material appearing on the 2003-4 standard CFMEU Membership Application form set out above at [40] does not appear to satisfy this requirement, although that may have been its intended purpose. 82 Clause 8(ii) of the Constitution dealt with members who were not financial. Where the member fails to do so the Union may prosecute such member in the appropriate court for the recovery of that amount. This subsection has effect in spite of anything in the rules of the organisation. 86 Be that as it may, it is important, for present purposes, that the Union membership status of Norm Philipp, Reinhard Philipp, Anthony Summers, Barry Sindel and Norman Philipp Jnr in January/February 2004 be addressed. 87 It seems clear that at some time or other Norm Philipp, Reinhard Philipp, Anthony Summers, Barry Sindel and Norman Philipp Jnr had all been members of the Union. However, by 18 February 2004 Anthony Summers was no longer a member of the Union. Furthermore, the Union did not consider him or have reason to consider him at that time to be a member. On 31 May 2001 the Union wrote to Mr Summers informing him that his application to resign had been received and processed and that his membership had been finalised. He was issued with a 'Clearance' certificate recording that he had paid all fees, fines, levies and dues and was 'Cleared from the Union' The respective Union numbers of the other workers appear to have been Norm Philipp - 292276, Reinhard Philipp - P10157, Barry Sindel - 223139 and Norman Philipp Jnr - 292275. 88 It would appear that Mr Norm Philipp became a member of the Union on 11 May 2000. On 19 November 2001 a payment was made by him in the amount of $479.10 covering 'Dues' of $442.07 and GST of $37.03. For this payment he received an 'OK Card' from the Construction, Forestry, Mining and Energy Union, Construction & General Division, NSW Branch for the period 1 October 2001 to 31 March 2002. 89 Mr Norm Philipp's evidence, which I accept, is that on the day after he became a financial member of the Union in 2001, i.e. 20 November 2001, he presented a resignation letter to the Union delegate at the site at which he was then working --- the Royal Prince Alfred Hospital site at Camperdown in Sydney. Conversation is said to have followed which demonstrated a reluctance on the part of the delegate to accept Mr Norm Philipp's letter of resignation. Mr Norm Philipp then said words to the effect, 'Mate, that's my letter of resignation, you didn't accept it, I'm not paying a cent more'. 90 Under s 172 of Schedule 1B to the Act, Mr Norm Philipp's membership of the Union would have continued until at least 31 March 2004 unless his letter of resignation, delivered by him to the Union delegate at the Royal Prince Alfred Hospital site on 20 November 2001, was effective in bringing his membership of the Union to an end. 91 In light of subclauses 11(1) and 11(5) of the Constitution of the Union and s 174(1) and 174(5) of Schedule 1B to the Act and the principles enunciated in Capper v Thorpe [1998] HCA 24 ; (1998) 194 CLR 342 at [21] , the question is whether Mr Norm Philipp's letter of resignation, given by him to the Union delegate, was 'received by' the Union. Given the authority conferred on delegates by the Rules and the terms of the Union's Code of Conduct for Union Delegates, it is clear that delegates were to provide an interface between workers on site and the organisation in relation to membership of the Union such that it was within the authority of a delegate to receive, on behalf of the Union, a letter of resignation from a member. Under clause 11 of the Union's Constitution and s 174 of Schedule 1B to the Act it was not necessary for Mr Norm Philipp to be 'financial' in order for him to lawfully resign his membership of the Union, although he appears to have been financial at the relevant time, in any event. Accordingly, as the Union 'received' notice of Mr Norm Philipp's resignation on 20 November 2001, that resignation took effect two weeks later i.e. on 4 December 2001. 92 Thus, Mr Norm Philipp was not a member of the Union in January/February 2004. 93 Whatever Mr Norm Philipp's membership status may have been at the time, he did not, when undertaking site induction at the Fairy Meadow site on Monday 19 January 2004, with a view to undertaking plastering work for Pro Finish Interiors, suggest that he was a member of the Union, nor did he do so when re-inducted at the Fairy Meadow site on Wednesday 18 February 2004 with a view to carrying out plastering work for Innovation Interiors. However, Mr Philipp conceded that on 18 February he may have said to Mr Casper 'You know that I'm in the Union', in the belief that his name would still be recorded on the Union's books. 94 At about 9.13 am on Wednesday 18 February 2004 Mr Casper proceeded to send a two page facsimile to Janet McIntosh at the CFMEU office. 96 Janet McIntosh proceeded to record details under the column headings 'Union Number' and 'Financial' on the edited Lanskey form against all the names, whether marked by an asterisk to record their perceived 'ON LOAN' status or not. On the form transmitted to Janet McIntosh there was no indication that Glenn Suter, Barry Sindel, Norman Philipp Jnr, Norm Philipp, Reinhard Philipp, Anthony Summers or Dimitrios Gontas were members of the Union. Janet McIntosh's return facsimile to Mr Casper, with all the membership and financial status details recorded on the CFMEU office copy of page 2 of Mr Casper's facsimile, was sent to him at 10.48 am on Wednesday 18 February 2004. Presumably, Mr Casper made his inquiry of the CFMEU office because of the fact that none of Glenn Suter, Barry Sindel, Norman Philipp Jnr, Norm Philipp, Reinhard Philipp and Anthony Summers had indicated that they were members of the Union on the Lanskey Site Personell (sic) forms which they had completed. By way of contrast, Mr Gontas's 'New Employee Details' form had been completed by him so as to indicate, when given a 'Yes/No' alternative, that he was not a member of the Union. No doubt Mr Casper was keen to ascertain the membership status of those workers who were coming to the site to work for Innovation Interiors and about whose membership status he had no knowledge, even though when they, or some of them, had previously worked at the Fairy Meadow site for Pro Finish Interiors, a similar inquiry had not, apparently, been made. Apart from other considerations, Mr Casper had a proven track record of seeking to secure and securing new members for the Union and of having unfinancial members brought up to a financial status. 97 In this context it may be noted that this was not the first occasion when Mr Casper had submitted a list of workers' names to the CFMEU office to ascertain their Union membership and financial status. He assiduously pursued the identity of workers who were not members of the Union. At 10.26 am on 18 July 2003 Mr Casper had submitted a list of names to the CFMEU office under the heading 'INNOVATIONS (sic) INTERIORS' with five column headings reading 'SURNAME', 'FIRST', 'D.O.B. ', 'UNION #' and 'FINANCIAL'. The columns under the headings 'UNION #' and 'FINANCIAL' as submitted by Mr Casper to the CFMEU office were blank at the time. I would like to check these fellows Financial Status and have it ASAP. Where Union dues were outstanding, that was also noted. The facsimile response from the CFMEU office to Mr Casper's facsimile of 18 July 2003 was transmitted to him at 11.35 am on 18 July 2003. 98 Another similar document headed 'INNOVATION INTERIOR (sic) GYPROCK' would appear to have been brought into existence by Mr Casper in about November 2003. That document had column headings reading 'NAME', 'DOB' and 'Member #'. There appear to have been approximately 29 names recorded on that list. The copy of the list which is in evidence has been edited with notations, presumably added by staff at the CFMEU office or by Mr Casper with the assistance of the CFMEU office, where Union dues are said to have been owing. In other instances the letters 'OK' have been added against names or the word 'Deal' has been added against a name. Some seven or eight names appear to have been deleted, however it is unclear from the photocopy which is in evidence whether the marking indicates an intended deletion of a name from the list or, alternatively, the application of a coloured highlighter for some reason which, in the photocopy, has come out in black as if it were an intended deletion. 99 After Mr Casper received Janet McIntosh's facsimile from the CFMEU office which was transmitted at 10.48 am on Wednesday 18 February 2004, he proceeded to add an asterisk to his copy of the facsimile so received against the name of Anthony Summers. 100 Upon receipt of Janet McIntosh's facsimile it would have been apparent to Mr Casper that Anthony Summers was not, according to the Union, a member of the Union. 101 Even though Mr Norm Philipp was no longer a member of the Union for the reasons indicated above, Mr Casper might have reasonably believed him to still be a member as at 18 February 2004, albeit one who was significantly unfinancial. Janet McIntosh had indicated that he was then indebted to the Union in the sum of $735. 102 In the case of Reinhard Philipp, Mr Casper would have had reason to believe that he was a member of the Union as at 18 February 2004, but one who was very significantly indebted to the Union for unpaid dues. Janet McIntosh had recorded against Mr Reinhard Philipp's name that he was indebted to the Union in the sum of $3,080. 103 In relation to Mr Summers, Janet McIntosh had noted an amount of $230 against the letters 'N/M', which I understand to have been an indication that Mr Summers was a non-member. Presumably the figure of $230 was added to indicate how much Mr Summers would have to pay to become a member of the Union. 104 In relation to Barry Sindel the details recorded by Janet McIntosh might have led Mr Casper to believe that he was still a member of the Union, as at 18 February 2004, albeit one who was significantly unfinancial with an indebtedness to the Union in the amount of $1,151.30. Against his name Janet McIntosh recorded the notation 'DEAL CR'. When Mr Sindel originally worked for Innovation Interiors at the Fairy Meadow site in about November 2003 there was no apparent disclosure by him that he was a member of the Union. At that stage a Lanskey form was completed for the 'Company:' 'Innovation Interiors' which had the heading 'Sub-contractor Employee' printed on it. The list of names of Innovation Interiors' workers recorded approximately 28 names with details under some nine column headings against the individual names. The last two column headings were 'Union Number' and 'Financial'. Against Mr Sindel's name no Union number was recorded although a figure of $368 appeared in the column headed 'Financial' and adjacent to that the letters 'S.T.'. 105 When Mr Sindel returned to the Fairy Meadow site to undertake work for Pro Finish Interiors on 19 January 2004 he was re-inducted, but with his original induction number. No details were provided indicating that Mr Sindel was a Union member. 106 It is apparent that whilst Mr Sindel had been a member of the Union, he had become significantly unfinancial and had resigned his membership. It would appear that as at 18 February 2004 a deal had been done concerning his liability to the Union in respect of his outstanding dues. When he inducted Norm Philipp, Reinhard Philipp, Norman Philipp Jnr and Barry Sindel at the Fairy Meadow site on the morning of Monday 19 January 2004 he handed Union membership application forms to each of them. Acknowledging that he had a poor recollection of the induction meeting on the morning of 19 January 2004, Mr Casper nevertheless conceded that he handed out membership application forms to those persons whom he understood were not members of the Union and that he asked them to fill them out. 108 Mr Norm Philipp responded by saying 'I'm not filling that out, mate, I don't have to be in the Union'. Mr Reinhard Philipp said 'I'm not interested in re-joining the Union, it's against my religion. You don't have to be in it. When Mr Summers replied 'No', Mr Casper said 'Why not? ', to which Mr Summers replied 'I used to be a member, but I'm too old for all that now'. Mr Summers had previously been a member of the Union on two separate occasions. 110 Notwithstanding Mr Casper's then understanding that Norm Philipp, Reinhard Philipp, Barry Sindel and Anthony Summers were not members of the Union in mid January 2004, they were nevertheless, permitted to work at the Fairy Meadow site through to the end of January when Pro Finish Interiors' work was essentially complete, and, in the case of Mr Anthony Summers, he was permitted to execute further work for Pro Finish Interiors on 5 and 6 February 2004 as well. He was a plasterer employed by Innovation Interiors who was also a member of the Union. When the Pro Finish Interiors' workers were undertaking gyprock plastering work in Block A of the Northgate Apartments Building on the Fairy Meadow site in January Mr Boyd had a conversation with Mr Suter in relation to the basis on which they were engaged, namely as independent contractors working under ABNs. However, even before his conversation with Mr Suter, Mr Boyd had formed the view that the Pro Finish Interiors' workers were subcontractors working under ABNs. He formed this view because 'ABN or subcontractors ... work a lot better and faster than a person on wages, the majority of them'. By Friday 25 of July 2003 he had secured each of them as new members of the Union. On that date he issued receipts to each of them in respect of the payment of their respective Union dues of $218 each. 115 At some stage four other workers joined Innovation Interiors workforce who were not members of the Union namely Terry King, Nikola Mijakovac, Gary Kernan and Zarko Romic. By 22 September 2003 each of these Innovation Interiors' workers had become members of the Union, receipts having been issued to them on that date for payment of their Union dues of $225 each. 116 On 22 September 2003 Mr Casper also issued a receipt to Stevo Pjevac who had been recorded on his list of Innovation Interiors' workers as a non-member. Apparently Mr Pjevac had joined the Union on 29 May 2000 and resigned in 2001 owing money to the Union. With the approval of Mick Lane, Mr Pjevac paid $225 of his outstanding dues totalling $360, rendering him paid up and 'OK' to 1 April 2004 as a result of a 'deal'. It would appear that Mr Pjevac's payment of $225 was effected by an Innovation Interiors' cheque. 117 Another Innovation Interiors' worker whose name was recorded upon one of Mr Casper's running lists for that company was Dean Webb. It would appear that on 20 November 2003 Mr Casper issued a receipt to Dean Webb for the payment of $225 covering his joining fee and six months dues as a new member of the Union. On the same day, Mr Casper issued a receipt to Mr Kane Rogers, another Innovation Interiors' worker, for $225 to cover his joining fee and his dues for the first six months of his membership. 118 On 26 November 2003, Mr Casper received a payment of $190 from Joe McNamara, another Innovation Interiors' worker, recording on his receipt 'Deal as per Mick Lane. Credit Bal OK to 1/4/04'. I give them --- they're given a chance to join on their own if they would like so they don't have to join immediately. ' According to Mr Lane a resolution was passed from the floor of the meeting to the effect that 'everyone on site get financial with the Union'. 121 Following his employment by Lanskey Mr Casper was informed that members of the Union working on site at an earlier point in time had resolved to the effect that the site was to be a 'Union site' and had directed that all CFMEU delegates advise new workers on the site of such resolution. 122 Mr Casper says that his understanding of the earlier resolution was that it constituted 'simply a direction that in my role as CFMEU site delegate I should encourage all workers to join the CFMEU if they were not already members'. 123 On Friday 16 January 2004 Mr Suter, Pro Finish Interiors' foreman, attended at the Fairy Meadow site from about 7:00 am until about 2:00 pm. 124 On Monday 19 January 2004 he returned to the site working there from about 7:00 am until about 3:00 pm on that day. He was accompanied by Norm Philipp, Norman Philipp Jnr, Reinhard Philipp and Barry Sindel. Each of them carried out plastering work for Pro Finish Interiors in the loft or penthouse level of Block A. 125 Mr Norm Philipp's evidence is that he arrived at the Fairy Meadow site at about 6:00 am with a view to starting work at about 7:00 am. His affidavit evidence was that when he was in the site car park with his brother Reinhard Philipp, his son Norman Philipp Jnr and Barry Sindel he was approached by Mr Casper. I hope you're in the union. If you haven't got a ticket you won't be starting. If you're not a financial member, you won't be starting. This is a union site. Would you think about rejoining it? I'm not interested in rejoining the union, it's against my religion. You don't have to be in it. This site has been voted as the [sic] union site by the members. If you haven't got a ticket you won't be starting. If you're not a financial member you won't be starting. He accepts that he was asked 'What makes this a union site? ' He accepts that he said words to the effect of 'The site voted it a union site. ' Furthermore he accepts that Norm Philipp said 'There's no such thing mate' but says that those words were spoken immediately after the question was asked 'What makes this a Union site? 130 I was impressed by the evidence of Mr Norm Philipp. He appeared to me to be forthright and honest. His evidence had a ring of verisimilitude. 131 Mr Casper was both respectful and well-spoken. He seemed to me to be quite articulate. However, his written word suggested that he was not particularly literate. I find it difficult to accept that Mr Casper was prone to excessive swearing. Unlike Mr Lane, whose evidence smacked of artful reconstruction and lacked credibility, I was generally impressed by Mr Casper's evidence. 132 There can be no doubt that Mr Casper was significantly successful in enlisting new members for the Union amongst the plasterers who worked for Innovation Interiors and in procuring the restoration to a financial status of those workers who, on arrival at the Fairy Meadow site, were unfinancial members of the Union. He said that he worked hard to enrol all of the workers, who were eligible to join the CFMEU, into the Union as members. 133 The critical question is whether what Mr Casper said with a view to encouraging non-members to become members and unfinancial members to become financial went beyond encouragement and should be construed as words of insistence directed at ensuring that all persons working on the site were financial members of the Union. 134 Counsel for the respondents drew attention to inconsistencies between a statement made by Mr Norm Philipp on 19 May 2004 in respect of the events of 19 January in that year and the terms of his affidavit sworn 2 February 2006. Mr Norm Philipp readily acknowledged that he may have been in error in suggesting that Mr Summers was present at the time of the relevant conversation with Mr Casper. In cross examination Mr Norm Philipp said 'I can't remember a hundred percent whether he was there or not. As far as I can remember I think he could have been.... He might not have been there. ' It should be noted that in his affidavit Mr Norm Philipp did not categorically state that Mr Summers was present. Rather he said 'to the best of my recollection' he was present. 135 I am satisfied that Mr Summers was not present but this does not relevantly detract from Mr Norm Philipp's credit in the circumstances. 136 In cross-examination it was suggested to Mr Norm Philipp that he had not, in his statement of 19 May 2004, attributed to Mr Casper the words 'Are you boys starting today? I hope you're in the union'. Mr Norm Philipp readily accepted that those words, which were included in his account of the relevant conversation in his affidavit, had not been included in his earlier statement. When the difference between the two accounts was drawn to his attention, his response was 'I can't see them here [referring to the additional words] but like I said before, I added things as I remembered them. You know, like I didn't invent the thing. 139 Mr Casper gave evidence that Mr Rowland told him that the Fairy Meadow site was to be a Union site. He also says that Mr Lane told him that as well. No mention was made by Mr Casper in his affidavit that Mr Rowland had said any such thing to him, nor did Mr Rowland suggest that to be the case. I do not accept that Mr Rowland told Mr Casper that the Fairy Meadow site was, or was to be, a 'Union site'. 140 Mr Casper readily acknowledged that on the morning of 19 January 2004, at what he says was the induction meeting, he said to Mr Norm Philipp and those who were with him 'This is a Union site. ' He denied that by using those words he intended to convey that the site was one where you had to be a member of the Union in order to work there. By signing the 'CFMEU Code of Conduct for Union Delegates' form, Mr Casper undertook to 'ensure' that all workers at the Fairy Meadow site be financial members of the CFMEU, not simply to 'encourage' them to be such members. 142 I am satisfied that words to the effect of those deposed to by Mr Norm Philipp in his affidavit were spoken by Mr Casper to Mr Norm Philipp, Norman Philipp Jnr, Reinhard Philipp and Barry Sindel on the morning of Monday 19 January 2004. However, as Mr Casper said, it was his practice to allow a few days' grace for non-members to join of their own accord before they had to do so. In addressing questions of reasonable satisfaction in these proceedings I have been conscious of Dixon J's observation in Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 at 362 that reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The fact that pecuniary penalties may be exacted is a material matter to be borne in mind. At the same time, I am conscious of the Full Court's caution in Rejfek v McElroy [1965] HCA 46 ; (1965) 112 CLR 517 at 521 that no matter how grave the fact which is to be found in a civil case, the mind has only to be reasonably satisfied and has not with respect to any matter in issue in such a proceeding to attain that degree of certainty which is indispensable to the support of a conviction upon a criminal charge. I have also been mindful of the unexplained absence from the witness box of Barry Sindel and Norman Philipp Jnr, with the consequence that possible inferences favourable to the respondents, for which there was ground in the evidence might, perhaps, be more confidently drawn (see Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298 at 308). However, it must be borne in mind that whether the Jones v Dunkel principle can or should be applied depends upon whether certain conditions for its operation exist including that the missing witness would be expected to be called by, relevantly, the applicant rather than the respondents. This condition will be satisfied where it would be 'natural for one party to produce the witness' or the 'witness would be expected to be available to one party rather than the other', or where 'the circumstances excuse one party from calling the witness, but require the other party to call him', or, 'where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him', or 'where the witness' knowledge may be regarded as the knowledge of one party rather than the other', or 'where his absence should be regarded as adverse to the case of one party rather than the other'. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary (see per Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 201-2). In the present circumstances no inferences relevantly flow from the failure by the applicant rather than the respondents to call Barry Sindel and/or Norman Philipp Jnr as witnesses. Given Mr Casper's own acknowledgement that he described the Fairy Meadow site as a 'Union site', further corroboration of Norm Philipp's evidence concerning the relevant conversation on the morning of 19 January 2004 was unnecessary. No inferences favourable to the respondents, for which there may have been ground in the evidence, could be more confidently drawn by virtue of the absence from the witness box of Barry Sindel and Norman Philipp Jnr. Apart from other considerations they could well have been called by the respondents. They were not in the applicant's 'camp'. Was not aware contractors took direction directly from Ousley. I instructed Skip not to go into Blocks A & B as they are now an Ousley site. 150 Mr Casper says that approximately two to three weeks after 19 January 2004, 'on or about 5 February 2004' he spoke to a worker whom he was inducting at the Fairy Meadow site to carry out work for Pro Finish Interiors. I'm a sub-contractor and we're all sub-contractors to Pro Finish --- Spiro Repas's company. 153 Whilst Mr Summers returned to work at the Fairy Meadow site for Pro Finish Interiors on 5 and 6 February 2004, he had been inducted by Mr Casper on 21 January 2004. The suggestion that a worker, who was arriving at the Fairy Meadow site to commence work for the first time on 5 February 2004 and who was then being inducted, told Mr Casper that he was a subcontractor and that he was one of a number of subcontractors who worked for Pro Finish Interiors does not bear analysis. 154 What did occur on 5 February 2004 was the submission by Pro Finish Interiors of its quotation to Hansen Yuncken for Plasterboard Fit-out works to be carried out at the Wollongong site, as mentioned above at [12]. Problems with a couple of contractors. Skip Casper causing problems. The memorandum bore the heading "Involvement in Activities and Subcontractors in Buildings A & B on this site 9 Wood Hill St Fairy Meadow NSW. I verbally reported this to John Millar, Lanskey Contracts Administrator. I also stated to both of them I felt Lanskey may be open to some liability, due to some of the incorrect credentials (insurances) of some of the sub contractors. This was due to an examination of some of them earlier this date resulting in one group leaving site due to their credential condition. [Chris Taylor, a Lanskey general foreman] & I was told to get rid of them off site or they would be down to shut the site (Peter Primer (sic) ). C.T. went to sort out with Skip. All OK for now. Tilers for Pool A works thru Hydrocare Pool Services. C.T. rang Robert Savell to chase up. I also told him that they cannot start on site until this is produced to Lanskey Constructions. I presumed that Skip had told them to leave site. These events in tilers not starting (sic) . I was asked by Les Dowes (Ousley) who told them to leave site. I said I presumed it was Skip as I was with John Millar discussing A&H Plasterings Super funds and application to C BUS. The absence of the facsimile from the evidence has not been satisfactorily explained. Furthermore, the Union's knowledge that Hansen Yuncken was contemplating retaining Pro Finish Interiors as its plastering contractor at the Wollongong site seems to me to have been derived from a conversation between Mr Lane and the Union's delegate, Mr Clinton on or shortly prior to 12 February 2004. On 12 February 2004 Mr Lane paid a visit to the Wollongong site and spoke with Mr McEwan. Mr McEwan made a diary note of his conversation with Mr Lane immediately after he left the building. Mick Lane spoke with Graham [Clinton] who advised that we were talking to "Spiro". Mick Lane met with me and advised that he was not only "non-union" but "anti-union". I advised he was 1 of 3 contractors we were talking to and will advise upon engagement. After which M.L. could contact them. M.L. advised "you have been warned" and walked out as he had other commitments. I told him that at that time I hadn't --- certainly hadn't engaged a gyprocker. I told him that he was one of three contractors that I was looking at, at which point he told me that - he said and I quote, "You have been warned". In addition, he denied saying to Mr McEwan that 'Pro Finish was anti-union'. 162 I have earlier described Mr Lane's evidence as smacking of artful reconstruction. Not only does it smack of artful reconstruction, in many respects it verges on deceitful reconstruction. Probably Mr McEwan's. My impression is that Mr Lane's own recollection in 2006 of the relevant events in February 2004, such as it may have been, was blurred, distant and imprecise. I would be reluctant to place any reliance upon it. 164 I have no doubt that Mr Clinton informed Mr Lane that his employer, Hansen Yuncken, was talking to Mr Repas of Pro Finish Interiors as a possible plastering contractor for the City Beach Apartments building on the Wollongong site. Furthermore, I have no doubt that on 12 February 2004 Mr Lane met with Mr McEwan and warned Mr McEwan about employing Pro Finish Interiors as Mr Repas was, in Mr Lane's estimation, not only 'non-union' but also 'anti-union'. 165 On 17 February 2004 Mr Lane informed Mr Suter in a meeting at the CFMEU office that he had problems with Pro Finish Interiors. I can go through papers and find complaints about fuckin' Profinish all over my fuckin' desk here'. I noticed you haven't used any in my court room ...? However, I would be surprised if Mr Lane used expletives quite as frequently as Mr Suter says that he did. Nevertheless I am satisfied that Mr Suter has not, in his record of interview of 11 March 2004 to which reference is made hereunder, attempted to embellish his account of words spoken by Mr Lane at the time. Having said that, he may have unwittingly thrown in a few more expletives than were in fact used. 168 Following the submission of its quotation for the plasterboard fit-out works at the City Beach Apartments building on the Wollongong site Mr Spiro Repas of Pro Finish Interiors met with Mr McEwan of Hansen Yuncken on 9 February 2004 at the pre-award/induction meeting referred to above at [13]. 169 Then on Wednesday 11 February 2004 Mr Suter attended the Wollongong site and had a meeting with Mr Bowman, Hansen Yuncken's site manager. Mr Bowman informed Mr Suter that before Pro Finish Interiors could start on site it would be necessary for Pro Finish Interiors to provide a work method statement and also certain insurance details. 170 Mr Suter and Mr Bowman proceeded to walk the site. Discussion took place as to where Pro Finish Interiors was going to build its site shed. Mr Suter said 'I'll get that organised and I'll get the materials delivered to site ... and we'll be ready to kick off, hopefully, by Friday morning' to which Mr Bowman replied 'Great'. 171 Mr Suter proceeded to return to the Pro Finish Interiors' office where he spent some time working on the plans and ordering materials. 172 Mr Repas provided Mr Suter with an envelope containing material to be delivered to Mr Bowman, which he proceeded to deliver at about 8:00 am on Thursday 12 February 2004. Mr Bowman proceeded to open the envelope and inspect the documents. Discussion took place in respect of certain matters that needed to be rectified --- one such matter was workers' compensation, where there was insufficient cover for the anticipated number of men who would be working on the site. In addition, Mr Bowman indicated that the work method statement was not up to scratch. He indicated that he wasn't happy with it and that Pro Finish Interiors would need to improve on it. 173 Mr Suter returned to Pro Finish Interiors' office and reported to Mr Repas on the problems which Mr Bowman had identified. 174 Notwithstanding Pro Finish Interiors' failure to submit a satisfactory work method statement, Mr Suter and a number of Pro Finish Interiors' workers arrived at the Wollongong site on the morning of Friday, 13 February 2004. Mr Clinton proceeded to induct Mr Suter along with Norm Philipp, Norman Philipp Jnr, Reinhard Philipp, Barry Sindel and Anthony Summers. 175 Before the Pro Finish Interiors' workers commenced work they were approached by Mr Bowman who requested that they provide a safe work method statement. Mr Norm Philipp said to Mr Bowman 'Isn't Spiro supposed to give you that? ' to which Mr Bowman replied 'He has given us one, but it wasn't satisfactory'. 176 Mr Bowman proceeded to prepare a manuscript safe work method statement for the Pro Finish Interiors' workers on a piece of paper which he proceeded to sign along with Messrs Suter, Norm Philipp, Norman Philipp Jnr, Sindel, Summers and Reinhard Philipp. The manuscript safe work method statement commenced with the heading 'PRO FINISH 13/2/04 City Beach Pavillions Cnr Bank & Harbor'. The next heading read: ' SWMS for Load up gear to Level 1 & build compound'. After preparing the manuscript safe work method statement Mr Bowman said words to the effect 'That should do you if Workcover come out'. After the document was signed by all the parties present he said words to the effect 'That should be enough for today anyway, because I'm still waiting on some paperwork from Pro Finish'. 177 At about 10:00 am Mr Suter asked Mr Summers to leave the Wollongong site and proceed to Pro Finish Interiors' factory at Coniston to work there for the rest of the day. 178 The remaining men then proceeded to build a site shed for Pro Finish Interiors at the Wollongong site and commenced work on the steel stud framework in the upstairs apartments. Earlier they had attended to the unloading of a couple of trucks, one from Pro Finish Interiors and the other from Pro Finish Interiors' steel supplier which carried the steel studding track. 179 Shortly before 3:00 pm on Friday 13 February the Pro Finish Interiors' workers packed up their tools and left the Wollongong site for the day. 180 On Monday 16 February 2004 Mr Suter returned to the Wollongong site together with the Pro Finish workers who had been inducted on Friday 13 February 2004 namely Norm Philipp, Norman Philipp Jnr, Reinhard Philipp, Barry Sindel and Anthony Summers. In addition, four other Pro Finish Interiors' workers were inducted that morning namely Albert Lilley, Geoff Harnett, Bryan Harnett and Tony Morgan who joined the other Pro Finish Interiors' workers on the first floor of the City Beach Apartments building. According to Mr Suter 'everybody was into the rhythm' at the Wollongong site on Monday 16 February 2004. It was a case of 'tools out, working away happily'. The work advanced half-way through the first floor at which stage the Pro Finish Interiors' workers were 'cleaning up the stud work'. During the day, there were no incidents. 181 However, as at 16 February 2004 Pro Finish Interiors did not have a contract to undertake the plastering work at the Wollongong site. By 24 February 2004 Pro Finish Interiors was no longer under consideration to do that work. As it transpires Hansen Yuncken ended up letting a contract to Illawarra United Plastering. 182 Mr McEwan, who was an impressive and credible witness, was of the view that the work undertaken by Pro Finish Interiors at the Wollongong site on Friday 13 February and Monday 16 February 2004 had been undertaken 'at their own risk'. As at 16 February 2004 McEwan may well have been unaware of the fact that, not only had the Pro Finish Interiors' workers built their site compound, but they had also proceeded to undertake plastering work on the first floor of the building. 183 As Mr McEwan was driving home on the night of Monday 16 February 2004 he telephoned Mr Bowman and asked him whether there had been any Pro Finish Interiors' workers on site on that day. Mr Bowman informed him that there had been, whereupon he inquired as to whether Mr Bowman was happy with their safe work method statement. Mr Bowman informed him that he was not so satisfied at which point Mr McEwan contacted his construction manager and told him what had transpired that day. He was then directed to contact Mr Repas and tell him 'not to turn up to work the following day', which he proceeded to do. 184 It is true that Mr McEwan had negotiated a 'handshake deal' with Mr Repas of Pro Finish Interiors on 9 February 2004 but that deal was subject to Pro Finish Interiors meeting a number of requirements. 185 As at 16 February 2004 Pro Finish Interiors did not have an approved safety plan, nor did it have an approved safe work method statement. In addition, Mr McEwan was concerned about Pro Finish Interiors' certificate of currency in respect of its workers' compensation insurance. 186 When asked whether by performing plastering work on 16 February 2004 Pro Finish Interiors would have been in breach of the Occupational Health and Safety Regulations in New South Wales Mr McEwan responded 'That's why I put a stop to it'. 187 Apart from having a concern about the failure of Pro Finish Interiors to supply the necessary documentation, Mr McEwan had concerns as to the ability of Pro Finish Interiors to complete the contract work. This concern arose after he made searches of some Pro Finish companies. The concern which he had in that regard grew by Tuesday 17 February 2004. 188 Mr McEwan's evidence, which I accept, is that he ultimately did not engage Pro Finish Interiors to carry out the plastering work for reasons of his own unrelated to Mr Lane's warning of 12 February 2004. 189 Mr McEwan was concerned lest it appear that his non-engagement of Pro Finish Interiors was seen to be because he was, in effect, bowing to Mr Lane's wishes. I am satisfied that Mr McEwan did not bow to Mr Lane's wishes, but that does not mean that Mr Lane's wishes as communicated to Mr McEwan are irrelevant in the context of this case. 190 At 4:00 pm on Monday 16 February 2004 Mr Lane again visited the Wollongong site and met with Mr McEwan. Mr McEwan made a contemporaneous file note immediately after the meeting concluded. Discussed the engagement of Profinish. I confirmed that all Profinish employees and subcontractors will be covered in respect of C + Bus, ACirt & [? I asked if Mick had a problem with Profinish if the above conditions met. He confirmed there was an issue as none of Spiro's employees or subcontractors are Union members. I advised that "at the end of the day Union membership is a personal choice". Rang Spiro to arrange a 2.00 pm meeting. Mick Lane advised he would be in contact with Spiro to arrange a meeting. I advised M.L. contact details. M.L. advised he would be requesting a "time & wages inspection". He never actually said that. Mr McEwan said that Mr Lane had contacted him to let him know that Mr Lane had just finished a conversation with Mr Repas and that Mr Repas wasn't interested in having a meeting with Mr Lane as none of his workers wanted to become members of the Union. Mr Lane went on to tell Mr McEwan that Mr Repas was going to be rolling up annual leave entitlements of his workers into a fixed salary rate and that he was going to be deducting superannuation and redundancy entitlements from those agreed rates of pay. Mr Lane concluded that 'the guy [Mr Repas] was 100% shonky'. Mr Lane told Mr McEwan that if he [Mr Lane] allowed Pro Finish Interiors onto the project 'then he should resign and he would bring every organiser down from Sydney if he had to'. 194 When cross-examined by counsel for the respondents who suggested that Mr Lane did not say 'if Pro Finish were allowed to continue on the site, I would or should resign' and that he did not make any reference to bringing organisers down from Sydney, Mr McEwan emphatically confirmed that Mr Lane had said both of those things. 195 At about 7:40 pm on 16 February 2004 Mr Repas telephoned Mr Suter on his mobile. At that time Mr Suter was at his home at north Nowra, some considerable distance to the south of the Wollongong site. He was then enjoying his dinner and a few red wines. To use his expression the 'care factor' was 'down around zero'. Mr Repas said to Mr Suter words to the effect: 'There's no work tomorrow. There's a few problems on the site'. One such problem which Mr Repas identified was the fact that Pro Finish Interiors' work method statement was not ready. 196 After completing his discussion with Mr Repas, Mr Suter rang a couple of the 'blokes' arranging for them to go to the Belmorgan job at Penrith on Tuesday 17 February 2004. He contacted others and arranged for them to go to Pro Finish Interiors' office where there was a bit of setting work to do. One of the men reminded Mr Suter that he was unable to work on 17 February 2004 as he had an appointment to see a medical practitioner. 197 None of the Pro Finish Interiors' workers returned to the Wollongong site on Tuesday 17 February 2004. Insofar as the late Mr Reinhard Philipp's statement and Mr Norm Philipp's affidavit may have suggested that their last day at the Wollongong site was 17 February 2004 rather than 16 February 2004 I believe that they are confused about the relevant date. I am satisfied that they did not return to work at the Wollongong site after 16 February 2004. 198 On the morning of 17 February 2004, Mr Suter stayed at home and attended to some personal paper work. 199 Shortly after midday on that day Mr Graham Boyd, Innovation Interiors' leading hand, rang Mr Suter looking for men to assist Innovation Interiors in carrying out the plastering work for which it had the contract in Block D at the Fairy Meadow site. Mr Suter was able to inform Mr Boyd that he would be able to arrange for up to nine men, who customarily worked for Pro Finish Interiors, to start work for Innovation Interiors the following morning. 200 Mr Suter proceeded to make contact either directly or indirectly with Norm Philipp, Reinhard Philipp, Anthony Summers, Barry Sindel, Tony Morgan, Geoff Harnett and Albert Lilley all of whom proceeded to attend the Fairy Meadow site early in the day on Wednesday 18 February 2004 to carry out plastering work for Innovation Interiors. Mr McEwan says that Mr Lane walked into his office and dropped a couple of bits of paper on his desk saying 'Here are some other plasterers for you to talk to'. One piece of paper recorded the phone number for Shellharbour Interiors and the other for Illawarra United Plasterers. Mick Lane on site 9.00 am. M.L. gave me Shellharbour Interiors number + Illawarra United Plasterer's. I advised that I would be happy to issue a BOQ [Bill of Quantities] for pricing but if their price was not competitive then we will be continuing with Profinish provided he supplied all the relevant paperwork. Mr McEwan indicated that one of the matters to be discussed was the work method statement. A tentative arrangement for a 2:00 pm meeting on Tuesday 17 February with Mr Repas would appear to have previously been put in place on the afternoon of 16 February 2004. 203 Mr Suter proceeded to speak with Mr Lance Bowman at the Wollongong site. Mr Bowman indicated that Pro Finish Interiors had to get its work method statement in order and also had to get its workers' compensation fixed up. 204 After speaking with Mr Bowman Mr Suter telephoned Mr Repas shortly before midday. Mr Repas suggested that Mr Suter should come up to Pro Finish Interiors' office for a meeting. Mr Suter proceeded to meet with Mr Repas at Pro Finish Interiors' factory located at Fox Ave, Coniston at about 1:00 pm --- 1:15 pm. We can get along with the union and they'll back off and leave us alone. And while we're doing the right thing they can't touch us And ... the EBA, some guys want it, some guys don't. If you're going to go up and start taking on all these big jobs ... look at an EBA. You don't sign it, but look at it. This meeting took place at about 2:00 pm. 206 Mr McEwan informed the meeting that Mr Lane had been to the Wollongong site and had spoken to the Union delegate, Graham Clinton. Mr McEwan advised that Mr Clinton had been up to the CFMEU office and had spoken to a girl in the office who had investigated all of the Pro Finish Interiors' workers to see whether they were Union members and whether or not they were financial. ... Mick Lane has been here. He wants this to be a union site. All your blokes are members of the union, but some aren't financial. There are one or two who aren't actually a member. 207 In relation to an EBA with the Union, discussion took place about contacting the Union. Mr Suter agreed to go and meet with Mick Lane in the Union office to talk about the problems of Pro Finish Interiors, the problems of an EBA and the Union's views on Pro Finish Interiors as a company with a view to trying to bring the Union and Pro Finish Interiors together to come up with an agreement to settle the problems. 208 Mr Repas mentioned that he had upgraded his workers' compensation policy to cover 20 men. 209 In relation to the contract value of the works, Mr Repas was invited to go back and reprice the job in the light of the extra workers' compensation and other expenses which were likely to be incurred. I'll go and deal with Mick Lane at the union and see what we can do about getting together and coming up with some sort of solution to get the job rolling again. ... I know you have got an issue with us. We want to come and discuss it and talk turkey and ... we're prepared to talk about an EBA. ' to which Mr Lane replied 'Well I am in my office now, if you want to come down. I'll be there in 20 minutes. 212 Mr Suter was called as a witness by the applicant on a subpoena ad test. His evidence commenced on the afternoon of the third day of the trial and continued until shortly after midday on the fourth day of the trial at which stage an application was made by the applicant to question him as though the applicant were cross-examining him about certain matters in accordance with s 38 of the Evidence Act 1995 (Cth). 213 Following a hearing on the voire dire leave was granted to the applicant to so question Mr Suter in accordance with s 38(1)(c) of the Evidence Act 1995 (Cth) (see Hadgkiss v Construction, Forestry, Mining and Energy Union [2006] FCA 941 ; (2006) 152 FCR 560). 214 Following the grant of that leave, Mr Suter returned to the witness box on the seventh hearing day for a brief period of time after which his evidence resumed on the eighth hearing day and then continued on the ninth and tenth hearing days. On the eighth hearing day a transcript of a sound recorded interview with Mr Suter by a Mr Alfred and Ms Siciliano, which took place on 11 March 2004 between 10.17 am and 11.12 am and then between 12.16 pm and 1.15 pm, was tendered and admitted, without objection, as Exhibit A10. The recorded interview sets forth Mr Suter's account of events occurring between 11 and 17 February 2004 to which he was privy in relation to the engagement of Pro Finish Interiors to carry out work in the Illawarra area. I am satisfied that Mr Suter had no particular axe to grind. I consider that his account of the relevant events as set out in the record of interview has a ring of truth about it. It is blindingly obvious that there were significant discrepancies between Mr Suter's unaided recollection of the relevant events, as given in his evidence in chief on 19 and 20 July 2006, and his account of the relevant events as provided by him to Mr Alfred and Ms Siciliano on 11 March 2004. I am satisfied that the discrepancies are of little moment given the passage of time which has elapsed since the events occurred. My impression is that Mr Suter's recollection of the events that occurred almost two and a half years previously had dimmed significantly such that where his evidence in July 2006 was at variance with his account of the relevant events, as given to Mr Alfred and Ms Siciliano on 11 March 2004, his March 2004 account is to be preferred. I am satisfied that the account which he then gave was reliable, subject to the possible criticism that in his account of conversations with Mr Lane he might have thrown in a few more expletives than were in fact used by Mr Lane at the time. Having said that, I would adopt without reservation Mr Suter' s 11 March 2004 account of his 17 February conversation with Mr Lane in preference to any account proffered by Mr Lane, to the extent to which they were at variance with one another. 215 The meeting between Mr Lane and Mr Suter at the CFMEU office lasted, according to Mr Suter, from about 3.00 pm until 5.20 pm. Given that Mr McEwan's file note made earlier in the day in respect of his meeting at the Wollongong site with Messrs. Bowman, Repas and Suter, recorded that 'Glen (sic) advised he contacted Mick Lane @ 3.15 pm to arrange a meeting', it would seem to me more likely that the meeting between Mr Lane and Mr Suter commenced closer to 3.30 pm than 3.00 pm. Mr Lane's recollection, such as it was, was that the meeting was of some length but not more than one hour. Given the detail contained in Exhibit A10, I would have thought that the meeting probably lasted for close to two hours. I don't give much ... for that bloke'. I've dealt with his union problems ... and I continue to do so now if he doesn't do it. So what's he fuckin' think he's doing up there? ... I've been fuckin' chasing him for years. He's fuckin' been avoiding me. I know he's not fuckin' been paying entitlements to cunts out there. ... He thinks he can fuckin' run around here and think he's fuckin' king of Wollongong, he's fuckin' wrong, he can fuck off. I can go through papers and find complaints about fuckin' Profinish all over my fuckin' desk here. ... And the fuckin' trouble, all he had with the ... fuckin' Penrith well I'll fuckin' tell you, if you're gunna fuckin' work around here mate. When he fuckin' gets down to that Belmorgan fuckin' job mate. I'll be fuckin' down there, don't you worry. What's he fuckin' gunna do about it then? He will make the final decision of [sic] what he wants to do so let's talk about what you guys want first. He also had other EBAs that workers at the Fairy Meadow site were working under. I ['ll] ... take the information back to Spiro and put it on his desk and he'll make the decision. I don't make this decision, I don't spend his money, I don't pay his wages. I just control his jobs and run his men'. 218 Whilst Mr Suter's recollection in July 2006 was that he only had one meeting with Mr Lane at the CFMEU office and that meeting was attended by not only himself but also Mr Repas, I am satisfied that a second meeting took place at the CFMEU office on Friday 20 February 2004 which was attended by Messrs Lane, Suter and Repas. Little is known of what transpired at the 20 February 2004 meeting. 219 Returning to the meeting between Mr Lane and Mr Suter at the CFMEU office on the afternoon of Tuesday, 17 February 2004, Mr Suter says, and I accept, that after mention had been made of the problems the Union had experienced with Pro Finish Interiors at Penrith Mr Suter explained to Mr Lane that the problems with Penrith were all the Union's problems, not Pro Finish Interior's problems because the problems at Penrith had resulted from some of the men signing an EBA up there. It wasn't ratified, but it was signed. Apparently it was a legal document which provided for above award wages and then the men wanted to renege on it. They took it to the Union. The Union didn't come on site, they met the men off site. 220 When the men returned to the site Suter had said 'You guys have obviously been to the union meeting. I didn't come down in the last bloody shower. I know what happens when six blokes are all sticking together and walk off site and don't show up for an hour ... there's obviously a union meeting going on somewhere. And so do you want to tell me about it? They explained what it had been about. ... If you guys aren't happy with that EBA ... If you don't want to work here under these conditions you can leave now, or you can leave in a week's time. .. if the union come back and verbal with this and they're not happy with it, well then we're going to tear it up and put you on award wages, alright? ... if you're not happy with that you can feel free to leave too. But if you want to just stay you work on the EBA, I don't care less the fact that you just had a union meeting, let's get on with the job'. That part of the discussion (concerning a site at Penrith) lasted for some 20 minutes. I've got fuckin' Innovation up here, they're all on fuckin' wages, on an EBA up there [Lane says "maybe yes" when asked if he said words to this effect] --- mate they've got no fuckin' sole traders up there at all ... and so and so down here he's on an EBA and Steven Plasterers, they haven't got an EBA. They're gunna do one soon. They don't employ sole traders at all, he won't touch 'em. We're saying, we're gunna go back and discuss it. ... how do you feel about me working up there as a sole trader because I won't be working there [at the Hansen Yuncken site] on wages. I don't give a fuck what you do. [Lane agrees words to this effect spoken, if expletives deleted] But the minute you put that fuckin' nail bag on, you're on wages. ... You've got to get on a fuckin' level playing field with all the rest. So you, all you blokes out there, sole traders and EBA guys and everybody's got to be on a level playing field so everybody competes. How do you reckon it's going to look for me if fuckin' Innovations say to me How come you let those cunts out of that fuckin' job [Hansen & Yuncken] down there. ... What are those cunts down there doing that job when they haven't got a fuckin' EBA? No guarantees when I walk out of here. I'm going to go back and speak to Spiro'. They can't win a job because he's down there undercutting on sole traders. 224 During the course of the meeting Mr Lane said words to the effect of anything that's said at this meeting, I'll completely deny, if raised on another occasion. When cross-examined about Mr Lane's use of such words Mr Suter said, 'Mick said that to me in the meeting as plain as day'. 225 Conversation between Mr Lane and Mr Suter turned to Union membership fees. Now I've got a fuckin' piece of paper here saying fuckin' half of youse are in the union'. He doesn't hire and fire blokes, I do that, he wouldn't know. I ask them. I could have fuckin' told you if you'd rung me. But Spiro wouldn't have a clue mate. He just pays the fuckin' bills. He pays the wages, you know. That's what Spiro's about. I do all that shit mate. ... that's not even a problem, that's not even an issue Mick. I can come in here and fix that up, we can sort that out. ... And get the guys up to date ... With no problem at all. I only have to ask these guys mate. ... I go up and say ... we've got to do the union guys and they'll sort it out and it'll be done in 5 minutes. ... As far as the union goes, ... we haven't got a problem with the union. We've got no problems being with the union, being union members, nobody's got a problem with that, ... but Spiro wouldn't know that .... When we get to that mate, ... that's a minor issue'. Clearly, he had no authority to make any commitments on behalf of those workers. ... I've got fuckin' 50 blokes and they're all fuckin' members of the union. And you cunts come in, you're not a member of the union. ... You're getting all the fuckin' entitlements the union's got ya and you won't even pay your fuckin' dues. I'm going to fuckin' have that site, I'm going to and that's going to be a fuckin' union site. '... I suggest to you he never said words, that fucking site is going to be a union site? 'In his throwing his hands around, yes, he did say that to us, I'm sure Spiro was there when he said that. 'And he never said, I'm going to fucking have that site? 'He said he's f-ing having that site, I recall him saying he was going to have the site. I seem to recall that he was going to make it a union site but not have that f-ing site. 'Can I suggest that he never said, that's going to be a fucking union site? 'He said that he wanted to make it a union site, I don't recollect, I recall him saying he wanted to make it a union site, I definitely recall him saying that while the meeting was on. 'And he never said, I want fucking EBA workers only there? 'I don't have any recollection of him saying that, Mr Pearce. 229 I would observe that Mr Suter used the words, 'I don't have any recollection of him saying that, Mr Pearce', just after the hearing resumed at 11.45 am on 28 July 2006 following a short adjournment to allow Mr Suter to get his mind back into gear. 'And he didn't say to you, why the fucking hell should I let sole traders on my site, he didn't use those words, did he? 'Can I suggest to you, Mr Pearce, my concentration span has just about gone back to nothing at the moment totally given [I thought the witness said 'totally gone'] '. What's fuckin' Repas up to now? I hope they don't' hear me out there [referring to the staff in the general office of the Union] , they'll come and beat me. ... what's your problem? Who's he fuckin' think he is mate? Well I'll fuckin' tell you they're not. Someone's giving you false information here Mick. You sit down for a minute and I'll tell you what happened. ... A couple of hours ago Graham [Boyd] rang me looking for men. And I sent all my men down there to work for him. No money involved, no exchange. I've terminated them yesterday. They're working, they're employed by Innovation today. He's [referring to Graham Boyd of Innovation Interiors] - been told to employ them. He's employing them, he's paying them wages, their super, their BUS the whole lot mate. They're union members. They're entitled to be there'. 234 Mr Suter's impression was that at this stage, Mr Lane started to back off a little bit. 235 Discussion then continued about a possible EBA with Pro Finish Interiors. I'm going to go back and speak to Spiro. Now if he wants to continue with this, it's up to him. If he wants to have a meeting with you, that's up to him. ... I'll get back to you and I'll let you know what we're going to do, okay ... but no promises, I'm walking out of here, no promises. I'm trying to get something going here. If Spiro doesn't want to follow through, that's between you and him mate. But I've washed my hands after this today. I can have the fuckin' alley mack drivers not take your fuckin' gear up. Mr Suter included the observations as to what Mr Lane said he could do in relation to the Wollongong site in his record of interview in response to an invitation by Mr Alfred to respond to the question, 'So there was no discussion about interrupting that site ...? The alley mack ... wouldn't take our gear up and I've seen that sort of thing go on before with companies we've been working from (sic) . You know, they'll just drive straight past you. ... Hansen and Yuncken ... assured me at a later meeting that no, that wouldn't have happened. I don't make stupid threats and neither do I make threatening sort of innuendos that at the end of the day you look nothing like an idiot because you can't follow through with them? I'm suggesting to you that you did say those words and that you deny it because you know to acknowledge the words that you said would be prejudicial to your case? What do you say in relation to that suggestion? I am also satisfied, as Mr Suter said, that Mr Lane implied 'very, very strongly' that if Pro Finish Interiors didn't have an enterprise bargaining agreement with the Union, it couldn't work on the Wollongong site. However Mr Lane did not say so. 241 I am further satisfied that Mr Lane explained to Mr Suter what he 'could' do if Pro Finish Interiors did not 'comply' with the Union's demands. However, I could not, on the evidence before me, read into Mr Suter's use of the word 'comply' a threat by Mr Lane directed to Pro Finish Interiors were it to fail to enter into an enterprise bargaining agreement with the Union. 242 I am also satisfied that Mr Lane said to Mr Suter that the Wollongong site was 'going to be a union site', meaning thereby, one at which you couldn't work if you didn't have a Union membership ticket. 243 The meeting between Mr Lane and Mr Suter concluded at about 5:20 pm on 17 February 2004 whereupon Mr Suter jumped in his car and 'hit the freeway' to North Nowra where he lived. During the course of his journey Mr Suter telephoned Mr Repas and told him the end result of the meeting. He then said, 'The next thing for us to do now is for you to have a meeting with Mick'. Mr Suter informed Mr Repas that a meeting with Mr Lane had been arranged for the following Friday afternoon, 20 February 2004. Against their respective signatures the date '17/2/04' appears. It seems to me that the date was incorrectly recorded against their respective names and it should have been '18/2/04'. 245 Given that Mr Summers worked for nine hours for Pro Finish Interiors at the Penrith Plaza site on Tuesday 17 February 2004 it seems highly unlikely that he was at the Fairy Meadow site on that day. They've already been on our case before. If you have any hassles with them, we'll just go, you know, we'll leave now. I need youse up there. Go up there and start working. Shortly thereafter they were summoned to the site shed in the car park level of the building for induction. Notwithstanding that Norm Philipp, Reinhard Philipp, Barry Sindel and Anthony Summers had previously been inducted, they were required by Lanskey to undertake a further induction. During the course of the induction Mr Casper asked Mr Summers whether he had thought any more about joining the Union to which Mr Summers replied 'No, I haven't reconsidered'. 248 Mr Casper asked Mr Reinhard Philipp 'Have you thought any more about joining the Union? ', to which he replied 'It's against my religion'. 249 In his statement made 19 May 2004 Mr Reinhard Philipp had said that he was 'not site inducted on this occasion', however, I am satisfied that he attended the site shed along with the other workers. Not interested mate. You know that I was [in his statement made 19 May 2004 he said "I'm"] in the Union, I'm not financial, I haven't paid it, I've got no intention of paying it. When I was working on the RPA site they forced me to join the union there, I did, and I told the bloke I'd resign on the first day. I went to give him a letter, the union bloke, and he threw it back at me. He said "you can't do that, if you do that, I'll take it to the members on site and you won't be working here. " I said "mate, that's my letter of resignation, you didn't accept it, I'm not paying a cent more". 252 Following the induction meeting the men returned to work on the site. 253 On the afternoon of 18 February 2004 Mr Lane visited the Fairy Meadow site. In his affidavit he said, 'I do not now recall the specific purpose of my visit on that day, but I do know that it was not for the specific purpose of meeting on the site the former Pro Finish workers who were apparently seeking to come on to the site on behalf of Innovation'. Whilst I accept that Mr Lane did not in August 2006 recall the specific purpose of his visit to the Fairy Meadow site on the afternoon of Wednesday 18 February 2004 I do not accept for one moment his assertion that it was not for the specific purpose of meeting the workers whom he described as 'the former Pro Finish workers'. It will be recalled that at 9:13 am on that day Mr Casper had forwarded his facsimile to the CFMEU office seeking Janet McIntosh's assistance in providing details of the Union memberships and financial status of the relevant workers with the request that, not only should the form when completed be faxed back to Mr Casper, but also a copy of it should be given to Mr Lane. I have no doubt that this occurred and that it was the catalyst for Mr Lane's visit to the Fairy Meadow site, especially in the context of the events of the preceding two days concerning the Wollongong site. PPS went out about six or seven years ago. Why don't you get a fucking real job. 255 Mr Casper did not hear and denied that Mr Lane used words to the effect 'You fucking bastards have been on PPS too long' and 'Mate, you don't join the union, you're not working on this fucking site and you won't be working on a fucking site in Wollongong again'. You're not working on the other fucking site and you won't be working on a fucking site in Wollongong again". You said those words, didn't you? I deny it because I wouldn't have said it and neither do I say it. I must say that I find this very difficult to accept. This is a union site, if you're not in the union you won't work on the site. You won't be working anywhere in Wollongong. Why don't you get a fucking real job. This is a union site, and you have to be in the union to work here. ' [in his statement of 20 May 2004 Mr Summers apparently said 'I should be in the union'. They didn't say it together. Rather, he saw it more as a 'demand'. In his earlier statement Mr Summers had also included a response by him namely 'That's fair enough, you have your opinion'. 263 I accept Mr Summers' evidence that the conversation which occurred was expressed in a more refined form in his affidavit sworn 2 February 2006 than it was recorded in his statement of 20 May 2004. 264 Mr Lane denied using words to the effect 'You won't get back on this site, that (sic) is a union site, and you won't get back on that site if you're not a union member'. 265 Mr Lane did, however, concede that in the early stages of the Fairy Meadow project a resolution had been passed to the effect that the Fairy Meadow site be a 'union site'. 267 Following the conversations of Messrs Lane and Casper with Messrs Norm Philipp and Reinhard Philipp and of Messrs Lane and Casper with Mr Summers, each of Mr Norm Philipp, Mr Reinhard Philipp and Mr Summers continued to work on the Fairy Meadow site until around 3:00 pm. 268 However, Mr Ned Djukic says, which Mr Casper disputes, that, on the morning of 18 February 2004 Mr Casper telephoned him and asked him to meet him in the car park under the building. Mr Djukic says that he proceeded to the car park where Mr Casper said to him 'I don't want these four people on site. I was abused and swore at. ' Mr Djukic understood the reference to 'these four people' to be a reference to 'the four new people that started that day'. I am satisfied that the conversation took place as alleged by Mr Djukic. 269 Mr Djukic says that he proceeded to tell his foreman Mr Boyd that 'Skip [referring to Mr Casper] will not allow us to keep the new four workers on site'. Mr Djukic has no recollection of seeing the four extra workers that arrived that day, again after that. 270 According to Mr Reinhard Philipp's statement made 19 May 2004 Mr Boyd spoke to Reinhard Philipp, Norm Philipp, Anthony Summers and Barry Sindel on the afternoon of 18 February 2004 and said words to the effect 'I don't need youse, there's not enough work to keep all of us going'. To which Mr Reinhard Philipp responded, 'Fair enough'. 271 In his affidavit Mr Norm Philipp said that Mr Boyd approached himself and 'the relevant ABN workers' on 18 February 2004, whilst the men were working, and said words to the effect, 'We don't need you anymore, you can finish the day out'. 272 According to Mr Summers' affidavit Mr Boyd approached him at around 1:00 pm and said words to the effect 'I'm sorry mate, I think we're catching up pretty much with the work'. According to Mr Summers' statement his response had been, 'That's okay, that's fair enough. Indeed, on the following day another new 'Pro Finish Interiors' worker', Mr Bryan Harnett, commenced work at the Fairy Meadow site for Innovation Interiors. 274 According to Mr Boyd the workers who came on to the site on 18 February 2004 ended up staying for a week to two weeks, apart from those who were told by him that their services were no longer needed in the manner indicated above. Such workers were Tony Morgan, Geoff Harnett and Albert Lilley. 275 According to Mr Boyd the four who were informed that their services were no longer needed were selected because Mr Boyd's boss (Mr Ned Djukic) had informed him that they 'did not want to join a union'. 276 Mr Boyd said that he'd never been put in such a position before. In the circumstances he took a witness with him when he informed the workers that he would have to let them go 'because there is not enough work to keep you on'. I don't blame you. If I got pressured like that, I'd think about doing the same thing you did. I don't blame you at all'. 279 That night, Mr Boyd proceeded to ring Mr Suter to tell him what had happened and how he felt and what he could do about it. 280 At about 7:00 pm on 18 February 2004 Mr Suter telephoned Mr Summers following his discussion with Mr Boyd, a discussion with Mr Geoff Harnett, in which Mr Harnett had informed Mr Suter of a willingness on Mr Summers' part to join the Union if it meant that he could stay on site and a further discussion with Mr Boyd, who indicated that if that was the case he could go back to work at the Fairy Meadow site on the following day. Mr Suter informed Mr Summers that he wanted him to go back to work at the Fairy Meadow site on the following day, which he proceeded to do. Indeed, Mr Summers worked at the Fairy Meadow site on both Thursday 19 February and Friday 20 February 2004. I'll fix you up with that as soon as I get some money. Frankly, the union doesn't like people with ABN's being on the job and being paid that way. They don't like Innovation using people with ABN's. They've turned a blind eye in the past because work was getting behind, but not now. His explanation for the addition in his affidavit was that he had had more time to think about the details of the conversations. I accept Mr Summers' explanation and also his evidence as to the terms of the conversation. 285 By virtue of the conversation between Mr Boyd and Messrs Norm Philipp, Reinhard Philipp, Anthony Summers and Barry Sindel on 18 February 2004, neither Mr Norm Philipp nor Mr Reinhard Philipp returned to the Fairy Meadow site after 18 February 2004. Mr Summers did in fact return to the site, notwithstanding the terms of the conversation, on Thursday 19 and Friday 20 February 2004, only to leave after the further conversation between Mr Boyd, Mr Morgan and Mr Summers on the afternoon of 20 February 2004. Mr Sindel continued to work at the Fairy Meadow site. 286 Whilst I accept Mr Djukic's evidence that Mr Casper said to him on 18 February 2004 words to the effect 'I don't want these four people [referring to Mr Norm Philipp, Mr Reinhard Philipp, Mr Anthony Summers and Mr Barry Sindel] on site. I was abused and swore at' and I further accept that Mr Djukic told Mr Boyd on that day 'Skip will not allow us to keep the new four workers on site', nevertheless there is no evidence that Mr Casper had said to Mr Djukic that he did not want Mr Norm Philipp, Mr Reinhard Philipp, Mr Anthony Summers and Mr Barry Sindel on the Fairy Meadow site because they did not want to join the Union. Mr Boyd may well have been so informed by Mr Djukic but there is no evidence to justify a finding that Mr Djukic was so informed by Mr Casper. 288 Whilst the wording of s 298SC is not identical to that employed in s 52 of the Trade Practices Act 1974 (Cth), there is a sufficient correspondence between the two to enable a conclusion to be drawn that it is unnecessary to establish an intent on the part of the alleged contravener to make a false or misleading misrepresentation (see Hornsby Building Information Centre Pty Limited v Sydney Building Information Centre Limited [1978] HCA 11 ; (1978) 140 CLR 216 at 228 and Brown v Jam Factory Pty Limited (1981) 53 FLR 340 at 349). It must be acknowledged that the word 'false', when viewed in isolation, is a latently ambiguous one (see per Deane, Dawson and Gaudron JJ in Murphy v Farmer ('Murphy') [1988] HCA 31 ; (1988) 165 CLR 19 at 26). 'False' is not a precise adjective (per Brennan and Toohey JJ in Murphy at 22). 'False' can mean merely 'untrue' or 'wrong', or it can involve both subjective and objective elements and mean 'purposely untrue' (per Deane, Dawson and Gaudron JJ in Murphy at 26). By a majority of three to two, the High Court in Murphy held that 'false' where used in s 229(1)(i) of the Customs Act 2001 (Cth) ('the Customs Act') meant 'purposely untrue'. The majority considered that, 'false' in s 229(1)(i) could also be read in congruence with, rather than in contrast to, the neighbouring phrase 'wilfully misleading' in which case it would have been an exercise in tautology to have inserted the word 'wilfully' before it. In the result, the majority construed 'false' as meaning purposely untrue, for the reason that a finding that an entry for home consumption was false would result in the 'draconian step of imposing automatic forfeiture as a penalty for " any" wrong "entry invoice declaration answer statement or representation" regardless of whether the wrong information was provided as the result of an innocent mistake or excusable ignorance'. It held that such a result should not be taken to have been intended by the legislature unless the relevant enactment distinctly so provided. In Murphy , the respondent, Farmer, had been required to answer in writing certain questions on a customs form. The answer he gave to one of the questions was wrong, but not deliberately or intentionally so. The consequences of a finding of falsity would have resulted in the forfeiture of a Porsche motor vehicle, the subject of the entry, had it not been for the lodgement of a bond to secure the release of the vehicle. In the case of a contravention of s 298SC(c), the Court has a discretion to impose a pecuniary penalty under s 298U(a). Unlike the Customs Act, the Act contains no provision for a default consequence such as automatic forfeiture of property in the event that a false or misleading representation is made. In the context in which it is used, I am satisfied that 'false' means no more than erroneous in fact. Similarly, no element of intent is required under s 298SC before a representation can be found to have been misleading. Section 298SC proscribes the making of representations which are false in the sense of being untrue and, what might be thought to be a lesser form of transgression, representations that are misleading. 289 An additional reason for reaching the above conclusion is that in s 4(7) of the Act, the legislature has drawn a clear distinction between provisions which concern matter that is 'false or misleading' and other provisions which concern matter that is ' to the person's knowledge false or misleading' (compare, for example, s 298SC(c) and s 170WG(2) of the Act). It is also significant to note the terms of s 298D(a), (b) and (c). These limitations on the application of Part XA and, accordingly, s 298SC are not cumulative. In the present case, the relevant conduct falls within s 298D(a) and/or (b). Accordingly, it was unnecessary to establish that the conduct, said to contravene s 298SC(c) was 'carried out with a purpose or intent relating to a person's membership or non-membership of an organisation' for s 298SC(c) to apply to the conduct in question. 290 The respondents also submit that s 298SC(c) only applies where the relevant false or misleading misrepresentation about another person's obligation to join an industrial association is made to that other person. 291 I am unable to so construe the language of s 298SC(c). In my opinion s 298SC can be invoked where a representation is made to any person about 'another person's obligation to join an industrial association'. However, the applicant submits that the individual partners or, at least in the case of Ruse Linings, Mr Summers, would be an eligible person. It seems clear to me that, whilst Mr Summers may have been an 'eligible person', nevertheless, there could be no 'discriminatory action' within the meaning of s 298S(1) in relation to him unless there was evidence that he had offered his services, as opposed to those of Ruse Linings, to, relevantly, Innovation Interiors. There is no such evidence in the present case. It seems clear that in relation to Mr Summers, his services were simply not on offer. Rather, Ruse Linings, which was not an eligible person, offered its services on the basis that Mr Summers would be the person undertaking the performance of its contractual obligations. 293 Similar considerations would apply in respect of the partnerships of N & M Philipp and R & M M Philipp referred to at [68]. Barry Sindel was in a different position as he was a sole trader. Such a representation was false or misleading in that it derogated from the freedom of association for which the Act provided. See also s 209(2) of the Industrial Relations Act 1996 (NSW). Such a representation was made to each of Norm Philipp, Reinhard Philipp, Barry Sindel and Norman Philipp Jnr. No such representation was made on 19 January 2004 to Anthony Summers as he did not attend the Fairy Meadow site until 21 January 2004. Notwithstanding the applicant's failure to prove that Mr Casper made the representation alleged to Mr Summers on 19 January 2004, I am satisfied that the applicant has established a contravention of s 298SC(c) by Mr Casper in respect of the making of the representation to each of Norm Philipp, Reinhard Philipp, Barry Sindel and Norman Philipp Jnr. (b) The finding that Mr Lane said to Mr Suter on 17 February 2004 that the Wollongong site was 'going to be a union site', meaning thereby, one at which you couldn't work if you didn't have a Union membership ticket, does not support an alleged contravention of s 298SC(c) by Mr Lane for making a false or misleading misrepresentation to Mr Suter that each of Norm Philipp, Reinhard Philipp, Anthony Summers and Barry Sindel was obliged to join the first respondent and/or the second respondent in order to work on the Fairy Meadow site, the Wollongong site and any other site in the Wollongong area. No mention was relevantly made of the Fairy Meadow site or 'any other site in the Wollongong area', nor was there any representation made to the effect that the Wollongong site was a Union site, with the consequence that, in order to work at such site, the relevant workers were obliged to join the first respondent and/or the second respondent. (c) Mr Lane did make a representation on 18 February 2004 to Norm Philipp and Reinhard Philipp to the effect that each of them was obliged to join the first respondent and/or the second respondent in order to continue working on the Fairy Meadow site, or to work on the Wollongong site or any other site in Wollongong. Such a representation was false or misleading in that it derogated from the freedom of association for which the Act provided. See also s 209(2) of the Industrial Relations Act 1996 (NSW). I am satisfied that the applicant has established a contravention of s 298SC(c) by Mr Lane in respect of the making of the representation. (d) Mr Lane did make a representation on 18 February 2004 to Anthony Summers to the effect that he was obliged to join the first respondent and/or the second respondent in order to continue working on the Fairy Meadow site, or to work on the Wollongong site. Such a representation was false or misleading in that it derogated from the freedom of association for which the Act provided. See also s 209(2) of the Industrial Relations Act 1996 (NSW). I am satisfied that the applicant has established a contravention of s 298SC(c) by Mr Lane in respect of the making of the representation. (e) As a delegate, Mr Casper was an officer of the first respondent within the meaning of s 298B(1)(a) of the Act. Accordingly, action done by him as a delegate was taken to have been done by the first respondent also, in accordance with s 298B(2)(b) of the Act. I am satisfied that by the action of Mr Casper referred to in paragraph (a) the first respondent contravened s 298SC(c) of the Act. (f) The failure of the applicant to establish a contravention of s 298SC(c) of the Act by Mr Lane as alleged in paragraph (b) leads to the conclusion that there was no corresponding contravention of s 298SC(c) by the first respondent. (g) Mr Lane was an officer of the first respondent within the meaning of s 298B(1)(b) of the Act. Accordingly, action done by him as an officer was taken to have been done by the first respondent in accordance with s 298B(2)(b) of the Act. I am satisfied that by the action of Mr Lane referred to in paragraph (c) the first respondent contravened s 298SC(c) of the Act. (h) Mr Lane was an officer of the first respondent within the meaning of s 298B(1)(b) of the Act. Accordingly, action done by him as an officer was taken to have been done by the first respondent in accordance with s 298B(2)(b) of the Act. I am satisfied that by the action of Mr Lane referred to in paragraph (d) the first respondent contravened s 298SC(c) of the Act. (i) As a delegate, Mr Casper was an officer of the second respondent within the meaning of s 298B(1)(a) of the Act. Accordingly, action done by him as a delegate was taken to have been done by the second respondent also, in accordance with s 298B(2)(b) of the Act. I am satisfied that by the action of Mr Casper referred to in paragraph (a) the second respondent contravened s 298SC(c) of the Act. (j) The failure of the applicant to establish a contravention of s 298SC(c) of the Act by Mr Lane as alleged in paragraph (b) leads to the conclusion that there was no corresponding contravention of s 298SC(c) by the second respondent. (k) Mr Lane was an officer of the second respondent within the meaning of s 298B(1)(b) of the Act. Accordingly, action done by him as an officer was taken to have been done by the second respondent in accordance with s 298B(2)(b) of the Act. I am satisfied that by the action of Mr Lane referred to in paragraph (c) the second respondent contravened s 298SC(c) of the Act. (l) Mr Lane was an officer of the second respondent within the meaning of s 298B(1)(b) of the Act. Accordingly, action done by him as an officer was taken to have been done by the second respondent in accordance with s 298B(2)(b) of the Act. I am satisfied that by the action of Mr Lane referred to in paragraph (d) the second respondent contravened s 298SC(c) of the Act. They were each partners in firms which offered services, but such firms were not eligible persons within the meaning of s 298S(1) of the Act. In relation to Norman Philipp Jnr, he may have been an eligible person, but he did not relevantly offer services to Innovation Interiors on or after 18 February 2004. His involvement in work at the Fairy Meadow site came to an end in January 2004 after he had executed work at the site as a subcontractor to Pro Finish Interiors. Whilst it may be suggested that Mr Casper advised, encouraged or incited Mr Nenad Djukic and Innovation Interiors to refuse to make use of or to agree to make use of services offered by Barry Sindel because he was not a member of the first respondent and/or the second respondent, the fact is that I am not satisfied that Mr Casper said to Mr Djukic words to the effect that he did not want Norm Philipp, Reinhard Philipp, Anthony Summers and Barry Sindel on the Fairy Meadow site because they did not want to join the Union. The evidence simply establishes that Mr Casper said to Mr Djukic words to the effect, 'I don't want these four people [referring to Norm Philipp, Reinhard Philipp, Anthony Summers and Barry Sindel] on site. I was abused and swore at'. Such words do not constitute advice, encouragement or incitement to refuse to make use of or to agree to make use of services offered by the named persons or any of them because such persons or any of them were not members of the first respondent and/or the second respondent. No relevant contravention of s 298S(2)(a) has been established. (n) It follows from the findings in respect of paragraph (m) that no contravention of s 298S(2)(a) of the Act on the part of the first respondent has been established. (o) It follows from the findings in respect of paragraph (m) that no contravention of s 298S(2)(a) of the Act on the part of the second respondent has been established. ' with the words 'A very minor part of the whole meeting', Mr Lane was conceding that he had threatened to take industrial action or other action against Pro Finish Interiors with intent to coerce Pro Finish Interiors to agree to the making of an Enterprise Bargaining Agreement with the Union. Mr Lane simply acknowledged that discussion with Mr Suter on 17 February 2004 about a possible EBA between the Union and Pro Finish Interiors constituted a minor part of the 17 February meeting. It seems to me that at the meeting, the door was opened for further discussions in relation to an EBA which was more likely than not addressed at a further meeting between Messrs Repas and Suter from Pro Finish Interiors and Mr Lane on Friday 20 February 2004, when the draft EBA referred to at [218] was printed off. The evidence does not disclose what conversation ensued about a possible EBA at that meeting. Given the findings made by me at [240] --- [241], no relevant contravention of s 170NC(1) of the Act, on the part of Mr Lane, has been established. (q) It follows from the findings in respect of paragraph (p) that no contravention of s 170NC(1) of the Act on the part of the first respondent has been established. (r) It follows from the findings in respect of paragraph (p) that no contravention of s 170NC(1) of the Act on the part of the second respondent has been established. (b) By making a representation on 18 February 2004 to Norm Philipp and Reinhard Philipp to the effect that in order to continue working on the Fairy Meadow site, or to work on the Wollongong site or any other site in Wollongong, each of Norm Philipp and Reinhard Philipp was obliged to join the first respondent and/or the second respondent, the fourth respondent contravened s 298SC(c) of the Act. (c) By making a representation on Wednesday 18 February 2004 to Anthony Summers that in order to continue working on the Fairy Meadow site, or to work on the Wollongong site he was obliged to join the first respondent and/or the second respondent, the fourth respondent contravened s 298SC(c) of the Act. (e) By the action of the fourth respondent referred to in (b) above, the first respondent contravened s 298SC(c) of the Act. (f) By the action of the fourth respondent referred to in (c) above, the first respondent contravened s 298SC(c) of the Act. (g) By the action of the third respondent referred to in (a) above, the second respondent contravened s 298SC(c) of the Act. Accordingly, it is unnecessary to decide whether the losses sustained by them in February --- March 2004 and referred to above were caused by the contraventions of s 298SC(c) which have been found to have occurred. 299 The parties are agreed that the precise form of the relief which should be ordered in the circumstances should be the subject of further submissions after the parties have had an opportunity to consider the findings which have been made in respect of the alleged contraventions. Similarly, the parties have agreed that the appropriate order as to costs should abide further submissions. No doubt such submissions will have regard to s 347(1) of the Act and Re Polites; Ex Parte The Hoyts Corporation Pty Limited [1991] HCA 31 ; (1991) 173 CLR 78 at 93. I certify that the preceding two hundred and ninety-nine (299) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | whether false or misleading representations made about a person's obligation to join an industrial association whether advice, encouragement or incitement given or provided to take discriminatory action against a person who was eligible to join an industrial association whether industrial action threatened with intent to coerce a person to agree to make an enterprise bargaining agreement meaning of 'false or misleading' in s 298sc(c) of the workplace relations act 1996 industrial relations words and phrases |
The Full Court ordered that the applicant have leave to serve the originating application and the amended statement of claim on the respondent at 4-5 Toyomi-cho Chuo-ku, Tokyo, Japan. 2 Pursuant to that leave, the applicant sought to effect service through diplomatic channels in accordance with Order 8 of the Federal Court Rules . The Government of Japan has declined to assist in effecting service. 160/06 of September 14, 2006, requesting the Ministry's assistance in serving the judicial documents on Kyodo Senpaku Kaisha Ltd, has the honour to inform the Embassy that the documents were unable to be accepted for the reasons stated in the enclosed note and to return herewith the relevant documents on the Embassy. The Attorney-General's Department informed the Deputy Registrar of the Court shortly after 18 December. The solicitors for the applicant were informed on 8 January 2007. On 31 January 2007 a notice of motion was filed seeking substituted service. On 2 February 2007 I made orders for substituted service. These are my reasons for doing so. 7 Leave having been granted, the Court's discretion to order substituted service is enlivened: Mondial Trading Pty Ltd v Interocean Marine Transport Inc (1985) 65 ALR 155 at 157; Rice Growers Co-operative Ltd v ABC Containerline NV (1996) 138 ALR 480 at 483; Commissioner of Taxation v Ma [1999] FCA 1093 ; (1999) 92 FCR 569 at [14] ; ASIC v Sweeney (No 2) (2001) 38 ACSR 743; [2001] NSWSC 477 at [40] - [41] and ACCC v Chaste Corp Pty Ltd (in liq) [2002] FCA 1183 at [11] . 8 The relevant word in the rule is "impractical". "Impractical", depending on context, can have a different meaning to "impracticable". The Shorter Oxford Dictionary on Historical Principles (1986) gives the definition of "impracticable" as "practically impossible" or "that (which) cannot be carried out or done". It gives as the meaning of "impractical" both "impracticable" and "un-practical". When one examines the definitions of "practical" it is clear that "un-practical" has a wider meaning, in a more relative sense, than that which cannot be done. Impracticable means 'that cannot be carried out, that is not feasible' (it would be impracticable to place a ban on smoking in pubs; a manned mission to Mars is impracticable at present) . In general impractical (which is a relatively recent word, first recorded in the mid-19c. ) means 'not practical, unpractical', ie (of an idea or course of action) not sensible or realistic; (of a person) lacking the ability to do practical things. Unfortunately impractical is tending to encroach on the territory of impracticable, and it is not easy to see how they can be permanently kept apart. Practicable means capable of being carried out in action. Anything that is possible of accomplishment by available means may be called practicable. Only that which can be accomplished successfully or profitably under given circumstances may be called practical. A practical idea, for example, is one that is useful, realistic and likely to be successful. Context and purpose are important. Nevertheless, the word used in the rule is "impractical", which is recognised widely as having a meaning different from "impracticable" and thus, arguably, its meaning is not just governed by notions of whether service is factually possible or feasible, but can include relative notions of sensible and realistic in the circumstances. In that case, Tamberlin J seemed to express the view that futility or inability to serve was an essential requirement for invocation of the rule. Whether that gives full breadth to the language of the rule may be open to debate. On one view of the language of the rule, "impractical" may be wide enough to cover circumstances where in the light of the nature of the claim and the circumstances of the applicant and respondent service through the method provided for by following the Rules is not sensible or realistic, even if it is possible or feasible. It is unnecessary to deal with this question here. Here, on the evidence, it is not possible or feasible to serve the process in Japan using diplomatic channels. Thus, on any view, service ex juris, in accordance with the Rules, is impractical. 15 In these circumstances, I was prepared to make the orders that I did on 2 February 2007. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop J. | service out of the jurisdiction substituted service meaning of 'impractical" in order 7 rule 9 discussed practice and procedure |
I refused the application for inspection of those documents and published reasons for that decision. See Brookfield v Yevad Products Pty Ltd [2006] FCA 1180. 2 By motion of 22 September 2006, the applicant has sought an extension of time within which to seek leave to appeal from that decision, and leave to appeal from that decision, pursuant to O 52, r 10(2A)(b) of the Federal Court Rules . The present motion seeks that leave only with respect to one of the documents of which inspection was not permitted, namely, a document described as 'Draft Report prepared by Barry Pinder of Pump Technology Pty Ltd dated 7 August 1995' and called in these reasons and in the previous judgment 'the report'. I will not repeat the information concerning the way in which the report came to be discovered in the previous judgment. 3 The applicant has sought to explain the delay in seeking leave to appeal beyond the time permitted by the Rules as being through his oversight, or his ignorance of the applicable time limit. The respondent disputes his claims in that regard. I do not need to decide that question. It is plain on the authorities that, in any event, the applicant should not be granted an extension of time within which to appeal if there is no real prospect of the grant of leave to appeal being granted in any event. 4 The relevant principles upon which leave to appeal would be granted are set out in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. It must be shown that the decision at first instance is attended with sufficient doubt to warrant its reconsideration on appeal, and that there is no substantial injustice if leave to appeal is refused, assuming the decision at first instance is wrong. 5 The basis upon which the report was found to have been privileged, and so not subject to inspection, is set out in the previous judgment. In particular, I refer to [8] to [14] of that judgment. It is important to note that it was the copy of the report provided to the solicitors for the respondent which was the subject of the application for inspection, and not any other copy of that document either held by the expert, or held by any other person. 6 The applicant has made a number of points which he contends illustrate that there is reason to think that the decision concerning that report is attended with sufficient doubt to warrant its reconsideration on appeal. In my view, none of those matters are made out. I will deal with them briefly. 7 As the applicant acknowledged, there is a different regime applicable to the inspection of expert reports under the Supreme Court Rules of the Supreme Court of South Australia. The applicant contends that a similar regime should be established in this and other Courts where there is a common law regime applicable. That is a matter for the legislature. 8 He also contends that there should be a distinction drawn between an expert's report provided before an action is commenced and one provided during the conduct of the action. The report fell into the latter category. I do not see any basis on the authorities, or in principle, upon which such a distinction could be drawn. 9 He also contends that because expert's reports (as he said) are produced for the benefit of the Court, all expert's reports whether favourable or unfavourable, should be regarded as not being privileged. He put the argument another way to say that the party receiving an expert's report should not have the option of treating a favourable report as not privileged by waiving the privilege, but retain the privilege in respect of unfavourable reports. That is, he contended, that filtering process should not be available to the recipient of the privileged communication. In my view, the principles are straightforward. They are set out in the judgment, in particular at [9] to [13]. I do not think the proposition put by the applicant is sustainable in the face of the decisions of the High Court in Commissioner of Australian Federal Police v Propend Finance Pty Limited [1997] HCA 3 ; (1997) 188 CLR 501 and Esso Australia Resources Limited v Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49. This Court, both at first instance and on appeal, is obliged to apply the decisions of the High Court. Applying those decisions, in my view, the argument put by the applicant on that aspect is simply not sustainable. 10 I have therefore reached the view that the decision at first instance concerning the report is not attended with sufficient doubt to warrant its reconsideration on appeal. I refuse the application for leave to appeal. It follows that I also refuse the application for an extension of time within which to seek leave to appeal. 11 The applicant pay to the respondent costs of the motion. | application for leave to appeal from interlocutory judgment whether decision attended with sufficient doubt to warrant reconsideration on appeal practice & procedure |
The further evidence that is sought to be led is from a Mr Peter Gabriel and a Mr Grant Baverstock. The nature of the proposed evidence to be led from Mr Gabriel is identified with quite some precision, in the form of an affidavit sworn by him, which is exhibited to an affidavit of the solicitor for Granitgard read on the application. It will be necessary to observe something further in relation to Mr Gabriel's evidence, as proposed, shortly. That of Mr Baverstock is in rather more abbreviated form in its proposed content, and reposes in a paragraph to be found in the solicitor's affidavit. It, too, requires further comment later. The application is made at a time when both the case for Granitgard and the case for the Respondent, hereafter Termicide, have each closed. Submissions in the case are yet to be made and, obviously enough, judgment has not yet been given. The proceedings were commenced on 19 September 2007. In February last year, a trial was fixed to commence on 23 June. Interlocutory directions were made, which required Granitgard to file its evidence in chief by 18 April 2008, in anticipation of the trial then occurring in June. On 10 June, Granitgard made application for the trial dates to be vacated. That proved necessary, in light of a proposal which Granitgard had made to amend its statement of claim. That application was successful: see Granitgard Proprietary Limited v Termicide Pest Control Proprietary Limited [2008] FCA 865 (Collier J). A sequel to the successful application by Granitgard for the adjournment of the trial was the making of further and revised directions in respect of the provision of evidence-in-chief by the parties. Granitgard, materially, was directed to file further affidavits-in-chief, if any, by 29 August 2008. That was in anticipation of a trial of two weeks duration, commencing 20 October 2008. The trial commenced at that time, but it did not finish within the time allocated. That allocation was made on the basis of submissions made by counsel as to its anticipated length. In the course of what proved to be the original tranche of the hearing, Granitgard closed its case on 27 October 2008. The trial finally concluded, as far as evidence was concerned, at that point, with the closing of the Termicide's case on 4 December 2008. Provision was then made for the making of submissions, initially in writing and then orally. Oral submissions were appointed to commence on 10 February 2009. That there is a jurisdiction to permit a party to reopen its case, so as to adduce further evidence, even after a statement has been made to the court that the party's case in evidence has closed is not in doubt: see, for example, Smith v The New South Wales Bar Association [1992] HCA 36 ; (1992) 176 CLR 256 at 266 to 267. No doubt it is relevant to take account of a number of matters such as likely prejudice to the party resisting the application and the reasons why the evidence was not led in the first place, but there is not, in my opinion, any hard and fast rule which requires the court to reject an application where the decision not call the witness in the party's case was a deliberate one. Of course that does not mean that that is not a very relevant consideration. It is. Where, for instance, a decision was based on tactical grounds it may be difficult to resist the conclusion that the interests of justice were better served by the rejection of the application. But even in that circumstance there may be cases in which it is felt that the client whose application it is should not have to suffer for his or her counsel's deliberate decision. Where the decision is not made for tactical reasons and is based on a mistaken apprehension of the law or the facts the case is more appropriately to be considered as one in which the application has resulted from an error by counsel. In the course of my reasons for judgment in that interlocutory application, I gained assistance from two judgments of the South Australian Supreme Court. I shall not refer in detail to those judgments, as they are reproduced in the interlocutory judgment which I delivered in Olivaylle . Those particular cases demonstrate, though, the extent of the discretion and the singularity of circumstance which may give rise to an exercise of a discretion to reopen, even in circumstances where a judgment has been delivered but an order has not yet been perfected. In Inspector General in Bankruptcy v Bradshaw [2006] FCA 22 at para 24, Kenny J, with respect, offers a very helpful summary of circumstances in which a court will permit further evidence to be given. Her Honour lists four categories in which she opines that, broadly speaking, a court may grant leave to reopen. Her Honour is careful to note that these classes or categories are not exhaustive and overlap. No such exceptional circumstances exist in the present case. There needs to be a finality to the process of litigation and a limit on the number of times a party can re-visit issues which have arisen in the course of a trial and have been addressed. There is no doubt that this particular proceeding is aptly described as "commercial litigation". It is a suit between competitors in a marketplace. It has been both at its interlocutory stages, and in the course of the trial to date, very closely contested indeed. There is no doubt that there are particular commercial interests at stake in terms of the interests in deriving profit from the conduct of business as between Granitgard and Termicide. Mr Gabriel's evidence as foreshadowed is not evidence which it could be described as available with the exercise of due diligence to Granitgard at any stage prior to the closing of its case or, for that matter, the closing of Termicide's case. One way of describing Granitgard's access to Mr Gabriel is that it is the product of what one might term a whistle blower, an anonymous whistle blower. Whether or not that whistle is nothing more than idle puffery, or perhaps a venting of spleen on the part of the disgruntled, is something that does not arise for consideration on the present application, otherwise than as a contingency which would fall for assessment, so far as Mr Gabriel's credibility is concerned, in the event that leave is granted to reopen Granitgard's case so as to permit him to be called. For whatever reason Granitgard has been able to secure an affidavit from him which covers a series of topics very usefully summarised in the submissions made on behalf of Termicide. The reference in this summary to Mr Jeynes is a reference to Mr Paul Jeynes who has already given evidence in Termicide's case. The reference to Laguna Court is a reference to a property, which was the subject of extensive evidence in the course of the proceedings to date, in relation to whether or not there had been a breach or a bridging of a Termiglass barrier at that property, and associated chemical treatment at that property. On behalf of Termicide, it is put that, on analysis, each of these topics are not such, having regard to Mr Gabriel's evidence, as foreshadowed, as would excite the exercise of a discretion to re-open the case so as to permit him to be called. Termicide's submissions go so far as to raise a question as to whether or not Grantigard made a deliberate tactical decision not to call evidence in relation to penetrations and for that matter whether penetrations of the Termiglass barrier are in any way an issue in the proceedings. One allegation made by Granitgard in the further amended statement of claim is to be found at para 8(a). As to para 8(f), the defence admits that that allegation is made. Paragraph 11 of the amended statement of claim, by way of particulars, makes an allegation that Termiglass does not provide an effective barrier to termites, and that it does not and does not consistently form an impenetrable barrier to termites or provide a barrier that is "too hard to chew, too heavy to move, and too small to crawl through". The further allegation materially made is that Termiglass does not provide a suitable physical barrier against subterranean termite entry. These allegations are put in issue in the amended defence. Having regard to the way in which Granitgard's case was conducted, and particularly having regard to the cross-examination which occurred in relation to the Laguna Court property, it does not seem to me that there has been any deliberate tactical decision on the part of Granitgard to not lead any evidence in relation to penetration. Rather, it seems to me that one of the issues that arises for decision in the case is whether there have been penetrations of the Termiglass barrier. Granitgard has been assiduous in pressing for discovery of Termicide's documents in relation to any breach of a barrier. As it happens, and controversially in relation to whether there has been any breach, it is the Laguna Court property which has ultimately proved, to date, to be the focus of particular forensic interest so far as whether or not there has been a breach as concerned. When one has regard to Mr Gabriel's evidence, one reason for that may be, assuming his evidence is admitted and accepted as worthy of credit, that he has, as a matter of corporate policy on the part of Termicide, falsified Termicide's reports of properties in a way that describes what is truly a breach as bridging. That, of course, means that when the solicitors for Termicide have come to review, in accordance with their duties, the files of Termicide, they have, assuming Mr Gabriel is to be accepted, if admitted in evidence, understandably enough taken the view that the document concerned was not amenable to discovery. No part, therefore, of these reasons for judgment should be construed as being in any way critical of the conduct of the solicitors for Termicide. Indeed, it may prove that there is no substance at all in the allegations found in the evidence proposed to be led on behalf of Granitgard from Mr Gabriel. Other criticisms are made by reference to the topics which I have identified on behalf of Termicide in resisting the application for re-opening. It seems to me that these criticisms go more to the weight that one might ultimately give to Mr Gabriel's evidence overall, than whether or not it is relevant, and further, whether or not leave to re-open ought to be given. Having regard to the foreshadowed evidence of Mr Gabriel in relation to the topics which I have identified, it seems to me that his evidence is of a kind which ought sympathetically to be regarded in relation to an application for leave to re-open. There was no particular issue made that it was evidence which was in any way reasonably able to be obtained beforehand. There is, understandably enough, something of a vexing quality, so far as Termicide is concerned, in the prospect of an elongation of this trial. Indeed, and with all due respect, something of an elongation has already occurred in relation to the length it has taken to hear the case to this point, although that may also be overly critical of the way in which witnesses were cross-examined on behalf of Granitgard. Be this as it may, it seems to me that there is, in the interests of justice, a need for Granitgard to be granted leave to re-open so far as an introduction of Mr Gabriel's evidence is concerned. Mr Baverstock's proposed evidence goes to alleged conduct on behalf of Termicide, following the adjournment of the proceedings for the preparation and receipt of submissions. As recited by Ms O'Neill, the solicitor for Granitgard, in a further affidavit read on the application, the nature of Mr Baverstock's proposed evidence emerges in but a hearsay way in the form of her attesting to a telephone call received by her from Mr Gabriel. Mr Gabriel in turn recited to her, so Ms O'Neill swears, the effect of a telephone call received by him from his father-in-law, Mr Baverstock. Mr Baverstock apparently works for Termicide as an installer. The effect of the evidence that one apprehends it is proposed to lead from Mr Baverstock by Granitgard is in these terms; that he received a call from Mr Paul Jeynes to say Paul will pay bikies to come and get him, because Mr Baverstock has "dumped on him". On behalf of Granitgard, it is submitted that Mr Baverstock's evidence, if admitted, upon leave to re-open, would amount to an admission by conduct. Reliance in this regard is placed on statements of principle collected in R v Liddy (2002) 81 SASR 22 at 90 - 92; see also Cross on Evidence at para 33435. Mr Baverstock's foreshadowed evidence is rather more tangential than Mr Gabriel's foreshadowed evidence. Nonetheless, it seems to me that it is not evidence that in any way could be described as reasonably available, or available at all, to Granitgard prior to the last adjournment of the trial. Further, it does have, particularly having regard to the intensity of contest between the parties, some probative value if accepted. I propose also to grant leave to Granitgard to re-open the proceeding so as to call Mr Baverstock. The terms of that grant of leave are that I am disposed to permit Granitgard to call Mr Gabriel to give evidence as contained in his affidavit, subject to such objections, if any, as may be made to it upon the tender of that affidavit. So far as Mr Baverstock is concerned, I am disposed to grant leave to Granitgard to re-open to call from him evidence as contained or, at least, as summarised in the affidavit of Ms O'Neill from which I have quoted. A corollary of the way in which I have exercised the discretion to re-open the proceedings is that there ought to be granted to Termicide liberty to apply in respect of the re-opening of its case in respect of such further evidence, if any, as it may be advised. A further corollary of the exercise of the discretion to re-open in respect of Granitgard's application is that the dates presently fixed for the hearing of submissions will have to be vacated. Termicide will need time to reflect upon the content of the evidence the subject of a grant of leave to re-open. I should add that in exercising the discretion, I have taken into account the estimate that some five days may be needed for the further hearing of evidence, and I have particularly taken into account the costs that will necessarily be entailed to each party in a further hearing. It seems to me, though, that the interests of justice do require the grant of leave to re-open, and that it will entail further hearing time is yet a further, necessary corollary. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | evidence application to re-open case leave to re-open case principles involved circumstances when leave should be granted leave to re-open case granted material witness not reasonably available to party at closure of case practice and procedure |
Over a period the parties have managed to reach agreement in relation to many categories of documents. Their efforts are to be commended. The categories on which a decision is required are set out in an annexure to these reasons for judgment. On the second day of the hearing, the applicant (the University) proposed amendments to a number of those categories on the basis that the University may seek discovery of the original categories at a later date. The respondent (ResMed) opposed such a course. I discuss this proposal in more detail at [82]ff below. 2 The University is the registered proprietor of Australian Patent No 643994 for an invention entitled "Nasal mask" (the Patent). Its priority date is 21 May 1990. 3 At the heart of the parties' dispute is a written agreement dated 17 May 1991 entitled "Licensing Agreement" between the University and ResMed (the Agreement). In the Agreement ResMed is called "the Licensee". 4 The University sues ResMed for infringement of the Patent and for breach of the Agreement. The question whether the categories of documents in dispute are discoverable turns largely on the Agreement and on a proper construction of the University's further amended statement of claim (FASOC). ResMed has filed a further amended defence and an amended cross-claim. 5 ResMed resists discovery on grounds of relevance and oppressiveness, that is to say, that the categories in dispute are not relevant for discovery purposes (see [40] below) to the issues raised on the FASOC, and to the extent that any of them are relevant for those purposes, it would be oppressive for ResMed to have to give discovery of them. 6 In accordance with a suggestion made by ResMed, I have decided to publish these reasons addressing, for the present interlocutory purposes only, certain questions of construction and other issues in the hope that the parties in the light of the reasons may yet be able to agree on the course to be followed. If they cannot do so, I will deliver the remaining instalment of the reasons and make orders. 7 I decide nothing finally on this interlocutory application. For one thing, I note that the Agreement is not to be construed in a vacuum, and I do not have before me evidence of the background against which it was entered into and which could bear upon its proper construction. However, I am required to form tentative views for the purposes of the exercise of my discretion on the discovery of the dispute. In fact the Patent, a standard patent, was granted on a complete application that was associated with the provisional application. The expression "Products and/or processes" is defined in cl 1 of the Agreement to include "technologies, products, devices, processes or techniques". However, Schedule 4, which is headed "The Product", states simply "Nasal Mask". Notwithstanding the reference to "products and/or processes" in the definition of "Product" and to "technologies, products, devices, processes or techniques" in the definition of "Products and/or processes", it seems clear that the Product is simply the physical Nasal Mask product that was the subject of the invention the subject of the Patent. 11 By cl 3.1 of the Agreement the University granted to ResMed an exclusive world-wide licence to use the Intellectual Property to manufacture and market the Product. Clearly the "Product" was taken here to be a physical thing. The term of the licence was from 1 January 1991 to 7 December 1992, but upon ResMed's request the University might grant an extension for a period to be agreed. 12 By cl 3.2 the University undertook to furnish the Intellectual Property to ResMed for the purposes of the Agreement in the manner and at the time stipulated in Schedule 7 to the Agreement. 13 By cl 3.3 of the Agreement, ResMed undertook not to use the Intellectual Property for any purpose other than that permitted by cl 3.1, which was "to manufacture and market the Product". Again, "Product" refers to the physical thing. 14 Clause 5 provided for payment of licence fees by ResMed to the University in the manner and at the time set forth in Schedule 3 to the Agreement. Schedule 3 stated a certain percentage of the "Net Ex-works Selling Price of all Product sold". 15 Clause 11.1 provided that should ResMed or any agent, servant or employee of ResMed make or discover any "improvement" in connection with the Intellectual Property, whether patentable or not, ResMed must forthwith disclose or cause to be disclosed to the University any information concerning that discovery or improvement, and, if so required by the University, must make available or supply to the University all information or data necessary or convenient for the proper understanding or development of the discovery or improvement, which discovery or improvement was to "belong to and be the absolute property of the University". Numbers in bold in brackets indicate paragraphs of those numbers in the FASOC. In particular, it was a term of the Agreement that the University granted to ResMed a licence to use the Intellectual Property as defined in the Agreement to manufacture and market the Product as defined in the Agreement ( 10 ). 19 Commencing in or about August 1997 and continuing to date, ResMed has sold a "Mirage" series of twelve nasal masks ( 14 ). The names of the masks in the series are set out in particulars to para 14, but the Mirage series is called "the Mirage Mask" in the FASOC. Inconsistently with this definition, however, at various later points in the FASOC, the term "Mirage Mask" is used to refer to one particular mask in the series, rather than the entire series (for example, in the particulars to para 14 itself, the first mask in the series of twelve nasal masks listed is called "The Mirage Mask"). 20 The Mirage Mask is a Product within the meaning of the Agreement, being a nasal mask that incorporates the use of the Intellectual Property ( 15 ). According to subparas (a) and (b) of para 15, the Mirage Mask consists of or incorporates the use of the Intellectual Property because it consists of or incorporates the invention disclosed in the Provisional Application. According to subparas (c), (d) and (e) of para 15, the Mirage Mask possesses certain integers of certain claims of the Provisional Application, and this is a further reason why the Mirage Mask incorporates the use of the Intellectual Property. 21 Subparagraph (f) of para 15 alleges, further or in the alternative, that the Mirage Mask incorporates the invention disclosed in the Patent itself, and subpara (g) alleges, further or in the alternative, that the Mirage Mask incorporates "information and know-how relating to the nasal mask, being the nasal mask disclosed in the Provisional Application". 22 Subparagraphs (c), (d) and (e) are akin to a conventional pleading of patent infringement --- the possession of the integers of claims. But subparas (f) and (g) are broader. The Mirage Mask is there said to incorporate the invention disclosed in the Patent, or to incorporate "information and know-how relating to the nasal mask ... disclosed in the Provisional Application". 23 The University emphasises that its case is not simply one of patent infringement. As will be seen, its breach of contract claim depends on a chain of causation from the invention the subject of the Patent and from the other elements of the Intellectual Property irrespective of whether they result in a product involved in an infringement of the Patent or are objectively apparent in any final product. I discuss this issue in more detail at [60]ff below. 24 In breach of the Agreement, ResMed has not paid the University licence fees in respect of the sales of the Mirage Mask, in consequence of which the University has suffered and continues to suffer loss and damage ( 16 , 17 ). 26 After pleading cll 11.1 and 11.2 of the Agreement, ResMed alleges that if, contrary to para 15, any Mirage Mask (the Relevant Mask) is not a Product, the Relevant Mask nonetheless is or incorporates a discovery or improvement in connection with the Intellectual Property, and therefore, pursuant to cl 11.1 of the Agreement, belongs to and is the absolute property of the University ( 22 ). 29 Further or in the alternative, ResMed has made and incorporated in each Mirage Mask one or more discoveries or improvements in connection with the Intellectual Property as particularised in Annexure B to the FASOC ( 26A ). Annexure B lists the twelve masks and in respect of each of them one or more alleged discoveries or improvements. Further or in the alternative, the use by a person other than the University or its licensees of those discoveries or improvements would infringe the Patent ( 26B ). Particulars of the possession of integers of claims of the Patent are given. In summary, it is alleged that in breach of cl 3 (which, it will be recalled, limits the permitted use of the Intellectual Property) and cl 11 (which, it will be recalled, relates to discoveries or improvements made by ResMed) of the Agreement, ResMed has used the Intellectual Property or the discoveries or improvements by incorporating the Intellectual Property, discoveries or improvements in numerous patents and designs that it (ResMed) has caused to be registered (Patents and Designs). The Patents and Designs are particularised in Annexure A to the FASOC. Annexure A identifies in paras (a) to (v), 22 elements that constitute the "elements of the Intellectual Property". Section 1 of Annexure A lists the Patents and Section 2 of Annexure A lists the Designs, in which the respective elements of the Intellectual Property, discoveries or improvements are said to have been "disclosed", "incorporated" or "included". 34 The University alleges that the University is the rightful owner of the Patents and Designs, and that ResMed holds them on a constructive trust for the University ( 40, 43 ). 35 Further, or in the alternative, the various Australia-related acts pleaded in paras 28---30 amount to the exercise by ResMed of rights in or pursuant to certain of the Patents and Designs, and the making, supplying, offering for sale, and selling of products which incorporate the invention the subject of certain of the Patents and which embody certain of the Designs ( 46 ). Particulars are set out in Annexure C to the FASOC. 36 ResMed is liable to account to the University for the profits that have accrued to ResMed as a result of any of the activities referred to in para 46 ( 47 ), or the University has suffered loss and damage as a result of the failure of the Respondent to take steps to assign to the University the Patents and Designs ( 48 ). Practice Note 14 (Discovery) of 1999 is also relevant. It is the Practice Note that refers to the possible desirability of discovery taking place according to "categories". 38 On 19 December 2007 I directed that each party serve on the other a list of categories of documents of which it would seek discovery, and that each party notify the other of any categories that were disputed. 39 Subject to the amendment mentioned at [1] above, categories of which the University seeks discovery from ResMed and which are disputed are the categories set out in the annexure to these reasons. 40 I had occasion to discuss the relationship between discovery by "categories of documents" and O 15 of the Rules in Australian Competition & Consumer Commission v Advanced Medical Institute Pty Ltd [2005] FCA 366 and Aveling v UBS Capital Markets Australia Holdings Ltd [2005] FCA 415 ( Aveling ). In Aveling , I observed (at [10]) that the principles that should guide parties in arriving at descriptions of categories of documents for discovery are the very principles that guide the Court when ordering discovery. Alternatively, of course, the categories may be defined so as to incorporate expressly the terms of the subrule. Whatever approach is taken, it is important to understand that when, as happened in the present case, the Court orders discovery by categories to be notified by one party to another, the Court does not intend that the notifying party be at liberty to widen the discovery obligation beyond the four classes of documents referred to in O 15 r 2(3). 41 Any description of categories of documents to be discovered should be arrived at, whether by the Court or by the parties, in the light of the standard laid down in the rules set out above. It is not clear to me that the parties have approached the question in this way. The question for me on the present motion is whether the disputed categories satisfy the rules. It is often difficult for the Court to be certain that documents falling within a particular category description fall within the rules. 42 It would be permissible for a category to be identified as documents that satisfy both of two conditions: (1) a description of a class of document; and (2) subrules (3), (4) and (5) of rule 2 (the effect of which subrules could be set out in appropriate form). This approach would at least ensure that the documents sought did not exceed either the range of documents referred to in the rules, or the bounds of the category descriptions. 43 What I have said in the last two paragraphs may or may not assist the parties in resolving their dispute. I appreciate that it may not address the question of the "oppressiveness of the search". When I refer to the Agreement, I am referring to the Agreement as originally in force and as extended. ResMed has pleaded in its further amended defence the facts establishing the renewal of the Agreement which took effect from 7 December 1992. So far as I know, however, when the Agreement was entered into its contemplated life was only the original term (from 1 January 1991 to 7 December 1992). As noted at [7] above, any opinions I express in these reasons as to the proper construction of the Agreement are not final. They are but an aspect of the exercise of my discretion on the question whether ResMed should be required to give discovery of the documents in the disputed categories. 47 Schedule 2 to the Agreement disappoints as a setting forth of particulars of "trade marks, patents, copyrights, processes, know-how, registered designs and other like rights" (see the definition of "Intellectual Property" in cl 1 of the Agreement). Although para (a) refers explicitly to the Provisional Application alone, I think it also catches the Patent that was associated with it. 48 Paragraph (b) in Schedule 2 is not limited to integers of the invention the subject of the Patent. Paragraph (b) refers to information and know-how relating to the "Nasal Mask" (subject to the two carve outs in para (b)). As will be recalled, Schedule 4 contains only the words "Nasal Mask". However, the definition of "Product" also contains the words "which incorporate the use of the Intellectual Property". This raises a question as to whether those words are limiting as to the range of products and/or processes that could be within the term "Products", or are merely descriptive of such products and/or processes. 50 The distinction between the relative pronouns "that" and "which" is discussed in various books on English usage: see, for example, Fowler's Modern English Usage , "that" (relative pronoun) 3, 4; The Penquin Working Words "that/which" and "clause"; Gower's The Complete Plain Words (HMSO 1973), (xiv) "Which" and "that", pp 142---145; Strunk and White, The Elements of Style (4 th edition, 2000) "That. Which.". Purists say that the relative pronoun "that" defines, limits, restricts or qualifies, whereas the relative pronoun "which" does not do so but introduces a feature or characteristic of something that has already been defined. According to this view, the words "which incorporate the use of the Intellectual Property" in the definition of "Product" are not restrictive (as the expression "that incorporate the use of the Intellectual Property" would have been) so that the product is simply "the products and/or processes set forth in Schedule 4". 51 As the books to which I have referred make clear, however, it would be quite unsafe to rely on the that/which distinction. The English language is not used with close attention to such niceties, even by drafters of contracts. 52 It seems to me that the expression "the Nasal Mask" in para (b) of Schedule 2 and in Schedule 4 is a reference to the "Nasal Mask" mentioned in para (a) of Schedule 2. In para (a), Nasal Mask is an invention, that invention being the subject of the Provisional Application and later of the Patent itself. 53 On this view, even if the expression "which incorporate the use of the Intellectual Property" were to be considered definitional, the Nasal Mask incorporates at least that part of the Intellectual Property that is the invention that was the subject of the Provisional Application. 54 I need not decide questions of construction now. They can await the final hearing. For present purposes, it is important that the definition "Intellectual Property" may include information and know-how, the use of which was not incorporated in the Product, and that merely relates to the Product. The Product itself need not have incorporated the use of all of the Intellectual Property. In particular, it need not have incorporated the use of the information and know-how "relating to" the invention (the Nasal Mask) that the University undertook by cl 3.2 to supply to ResMed. 55 The FASOC does not allege that the University supplied any information or know-how to ResMed in performance of its obligation under cl 3.2. It is conceivable, I suppose, that the University's case will be that ResMed acquired information and know-how that related to the Nasal Mask, whether forming part of the invention or not, otherwise than by being supplied with that information and know-how by the University pursuant to cl 3.2. The University should be required to clarify what its case is in this respect. It should be required to plead facts as to the supply of information or know-how by the University to ResMed pursuant to cl 3.2, or as to the acquisition by ResMed of information and know-how outside cl 3.2, if this is indeed the University's case. 56 Although ResMed is critical of the University's FASOC in this respect, ResMed has not sought any relief in respect of the FASOC and it is on the FASOC as it exists that I am required to determine the present discovery dispute. 57 Arguably, contrary to para 15 of the FASOC, each Mirage Mask was not within the expression "Product" because it was not the Nasal Mask referred to in Schedule 4. On this view, it may incorporate some integers of the invention being the Nasal Mask, but not fall within the term "Nasal Mask" itself. On this basis, the University's claim for royalties based on cl 5 and Schedule 3 in respect of the sales of the Mirage Masks would be without foundation. 58 If this view were to prevail, attention would still have to be given to the University's claim pursuant to cl 11 of the Agreement (paras 19ff of the FASOC). That claim is very broad. Paragraph 22 asserts that if any Mirage Mask is not within the defined term "Product", it nonetheless is or incorporates "a discovery or improvement in connection with the Intellectual Property, whether patentable or not" within cl 11 of the Agreement. It will be recalled that the Intellectual Property comprises the Nasal Mask, and the University's information and know-how relating to that invention. The information and know-how relating to the invention is itself a broad concept. The notion of an "improvement in connection with" that already broad concept is broader still. ResMed must have made or contributed to the discovery or improvement. However, unlike the Intellectual Property itself, a discovery or improvement is not limited to the University's Nasal Mask invention and related information and know-how as at 1991 (see [48] above). 59 In relation to discoveries and improvements, the University's claim is framed as one for damages or an accounting for profits, and an order for specific performance of an implied obligation to assign any intellectual property held by ResMed in any discovery or improvement. It will be recalled that under cl 11.1 of the Agreement, discoveries or improvements made by ResMed "in connection with the Intellectual Property" belong to and are the absolute property of the University. The University's case is, therefore, that the discoveries and improvements represented in the twelve Mirage Masks belong to and are the absolute property of the University. 60 ResMed sought to distinguish between two cases advanced by the University. The first was referred to for convenience as "the objective case". This case was to be established simply by an objective comparison between each Mirage Mask and the Intellectual Property that was alleged to have been furnished by the University to ResMed or otherwise acquired by ResMed. According to the objective case, it is only the final form of each Mirage Mask that the University needs to have, and documents relating to the development of each Mirage Mask, as are sought in categories 4, 5, 6 and particularly 8, are not relevant. 61 The second case was referred to for convenience as "the subjective case". This is the case that the University supports in its submissions. This case was described by the University as being that the Intellectual Property was as a matter of fact used in the creation of each Mirage Mask, notwithstanding that this may not be apparent from an objective comparison of the kind described in the last paragraph. That is, it suffices that there is a causal link between the Intellectual Property and each Mirage Mask. 62 ResMed submits that the subjective case is not pleaded by the University. It says that although the University pleads that various elements of the Intellectual Property were "incorporated" into each Mirage Mask, it has pleaded and particularised (whether in the FASOC or in response to a request for further and better particulars) those elements only by reference to physical features of a product. ResMed submits that in these circumstances, the question of whether those features have been incorporated into each Mirage Mask must be capable of being answered by a comparison involving the final form of each Mirage Mask. The documents relating to the development of each Mirage Mask, as are sought in categories 4, 5, 6 and particularly 8, are not, so ResMed contends, relevant to the University's case as pleaded. 63 In answer to ResMed's submission, the University says it may be that a simple comparison between each Mirage Mask and the relevant element of Intellectual Property would be enough. However, it argues that it is not limited to that approach. It suffices, so the University submits, that ResMed has used the Intellectual Property to formulate or arrive at the final product. The University therefore contends for a broader reading of the term "incorporates". 64 In my view, the University is not limited to the objective case by the FASOC and the particulars provided. For example, the FASOC alleges in para 15(g) that the Mirage Mask incorporates "information and know how relating to the nasal mask". The information and know-how referred to in that para is particularised by the University to be the elements of Intellectual Property referred to in Annexure A of the FASOC (with the exception of para (n)). Even though ResMed describes those elements as "physical features", their "incorporation" into a product may not be evident from a simple visual comparison. Similarly, in relation to paras 38 and 41 read with Annexure A, I do not think that the allegation of "incorporation" must be provable exclusively by a visual comparison. However, whether following discovery or not, the University must make this aspect of its case clearer in its pleading. (Opportunity should be taken to incorporate in the pleading all particulars, including those presently found in correspondence. Such documents could adversely affect ResMed's case and support the University's case on the use of the Intellectual Property and of "discoveries and improvements". However, the University must surely already have some evidence of disclosure of information by the University or by Professor Sullivan. Arguably ResMed should not be required to give discovery of documents in this category until the University has filed its own evidence relevant to the category. Again, however, perhaps ResMed should be required to give discovery of the documents in this category until the University has filed its evidence relevant to the category. As mentioned, I do not propose to deal with issues of oppressiveness in these reasons. Documents in this category could adversely affect ResMed's case and support the University's case on the use of the Intellectual Property and of "discoveries and improvements". I accept ResMed's submission that subpara (c) of para 25 is too broad. 72 In relation to unpublished patent applications and design applications, ResMed submits that the category is "entirely speculative", because such applications may not have proceeded or may not proceed. I accept ResMed's submission that there is no pleaded basis for their inclusion. 73 However, ResMed has indicated its willingness to provide to the University a list of the titles of all unpublished patent applications and design applications that concern facial masks, and, upon the relevant request being made, copies of each such application. The provision of those documents would be subject to appropriate confidentiality undertakings being given. Category 26 goes to quantification of loss. The licence fees that ResMed was to pay to the University were to be paid in the manner and at the time set forth in Schedule 3 to the Agreement which provided for payment of the licence fee of a certain percentage of the "Net Ex-works Selling Price of all Product sold". Clause 1 of the Agreement defined "Net Ex-Works Selling Price". The definition referred to the price charged by ResMed to "arm's length" distributors. The definition stated that if there was no "arm's length" distributor, the relevant price was to be that at which ResMed and the University agreed the Product would be sold to an arm's length distributor. 75 Counsel for the University explained that ResMed manufactured masks in Sydney but sold them to, inter alia, other companies in the ResMed group, including companies that are not subsidiaries of ResMed but are subsidiaries of an ultimate parent company. There is a question whether ResMed must pay licence fees in respect of sales to companies within its group or whether it must pay them on sales to third parties outside the group. The question is thus raised whether other companies in the ResMed group are "arm's length" distributors, or whether that notion refers only to "genuine third parties". Counsel for the University explains that category 26 "is simply directed to documents which would record the evolution of the corporate structure so that [the University] can just have some information as to how this group is, in fact, arranged now and was [arranged] at relevant times relevant to the proceedings". He states that the University expected that a corporate structure diagram would suffice. 76 In one way or another, the University is entitled to obtain the information that is sought, but there is a means to achieve the University's objective without the imposition on ResMed of the burden of discovering all documents that exist that describe or summarise the historical evolution of the structure of the ResMed group. Counsel for ResMed describes the University's case as "unorthodox". 78 The question for me is how to balance the interests of both parties at this stage of the proceeding, having regard to the demands of justice. 79 I note again that I have not dealt with ResMed's substantial evidence of oppressiveness. 80 I have indicated above that in the case of some of the categories, there is a case for deciding that discovery should await the filing of evidence by the University on particular issues. The course of requiring evidence prior to discovery is not novel: see, for example, Australian Competition and Consumer Commission v Qantas Airways Ltd [2003] FCA 907 esp at [4]. As Gyles J there observed, experience shows that the filing of affidavits often brings to light many documents. I appreciate that this may prove to be an exceptional case in this respect and that it is conceivable that it would be appropriate for the University to be granted leave to file further affidavits after discovery has taken place. 81 Another possible course is to give the parties a further opportunity to consider the category descriptions in the light of what I have said, especially at [37]ff above. ResMed will have to give discovery at some stage and it may be preferable that this take place now rather than later. 82 In the course of the hearing, counsel for the University suggested two variations to the categories of documents to be discovered at this stage. The first was to limit the documents sought in categories 4, 6 and 8 to those created before 31 December 1998 (category 5 is already limited in this respect). The second was to limit the documents sought in categories 4, 6 and 8 by reference to the first in the series of Mirage Masks alone (being the "original" Mirage Mask referred to in para 14(i)(A) of the FASOC). (Counsel also announced that category 15(a) is no longer pressed. 84 Discovery in stages is referred to in Practice Note 14 (Discovery) of 1999 as a device that might reduce the burden of discovery in some cases. If ResMed believes that there is no possibility of the University's suggestion reducing the burden of discovery, it is not obvious why that suggestion should be forced on ResMed. However, ResMed should be required to provide a short affidavit as to the difference (in terms of burden) between giving discovery in the proposed first stage and giving discovery of all documents sought in the disputed categories. 85 ResMed has agreed to give discovery of certain other categories not in dispute and to provide certain information, referred to in the above reasons. It must do so. 86 If the parties find that they cannot reach agreement in the light of my reasons above, I will publish the remainder of my reasons and make orders. I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. 5 All documents created before 31 December 1998 recording or evidencing the disclosure of any information from the University or Professor Colin Sullivan to ResMed concerning what is described by ResMed as the "Bubble Mask" or "Bubble Cushion", including without limitation: (a) any prototype or example of such a mask; and (b) any information concerning the development of the mask, the development of any prototype of the mask, the operation, features or benefits of the mask, or any methods or materials for the construction or manufacture of the mask. 6 All documents recording or evidencing any development work or other work performed by Professor Colin Sullivan in conjunction with ResMed on: (a) what is described by ResMed as the "Bubble Mask" or "Bubble Cushion", including the Series III; and (b) any of the Mirage Masks or any prototype of those masks. 8 All documents recording, evidencing or concerning the development of the Mirage Masks, or any mask in that series, including any prototypes of those masks, but excluding documents concerning only the materials for use or the manufacturing process. 15 All documents recording, evidencing or comprising: (a) the development of the inventions or designs disclosed in the Patents and Designs; (b) the following, insofar as they concern the provision of a seal between the mask and the face of the wearer: (1) the formulation or drafting of the Australian, European and United States Patents and Designs; (2) the application for and prosecution of the Patents and Designs in Australia, Europe and the United States; (3) the making of any arguments, or provision of any information, in support of (1) or (2); or (4) any internal or other consideration of, or advice received in relation to, (1), (2) or (3). 25 All documents comprising any patent, patent application design or design application for: (a) any Mirage Mask; (b) any mask incorporating a flexible membrane of the same or a similar type to the membrane of any Mirage Mask; or (c) any aspect of any mask in (a) or (b), other than an aspect concerning head straps, forehead supports, air inlet or delivery hose attachment features, or vents for release of expired or delivered air, except that where there are no documents in English in the possession, custody or power of the Respondent comprising these patents, patent applications, designs and design applications, then all English language documents recording or evidencing them. 26 All documents which describe or summarise the historical evolution of the structure of the ResMed Group. | discovery relationship between categories of documents and order 15 rule 2 of the federal court rules (cth) practice and procedure |
The Tribunal affirmed the decision of the delegate of the Minister to exempt from access under the Freedom of Information Act 1982 (Cth) folios 81 and 84 to 88 of a file of the Department of the Minister for Immigration and Multicultural Affairs. Federal Magistrate Jarrett also ordered Mr Bunting to pay the costs of that application. 2 The respondent's objection to the competency of the appeal is based on the premise that the judgment of Federal Magistrate Jarrett was interlocutory. Leave is therefore required, pursuant to s 24(1A) of the Federal Court of Australia Act 1976 (Cth). It is now out of time to apply for such leave, and there has been no application for an extension of time within which to apply for leave. The position simply is that if the orders from which the appeal is brought are interlocutory, then leave is required and an appeal brought without leave is incompetent. 4 The Federal Magistrate's decision to dismiss the application for an extension of time was an interlocutory judgment. I was referred to authorities concerning the meaning of interlocutory judgment, including Brouwer v Titan Corporation Ltd & Ors (1997) 149 ALR 50 at p 53, Licul v Corney (1976) 50 ALJR 439 at p 444, and Computer Edge Pty Ltd v Apple Computer Inc [1984] HCA 47 ; (1984) 54 ALR 767. It is plain that an order which does not conclude the rights of the parties inter se is interlocutory. 6 The reason, no doubt, for the history of the matter is the lack of legal understanding by Mr Bunting. Even today he indicated that his primary concern was the costs order that the Magistrate had made, saying that he lacked the capacity to pay those costs. The ignorance of Mr Bunting of the requirements of the law does not provide a basis on which those requirements can be ignored. In this particular case the appeal is one made without leave and leave is required. In those circumstances, the appeal is incompetent and I dismiss it. 7 In respect of the question of the costs order, that also is, in my opinion, an interlocutory order and leave is therefore required. The costs order is ancillary to the refusal of the extension of time application and clearly is not a judgment or order which concludes the rights of the parties inter se. While it is strictly irrelevant to the question of competency of the appeal, the concern of Mr Bunting as to his incapacity to pay the costs orders to be paid by Federal Magistrate Jarrett is not a factor which goes to the propriety of the making of the costs order. It is no doubt a factor which might be considered in any question of pursuing that costs order by the Minister. Frequently a commercial decision is made that there is no point in throwing good money after bad, in chasing a costs order which almost certainly will be empty. 8 For these reasons I uphold the notice of objection to competency and the appeal is dismissed. Given the history of the matter and the reasons for the making of these orders, I propose to make no order as to the costs of today or of the appeal. | objection to competency whether costs order is final or interlocutory whether appeal is incompetent appeal |
Leave is required because the judgment sought to be appealed from is interlocutory. The Court below dismissed the applicant's application for judicial review of a decision of the Refugee Review Tribunal on the ground that it did not raise an arguable case. 2 The applicant is a citizen of the Republic of China, also known as Taiwan. In his application for a protection visa he claimed that he left Taiwan because he feared that people from the Min Jin Party would harm his business activities due to his support of the Guoming Party. 3 A delegate of the Minister for Immigration and Multicultural Affairs refused the applicant's application for a protection visa. The applicant sought a review of that decision before the Tribunal. 4 The Tribunal advised the applicant, by letter dated 14 November 2005, that it was unable to make a decision in his favour on the material before it and invited him to a hearing on 9 December 2005. 5 The applicant failed to attend the hearing. By letter dated 19 January 2006 the Tribunal advised him that a decision in his review application would be handed down by it on 9 February 2006. 6 On 9 February 2006, the Tribunal handed down its reasons for decision, dated 17 January 2006. It affirmed the decision of the delegate of the Minister not to grant a protection visa. Smith FM also noted that the applicant made no attempt to contact the Tribunal on his return from Melbourne. His Honour held that the Tribunal was entitled to proceed to deal with the review application under s 426A(1) of the Migration Act 1958 (Cth). 9 In his grounds in support of his amended application, the applicant relied on s 424A of the Act . He submitted that the procedures required by that section were not observed by the Tribunal. The Tribunal did not take information which was specifically about the applicant and use that as a reason for affirming the delegate's decision. His Honour correctly dismissed the application before him for the reasons he gave. Further, no substantial injustice would arise from the refusal of leave because the Tribunal's decision is beyond reproach. The claims made by the applicant were so vague and unparticularised such that the Tribunal, in the absence of further information, was entitled to reject his application for a protection visa. Further, having regard to the provisions of s 426A of the Act, the Tribunal was entitled to proceed to determine that matter in the absence of the applicant. It had earlier invited him to attend by registered mail addressed to his address for service as nominated in his review application. 11 The application for leave to appeal is refused with costs. | application for protection visa application rejected appeals to refugee review tribunal and federal magistrates court dismissed application for leave to appeal no substantial injustice leave refused migration |
In the Tribunal, Mr Lim sought a review of a decision of the Social Security Appeals Tribunal which affirmed a prior determination to impose an eight-week non-payment period on Mr Lim's "Newstart Allowance". A Newstart Allowance is made to job seekers, such as Mr Lim, who are unemployed and are looking for work. 2 The issue before the Tribunal was whether Mr Lim had a reasonable excuse for his failure to comply with his "Newstart Activity Agreements". A Newstart Activity Agreement entered into by a job seeker is an agreement with which he or she must comply in order to continue to qualify for the Newstart Allowance. If the job seeker fails to comply with the Newstart Activity Agreement, the job seeker commits a "newstart participation failure" and a Newstart Allowance is not payable. Failure to comply with a Newstart Activity Agreement is not regarded as a newstart participation failure if the job seeker can show that he or she has a reasonable excuse for non-compliance. 3 Mr Lim executed three Newstart Activity Agreements ('the Lim Activity Agreements') on 20 December 2006, 26 February 2007 and 7 March 2007. The other party to each of the agreements was denoted as WorkDirections Pty Ltd ('WorkDirections'), described on the Lim Activity Agreements as a "Job Network Member". The Lim Activity Agreements also contain a number of references to Centrelink. For example, the agreements state that they show the activities that Mr Lim must perform in order to receive income support payments from Centrelink and that Mr Lim must contact Centrelink when he ceases an activity or his circumstances change. Centrelink is not, however, a party to the Lim Activity Agreements. 4 The hearing before the Tribunal concerned three breaches of the Lim Activity Agreements ('the participation breaches'). The participation breaches were committed under s 624(1)(d) of the Social Security Act 1991 (Cth) ('the Act'). As Mr Lim had committed three such participation failures within a 12 month period, his payment was suspended pursuant to s 629(1)(a) of the Act. 5 The Tribunal found, and Mr Lim does not challenge, that the three alleged breaches had occurred and that no reasonable excuse had been offered for those breaches. Accordingly, the decision under review was affirmed. It is not necessary to examine further the nature of the participation breaches or the excuses offered for them, as those findings are not challenged on appeal. 6 Mr Lim has challenged the validity of the Lim Activity Agreements. The validity of the Lim Activity Agreements was not raised before the Tribunal. Mr Lim conducted his application in the Tribunal on the basis that he was subject to valid Newstart Activity Agreements but that he had excuses for not complying with the terms of the agreements. Application of law on "attendance" and "reasonable excuse" on 27th April is irrelevant. 8 The respondent challenged the competency of the appeal on the ground that it did not disclose a question of law as required by s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ('the AAT Act'). That objection to competency came before Branson J who accepted that the notice of appeal did not identify a question of law capable of constituting the subject matter of the purported appeal ( Lim v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 1058). Nor does it by implication raise a question of law the answer to which could throw doubt on the correctness of the decision of the Tribunal. The references in the notice of appeal to the law of "attendance" and "reasonable excuse" do not assist Mr Lim in this regard. 9 However, her Honour gave consideration to any questions of law that Mr Lim could reasonably expect to be able to obtain leave to include in his notice of appeal were he to apply to amend the document. In particular I consider it arguable that the Secretary has not approved a form of Newstart Activity Agreement for an agreement between a person and a party other than Centrelink. It may also be arguable that the authority of the Secretary to delegate all or any of the Secretary's powers under [the Act] is insufficient to alter the requirements of s 605(4) that a Newstart Activity Agreement be between the person and the Secretary. I do not mean thereby to suggest that the Secretary could not delegate his or her power to sign such an agreement. However, the agreements entered into by Mr Lim do not purport to be agreements between him and the Secretary. They purport to be agreements between him and WorkDirections. 10 Mr Lim filed an amended notice of appeal on 25 July 2008 and a further amended notice of appeal on 20 August 2008. Whether it was open to the Tribunal to be satisfied that the agreements entered into by Mr Lim were Newstart Activity agreements within the meaning of s 624 of [the Act] . Whether it was open to the Tribunal to proceed hearing when the respondent (Secretary, DEWR) was not the same person who purported to have activity agreement with Mr Lim within the meaning of s 624 of [the Act] . I do not propose to deal with this ground further. Nothing was raised that would support any such conclusion. Agreements which Mr Lim signed are not approved by the Secretary s 234 instrument. Agreements which Mr Lim signed are purported to be agreement between Mr Lim and Workdirections. The newstart agreement was purported between Mr Lim and the Secretary of liberal govt. At the AAT hearing, the solicitor of respondent represent Miss Lisa Paul, Secretary of labour govt. Miss Paul was not privity to the newstart agreement with Mr Lim. The second proposed finding raises a different issue. This issue does not relate to either of the questions of law identified in the further amended notice of appeal. The respondent points out that the issue is not reflected in the questions of law and no leave was granted to raise this fresh issue when leave was granted on 13 August 2008 to amend the orders sought. The respondent does, however, provide submissions addressing this question. 14 The hearing of the appeal took place on 8 October 2008. Following the hearing, I gave the parties the opportunity to file further evidence and written submissions and also to make oral submissions addressing, primarily, the delegations made by the Secretary and the identity of WorkDirections as described on the Lim Activity Agreements. The agreement is between the person and the Secretary. By another instrument, commencing on the same date, the Secretary approved the form of Activity Agreement under, relevantly, s 605(4) of the Act as an approved form of Activity Agreement for a job seeker to enter into with an Employment Services Provider or with Centrelink ('the Approved Activity Agreement'). • Gregor Ptok (who signed the first Lim Activity Agreement) was employed by WorkDirections Australia as an Employment Advisor Intensive Support from January 2006 until August 2007 and was a person engaged by the Employment Services Provider, WorkDirections Australia, to perform functions and to provide services under the Employment Services Contract 2006-2009 . • Rebecca Dean (who signed the second and third Lim Activity Agreements) was employed by WorkDirections Australia as an Employment Advisor Intensive Support from August 2006 until July 2007 and was a person engaged by the Employment Services Provider, WorkDirections Australia, to perform functions and to provide services under the Employment Services Contract 2006-2009 . 20 WorkDirections Australia was contracted to provide job network services and, as part of that contractual obligation, was required to enter into Activity Agreements with job seekers. Mr Ptok and Ms Dean were, in accordance with their Employment Advisor position descriptions, required to perform functions and to provide services under the Employment Services Contract 2006-2009 between WorkDirections Australia and DEWR. 21 There is no basis for Mr Lim's assertion that Mr Ptok and Ms Dean were not so engaged. 24 There is also a reference on the next page of the Approved Activity Agreement to "Part A --- Compulsory activities" and "Part B --- Other activities" and, under the "Job seeker's Statement", it includes the statement ' I have agreed to voluntarily undertake the activities stated in Part B ' [original emphasis]. 25 The Lim Activity Agreements refer to Part A but not to Part B. 26 There is no suggestion that Mr Lim entered into a Part B agreement or an agreement to undertake activities voluntarily, or to include any voluntary activities in his Activity Agreements. 27 The respondent submits that it is clear from the Approved Activity Agreement that Part B references are to be used only if a Part B agreement has been entered into. The respondent contends that it is expressly contemplated in the Approved Activity Agreement that a redundant reference to Part B activities may be deleted without invalidating the agreement. 28 I accept the respondent's submission that it is apparent that Part B is only to be used where applicable. If it is not applicable, there is no reason for it to be present in the document, as it is only "for use" when a Part B agreement is entered into. An Employment Services Provider may utilise a form that contains Part B when it is relevant and a form that does not contain Part B or a reference to it when it is not relevant. 29 The fact that Part B is not present in the Lim Activity Agreements does not prevent them from complying with the Approved Activity Agreement or from being Newstart Activity Agreements as defined in s 605(4) of the Act. Is each Lim Activity Agreement between the person and the Secretary within the meaning of ss 605 and 624 of the Act? On Mr Lim's Activity Agreements, that heading was "WORKDIRECTIONS PTY LTD (JNM)'s signature and date". Under "Contact Details" on the Approved Activity Agreement, the form provides: "Contact details of Centrelink and/or Employment Service Provider(s) inserted here". 32 Mr Lim submits that the Lim Activity Agreements were between himself and WorkDirections, or, alternatively between himself and Mr Ptok or Ms Dean; that they were signed by WorkDirections, or, alternatively Mr Ptok or Ms Dean, as the contracting party; and that, as there is no reference to the Secretary, the agreements are not "between the person and the Secretary" as required by ss 605(4) and 624 of the Act. 33 It is now established that the Secretary approved the form of the Activity Agreements with which the Lim Activity Agreements complied. The Secretary also delegated, to each person engaged by WorkDirections Australia (an Employment Services Provider) to perform functions or to provide services under the Employment Services Contract 2006-2009 , the Secretary's power under s 605 of the Act to enter into Newstart Activity Agreements. Accordingly, the Lim Activity Agreements were signed by Mr Ptok and Ms Dean, persons engaged by WorkDirections Australia to perform functions and to provide services under the Employment Services Contract 2006-2009 , each as the delegate of the Secretary. 34 It is apparent from an extract of the Australian Business Register, as provided by Mr Lim and tendered by the respondent, that WorkDirections traded from 19 March 2002 until 6 December 2002 and that WorkDirections Australia has traded from 6 December 2002 until now, under the trading name WorkDirections Australia Pty Ltd. The respondent's submissions state that WorkDirections Pty Ltd changed its name to WorkDirections Australia Pty Ltd on 28 February 2002. It follows that, at the time of the execution of the Lim Activity Agreements, the entity that should have been named on the Lim Activity Agreements as the Employment Services Provider and the employer of Mr Ptok and Ms Dean was WorkDirections Australia and not WorkDirections. 35 It follows that there was what the respondent describes as an "irregularity" in the description of the company that was the Employment Services Provider in the Lim Activity Agreements. Mr Lim contends that the Lim Activity Agreements are invalid or void because WorkDirections was not the Employment Services Provider. He further contends that the use of the name "WorkDirections Pty Ltd" on the Lim Activity Agreements is a ' cold and calculated ploy to deceive the legal system '. There is no basis for the latter contention and I reject it. 36 There was no lack of delegated power to enter into the Lim Activity Agreements. The Employment Services Contract 2006-2009 was between WorkDirections Australia and DEWR, Mr Ptok and Ms Dean were employed by WorkDirections Australia to perform functions and to provide services under the Employment Services Contract 2006-2009 and the delegation was made to each person engaged by WorkDirections Australia for this purpose. It follows that the Lim Activity Agreements were entered into by Mr Lim and delegates of the Secretary. 37 The misstatement of the identity of the contracting party or of the employer of Mr Ptok and Ms Dean, as a mistake in naming the source of the power to enter into the Lim Activity Agreements, does not affect the validity of those agreements ( Brown v West [1990] HCA 7 ; (1990) 169 CLR 195 at 203). 38 Mr Lim also seems to contend that, whether or not the employees of WorkDirections Australia were exercising a power available as delegates of the Secretary, they were not entitled to sign without stating that it was on behalf of or as delegated by the Secretary. In this regard, Mr Lim contends that, while delegates may make decisions without revealing the source of their power, they cannot enter into agreements without indicating that they are doing so as delegates. Mr Lim says that his agreements were with a private contractor and that the Act has no application. Rather, he says, the Lim Activity Agreements are commercial contracts to which the common law applies. In a subsequent submission, Mr Lim stated that the failure to include any reference to the Secretary in the Lim Activity Agreements constitutes an ' operative mistake of law ', thereby rendering the agreements void. 39 Each Lim Activity Agreement states that it is ' an Activity Agreement under the Social Security Act 1991 '. Each states that it refers to activities necessary to receive income support payments from Centrelink. Mr Lim could not have believed that the Lim Activity Agreements were private arrangements. He could have been under no misapprehension that the agreements were under the Act and had consequences under the Act. 40 As was the case for the Departmental Officer in Luan v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 72 , an employee of WorkDirections Australia could only exercise the power to sign an agreement that resulted in Centrelink payments if delegated by the Secretary to do so. The Lim Activity Agreements are written agreements in a form approved by the Secretary. That approved form provides not for the signature of the Secretary but for the signature of the Employment Service Provider/Customer Service Adviser. This was the format of the Lim Activity Agreements. 41 The fact that the agreements were signed by employees of WorkDirections Australia, as delegates of the Secretary, does not preclude the agreements being between the Secretary and Mr Lim, despite the fact that the WorkDirections Australia employees did not indicate the source of power to enter into the agreements. Nor does it otherwise preclude the agreements being Newstart Activity Agreements within s 605(4). 42 The Lim Activity Agreements are agreements between the person (Mr Lim) and the Secretary for the purposes of ss 605(4) and 624 of the Act. • Mr Lim's participation and lack thereof in the activities the subject of the agreements and the subject of the Tribunal decision relate to a period of time prior to the change of Government. • The respondent is "the Secretary" as opposed to any personal reference to the present incumbent. • Section 19A(3) of the Acts Interpretation Act provides that, where an Act refers to a Department, unless the contrary intention appears, the expression means, inter alia , the Department of State of the Commonwealth that deals with the matters to which the provision relates. The respondent has established that at all material times the relevant department was DEWR and that the reference to "the Secretary" in s 605(4) of the Act was a reference to the Secretary of DEWR who delegated his powers to enter into Newstart Activity Agreements. • The Employment Services Contract 2006-2009 between WorkDirections Australia and DEWR defines "DEWR" as ' the Commonwealth Department of Employment and Workplace Relations or such other agency or Department as may administer this Contract on behalf of the Commonwealth and, where the context so admits, includes the relevant Commonwealth's officers, delegates, employees and agents '. In any event, s 19C of the Acts Interpretation Act provides for continuity of agreements entered into by or on behalf of the Commonwealth when there is a change in the administration of matters to which the agreement relates. 45 A delegation is not revoked when the office of the delegator passes to a new holder ( Aban v Minister for Immigration, Local Government and Ethnic Affairs [1991] FCA 385 ; (1991) 31 FCR 93 at 98 per Morling, Jenkinson and Heerey JJ). The effect of a delegation is to confer upon the delegate an authority which he or she must exercise in accordance with the requirement of the statute but with his or her own independent discretion. It is not a relationship of principal and agent ( Kelly v Watson (1985) 10 FCR 305 at 318 per Neaves J). In Kelly Neaves J was considering whether a delegation continued to have operative effect notwithstanding the vacation of office of a particular permanent head who had executed the instrument of delegation. Justice Neaves was of the view (at 318) that clear and unambiguous language would be required before construing a statute to produce the result that the delegation ceased to operate when a delegator ceased to hold office (see also Johnson v Veterans' Review Board (2002) 71 ALD 16 at [31]---[32] per Mansfield J). There is nothing in the Act or the SS Administration Act to suggest that the relevant delegations should cease with the holding of office of the delegator. Justice Branson permitted the validity of the Lim Activity Agreements to be raised in this application and I have considered this issue. Mr Lim also raises the circumstances of his signing of the Lim Activity Agreements, including whether or not he was afforded the opportunity for legal advice. There is no evidence relevant to those assertions. They do not arise from the Tribunal decision and they do not disclose a question of law under s 44 of the AAT Act. Evidence filed by the respondent demonstrates that the Lim Activity Agreements accord with the form authorised by the Secretary. The agreements were between Mr Lim and the Secretary (through his delegates). They comply with s 605(4) of the Act. 48 The application is dismissed. 50 While the respondent has established the validity of the Lim Activity Agreements and Mr Lim's application is to be dismissed, it was only after a series of attempts to validate the agreements and errors that were identified by Mr Lim and by the Court. In the circumstances, I note that the respondent has not sought an order as to costs and I will make no order as to costs. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | applicant challenges validity of newstart activity agreements under the social security act 1991 (cth) agreements required by the act to be "between the person and the secretary" agreements signed by employees of workdirections australia pty ltd delegations agreements between the applicant and the secretary for the purposes of the act agreements valid even though employees of workdirections australia did not identify source of power to enter agreements agreements valid despite change of government since agreements entered into agreements valid despite mistake in agreements as to the name of the employment services provider agreements in a form approved by the secretary administrative law |
The application was originally filed on 20 August 2007. It was supported by an affidavit filed on the same day. However, the Judge has directed that Item 3 of the Notice of Motion be accepted for filing and issuing. If you wish, you may simply strike out Items 1 and 2 of the Notice of Motion and then file the further amended Notice of Motion and affidavit. The orders given by Justice Jessup on 15 August 2007 stay (put on hold) until the appeal from those orders is fully determined. The stay order is applicable as from the date of this Motion that is 20 August 2007. 3 On 15 August 2007 Jessup J delivered reasons for judgment and made orders in respect of two proceedings brought by the applicant which had been consolidated before him. To the extent not previously dealt with by the court, the motion of which the applicant gave notice on 4 May 2007 be dismissed. The fourth respondent pay the applicant damages in the sum of $50. The application otherwise be dismissed. In due course that appeal will proceed to an appellate hearing subject to any other orders that might be made in the usual course of the preparation of an appeal. The general principle which is applied in the Court is that an appeal does not operate as a stay unless the Court or a Judge otherwise orders. Whether or not such a stay should be granted depends upon whether the Court or a Judge thinks in all the circumstances that the matter is an appropriate case for the grant of a stay. See, for example, Powerflex Services Pty Ltd v Data Access Co (1996) 137 ALR 498. 7 The application for the stay is made in respect of all the orders made by Jessup J but, as I understand it, particularly in respect of order number 4. In respect of the first three orders there is not, so far as the applicant is concerned, anything to stay which might impact upon her. 8 The first order is that, to the extent not previously dealt with by the Court, the applicant's motion is dismissed. There is no point in staying that order if the applicant is dissatisfied with that order. The proper process is to appeal against it and that she has done. The applicant has said that she does not want to accept the money and would have to return it. That is a matter for her but that is not an appropriate matter in respect of which the Court should grant a stay on the application of the applicant. The proper process if the applicant is dissatisfied with that order is to appeal against it and that she has done. 11 The fourth order is that the parties file and serve submissions as to costs. Granting a stay of that order would, in effect, be to stay part of the determination and trial of the matters which are before the trial judge. In due course, presumably, Jessup J will make an order as to costs. The terms of that order is, at this point of time, a matter of speculation and it is not appropriate to indulge in speculation. 12 The applicant puts her case for a stay in respect of the costs order on a number of bases. Before I turn to those bases I have formed the view that it is not an appropriate case to grant a stay against an order that simply directs that the parties file and serve submissions and submissions in reply on questions of costs. That is an unnecessary and unwarranted interference with the trial process. If in due course an order for costs is made adverse to the interests of the applicant, then, if she is so disposed, that is a matter that the applicant can make application to have dealt with by the appellate court. 13 As I understand the applicant, she is apprehensive that in due course Jessup J will make a costs order which will be adverse to her and she is concerned that that will disadvantage her in a number of respects. If such a costs order is made in due course it can be the subject of an appeal. Whether or not it should be the subject of a stay depends upon whether it is an appropriate case for a stay. I do not consider that it is an appropriate case for a stay at this stage. 14 The applicant has raised a number of matters and made a number of submissions as to why this is an appropriate case for a stay and I deal with those as I understood them to be put. The applicant made a number of submissions generally on the basis that corruption had happened between Jessup J and counsel for the respondents. I do not consider there is any basis whatsoever for those submissions and there is nothing in the material before me that would support such submissions. Let me deal however, with the submissions that went specifically to the reasons why a stay should be granted. 15 The applicant said that she wanted to prosecute her appeal properly. In my view it is open to her to prosecute her appeal properly, even if a stay is not granted in respect of any of the orders made by Jessup J. The applicant submitted that I should consider the matter with due care and I have considered the matter with due care but I do not consider that she is inhibited in any way from prosecuting her appeal if a stay is not granted. The applicant also submitted that the stay was absolutely necessary for the proper administration of justice. I do not consider that the proper administration of justice is interfered with if a stay is not granted and I do not see any basis on which the stay is necessary for the proper administration of justice. Her appeal can be prosecuted. It is not inhibited if a stay is not granted and she is still able to prosecute her appeal properly. 16 The applicant submitted that she would suffer great injustice if a stay was not granted. I understood that injustice to be on the basis that she would not be able to prosecute the appeal properly. I cannot see any foundation for that submission. The applicant submitted further that it would save resources if the orders of Jessup J were put on hold, but as she is already seeking to prosecute her appeal the resources of the parties will be devoted towards the appeal and no resources are saved by a stay at this stage. If a subsequent order for costs is made adverse to the interests of the applicant then that is a matter that can be picked up and dealt with in any appeal. 17 The applicant seemed to be under a misapprehension that there was open to her an alternative remedy if a stay was not granted by way of seeking an injunction. At this stage the appropriate process is for the applicant to appeal against the orders and judgment of Jessup J if she is so disposed and that she has done. Apart from the stay application there is no injunctive basis available to the applicant as I understand the position. 18 The applicant also submitted that she was not able to meet any order for costs and that she suffers from ill-health. No costs order has been made against her at this stage and any application in relation to not being able to meet any costs order certainly, at this stage, is premature. The applicant submitted that there was no argument to be put against the stay but as Mr McKenney, who appeared for the respondents, submitted, the general principle is that an appeal does not operate as a stay unless a Judge or a Court otherwise orders. 19 In all the circumstances I do not consider, for the reasons to which I have referred, that this is an appropriate case for the grant of a stay under O 52 r 17(1) of the Federal Court Rules. The orders of the Court will be that paragraphs 3 and 4 of the further amended notice of motion filed on 23 August 2007 be dismissed and that the applicant pay the respondents' costs of and incidental to the further amended notice of motion filed on 23 August 2007, including the costs of the hearing this day. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | stay of orders of trial judge pending appeal stay pursuant to o 52 r 17(1) of federal court rules practice and procedure |
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